Abril 24, 2018

Stocks rally as Xi calms US-China trade fears; Russian rouble tumbles

10 Abril 2018, 06:18 | Dolorita Barahona

China's trade war advantage is a huge and increasingly sophisticated economy: Don Pittis

Trump Proposes $100 Billion in New Tariffs In a Potentially Serious Escalation of the Trade War With China

The Trump administration also is pushing for a crackdown on what it says is China's theft of USA intellectual property.

The Trump administration is also pushing for a crackdown on what it says is China's theft of U.S. intellectual property.

Meanwhile, the sanguine view on the trade war is fuelling expectation that the USA dollar will resume its three-year downtrend, giving Asian central banks room to hold off on rate rises as the region's currencies appreciate.

For the moment, the U.S. administration has focused on rallying allies against China instead of opening up a multi-front trade war that the United States risks losing. Since December 2016, Beijing also has charged an additional 10 percent on "super-luxury" vehicles priced above 1.3 million yuan ($200,000).

Gao's comments came shortly after Trump defended his proposed tariffs, saying the move might cause "a little pain" but the United States would be better off in the long run.

U.S. stocks closed higher on Monday after U.S. President Donald Trump appeared to soften his tone on China-U.S. trade relations. Trump has called on Beijing to ease trade barriers "because it is the right thing to do". It is perhaps no wonder that China has threatened to add automobiles to the list of American products that could face even greater tariffs in the fact of a trade wars.

But Trump did not explain why, amid a week of economic saber-rattling between the two countries that shook global markets, he felt confident a deal could be made. China is the world's largest buyer of soybeans, and it can not meet its demand without buying US beans.

At the heart of complaints by the Trump administration, as well as among some officials in Europe, are policies they say are at odds with Beijing's earlier era of market liberalization.

Oxford Economics analysts estimate the threatened United States tariffs cumulatively represent 30 percent of total United States imports from China and, if imposed, the loss of Gross Domestic Product over 2018-2019 could reach 0.3 percent in each economy.

Another blogger, under the name of "Leng Yan", pointed out that the argument that China can rely on Brazilian soybeans to replace US imports is faulty: Brazil, located in the southern hemisphere, harvests in early spring, while the United States harvests in late fall.

As seen in the chart below from Westpac Bank, China's trade surplus with the United States has ballooned over the past decade as exports to the USA grew substantially faster than imports heading in the other direction.

Noting that the North Korea and South Korea situation complicated it, Trump said the deal that the USA was going to have with South Korea was going to be "a very fair deal".

Delivering the keynote address at the Boao Forum for Asia here, President Xi noted that with a focus on Asia and a global perspective, the forum has witnessed active discussions and produced many valuable "Boao proposals" since its inception. But China's initial reaction was to fight back rather than flinch. Kudlow, who started his job a week ago after his predecessor, Gary Cohn, quit over the tariff plan, brushed aside the possibility of economic repercussions.

"But I tell you, our farmers are great patriots".

"Human society is facing a major choice to open or close, to go forward or backward", Xi told hundreds of investors gathered on the resort island of Hainan, in a speech that didn't mention Trump's name.

The astounding United States trade deficit with China stands at some $375 billion despite the Chinese market being the third-biggest for American products. They point to continuing restrictions to access to the country's market, as well as Beijing's industrial policies that they say favor state-owned firms at the expense of private and foreign-owned ones.

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