- President Donald Trump has repeatedly raised the possibility of divorcing the U.S. and Chinese economies.
- But various data suggest that such a process may be challenging as the two economies have grown more connected over the years.
- The U.S. and China have been major trading partners for years, and they rely on each other’s supply chain for input into goods and services consumed within their borders.
SINGAPORE — As the rivalry between the U.S. and China intensifies, investors and analysts are increasingly worried that the two economies will grow more distant from each other — a development that would make it harder for companies to operate on the international stage.
There have been signs that the world’s two top economies have started to go their separate ways, some observers said.
In recent months, Washington began targeting several major Chinese technology companies — such as smartphone-maker Huawei and short-video sharing app TikTok’s owner ByteDance — making it more difficult for them to do business in the U.S.
Beijing is also expected to place foreign firms on a blacklist that it’s developing, known as the “unreliable entity list.”
However, various data sets suggest the process may be quite challenging — at least for now — as the two countries have grown more connected over the last decade.
A large part of the relationship between the U.S. and China is centered on trade, with the two countries having been each other’s major trading partner for years.
Those ties suffered somewhat following a tariff fight that erupted in 2018, but bilateral trade of goods and services still totaled a substantial $636.8 billion last year, according to data by the Bureau of Economic Analysis.
The trading relationship is an uneven one. In merchandize goods trade, the U.S. imports way more from China than it exports to the Asian country; but the reverse is seen in services trade, in which China buys more from the U.S. than the amount it sells, BEA data showed.
Despite touting separation of the two countries, or what some have referred to as “decoupling,” Trump has sought to push China to purchase more U.S. agricultural products to appease American farmers who are seen as a crucial voting bloc for him in the upcoming presidential election in November.
Both countries also tried to address their large goods trade imbalance by having China to agree to import more from the U.S. in the so-called phase one trade deal signed earlier this year.
But experts said trade between the two countries will likely deteriorate further this year as relations worsen and the coronavirus pandemic hit global economic activity.
Supply chain linkages
Beyond direct trade, the U.S. and China have also become “increasingly interdependent through rising supply-chain linkages over the past decade,” Fitch Ratings said in a report last month.
Supply chains are a complex network of companies that work together to provide raw materials, intermediate parts or expertise in order to produce a final product or service that can be consumed either domestically or globally.
It’s hard to gather accurate data that breaks down specific supply chain contributions by each company. However, the OECD — or the Organisation for Economic Co-operation and Development — launched a database in 2013 that provides some insight into how global supply chains work.
Latest available estimates by the OECD showed that in 2015, foreign input accounted for 12.2% — or around $2.2 trillion — of total goods and services consumed in the U.S. China was the largest contributing country of that foreign input, the data showed.
Some manufacturers within the U.S. were especially reliant on China for intermediate input or final products, said Fitch, citing the OECD data. Those include American producers of textiles, electronics, basic metals and machinery, the agency said.
In China, foreign suppliers made up around 14.2%, or $1.4 trillion, of total goods and services consumed within its borders in 2015, according to OECD data. The U.S. was also the largest single contributing country to that foreign input, the estimates showed.
In contrast with U.S. reliance on Chinese input in the manufacturing sector, China is “much more” dependent on American contribution in services, said Fitch.
While trade and supply chain inter-dependency may be difficult to unravel, investment flows between the U.S. and China have dropped as bilateral tensions escalate.
Over the last three years, the total value of foreign direct investment and venture capital deals between the countries have been falling, according to data by Rhodium Group.
A “notable trend is the drop in Chinese acquisitions of US technology assets,” the company said in its latest report this month. Meanwhile, U.S. investments in China have been relatively “more resilient,” it added.
Many U.S. businesses operating in China said they’re not yet looking to move out, noted Fitch.
The ratings agency cited a survey conducted last year by the American Chamber of Commerce in China, in which 83% of respondents said they’re not considering relocating manufacturing or sourcing outside China. That proportion of companies intending to remain in China has risen compared to past surveys, from 80% in 2018 and 77% in 2017, said Fitch.
Source: CNBC “5 charts show how much the U.S. and Chinese economies depend on each other”
Note: This is CNBC’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
By David Shepardson
SEPTEMBER 26, 202010:35 AMUPDATED 44 MINUTES AGO
WASHINGTON (Reuters) – About 3,500 U.S. companies, including Tesla Inc TSLA.O, Ford Motor Co F.N, Target Corp TGT.N, Walgreen Co WBA.O and Home Depot HD.N have sued the Trump administration in the last two weeks over the imposition of tariffs on more than $300 billion (£235.35 billion) in Chinese-made goods.
The suits, filed in the U.S. Court of International Trade, named U.S. Trade Representative Robert Lighthizer and the Customs and Border Protection agency and challenge what they call the unlawful escalation of the U.S. trade war with China through the imposition of a third and fourth round of tariffs.
The legal challenges from a wide variety of companies argue the Trump administration failed to impose tariffs within a required 12-month period and did not comply with administrative procedures.
The companies challenge the administration’s “unbounded and unlimited trade war impacting billions of dollars in goods imported from the People’s Republic of China by importers in the United States,” according to a suit filed by auto parts manufacturer Dana Corp DAN.N.
The suits challenge tariffs in two separate groups known as List 3 and List 4A.” List 3 includes 25% tariffs on about $200 billion in imports, while List 4A included 7.5% tariffs on $120 billion in goods.
One suit argues the administration cannot expand tariffs to other Chinese imports “for reasons untethered to the unfair intellectual property policies and practices it originally investigated.”
Companies filing suit include heavy truck manufacturer Volvo Group North America VOLVb.ST, U.S. auto parts retailer Pep Boys, clothing company Ralph Lauren, Sysco Corp SYY.N, guitar manufacturer Gibson Brands, Lenovo’s 0992.HK U.S. unit, Dole Packaged Foods, a unit of Itochu Corp 8001.T and golf equipment manufacturer Callaway Golf Co.
Home Depot’s suit noted it faces tariffs on bamboo flooring, cordless drills and many other Chinese-made products. Walgreen, a unit of the Walgreen Boots Alliance, said it is paying higher tariffs on products like “seasonal novelties; party, first aid, and office supplies; and household essentials.”
Lighthizer’s office did not immediately respond to requests for comment.
On Sept. 15, the World Trade Organization found the United States breached global trading rules by imposing multibillion-dollar tariffs in Trump’s trade war with China.
The Trump administration says tariffs on Chinese goods were justified because China was stealing intellectual property and forcing U.S. companies to transfer technology for access to China’s markets.
Reporting by David Shepardson; Editing by Tom Brown
Source: Reuters “Some 3,500 U.S. companies sue over Trump-imposed Chinese tariffs”
Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
Zak Doffman, Contributor
Sep 20, 2020,05:49am EDT
.Huawei is about to shift the 600 million users on its smartphone ecosystem from Android to its own HarmonyOS/HMS—at least that’s what seemed to be the key takeaway from HDC, the company’s developer conference a week ago. Well—maybe not. The real takeaway from HDC is much more interesting and will be a much more serious threat to Android than just shifting Huawei users. If it works, of course.
The reason Huawei is venturing an alternative to Android is the U.S. blacklist pulling Google software from its devices. That same blacklist has now removed chipsets and displays. There’s not much point in a new OS if smartphones are in short supply. The biggest threat to Android is not Huawei users shifting OS, it’s a potential market shake-up that impacts many more manufacturers than that.
Huawei has painted this shift from Android as an industry game-changer, a strike against Google and arch-rival Samsung, fuelling the company’s ambition to “fight” Android head-on “and take the lead.” Huawei overtook Samsung for global smartphone shipments earlier this year, albeit temporarily. The new U.S. action ensures that Samsung, as Android’s leading light, will recapture the market lead. Huawei’s ambition had been to topple Samsung’s crown. Now it needs to adopt an entirely different strategy to attempt the same.
At HDC, these game-changing supply chain issues were played down. Huawei’s consumer boss, Richard Yu, mentioned “restrictions and software shortages” in among an upbeat summary of “booming” sales, number one or two—globally and in China—in wearables, watches and notebooks. Number three for tablets. And, above all, number one—both globally and in China—for smartphones. For now, at least.
The U.S. first blacklisted Huawei in May last year, with the loss of Google being the headline. That tanked export sales for new Huawei phones, but its domestic market grew and grew. A year on, in May this year, the U.S. prohibited Huawei from using American tech to design or fabricate the custom chips that power its flagships. Plan B was to turn to standard offerings. Painful but not existential. Then, in August, Washington played its Trump card. Suddenly those third-party chips would also be restricted. There’s no obvious Plan C.
So let’s return to Yu’s bullish presentation. Yes, “our business has been affected,” he said, but “we can see our business is still growing fast.” Surely this means the company has a clever plan to replace those smartphone chipsets? That would mean the reported 75% decline in smartphone shipments next year, down to some 50 million units, must be very wrong. So, is there a secret Plan C after all?
Actually, there probably isn’t. Even if China pushed its domestic suppliers to breach U.S. sanctions, they could not produce the sophistication and volume of chipsets required. If there’s a secret, so to speak, it’s that Huawei seems to be contemplating a change in the relationship it now enjoys with those 600 million smartphone users around the world. One that would bypass U.S. sanctions.
Yu’s punchlines were all HMS-related. This is Huawei’s answer to Google’s Mobile Services (GMS), everything from the Play Store to Google Pay, as well as stock apps for maps, mail and search. Alongside HarmonyOS—a cross-platform operating system, HiLink—the networking ecosystem to connect Huawei devices to partner offerings, this is the new ecosystem intended to replace Android.
Huawei has been talking up its ecosystem for more than a year. A seamless, AI-driven linkage between smart devices. At the heart of this strategy is “1+8+n,” where “1” a user’s smartphone, “8” is the user’s smart devices—PC, tablet, wearables, and “n” is the myriad other IoT devices that link into this ecosystem, controlled by that central Huawei hardware.
The latest expansion of the U.S. blacklist has hit Huawei’s strategy with a fatal flaw. Tricky to deploy a strategy with a smartphone at its heart if you can’t produce the smartphone. But what if the smartphone isn’t from Huawei, it’s powered by Huawei? An open-source operating system like Android’s AOSP, available to other manufacturers? Through this lens, the integration between HarmonyOS (out of the box IoT ready) and HMS (490 million active users, 261 billion app downloads) becomes more than a stick-on Google replacement.
“The growth [of HMS] is really fast,” Yu told HDC. “The development has exceeded our expectations.” HMS Core 5.0 is the latest iteration. Faster networking than Android and with lower latency, more API’s than Google’s GMS. If you want to build an ecosystem to compete with the world leader then this is important stuff. But how do you get partners to play along—Android isn’t broken, it’s a global powerhouse. Huawei’s experience in post-blacklist export sales tells you all you need to know about Android’s lock on the market.
Huawei’s answer is to play the China card. “Huawei would like to enjoy joint success with global partners and developers,” Yu explained. “We are dedicated to introducing Chinese developers to global consumers. We are hoping to see more TikToks in the future—so we can take them to the overseas market… At the same time, Huawei has the ambition to help overseas developers serve Chinese consumers.”
The China card. If you buy into the splinternet, the tech division that is being driven between east and west, then the macro opportunity for Huawei has always been to lead a new and united eastern alternative to the U.S. dominance of the mobile ecosystem. As I said last year, not long after the blacklist, if Huawei were to pass a point of no return on Google, then its long-game alternative would be to place itself at the beachhead for this new momentum, one supported by China’s own emerging technology strategy. And now here we are.
Looking at the potential for this balkanisation, competing operating systems and ecosystems, Yu told his audience that “we would like to be the bridge in-between.” The SDK for HarmonyOS 2.0, the smartphone-ready flavour is due by year-end, Yu said. The consumer boss has promised this before. Just after the blacklist, he said HarmonyOS (HongMeng as was) might be available before the end of 2019. That became 2020. Now it has become 2021. But the stakes have changed. This isn’t about posturing anymore, this is about survival.
Wang Chenglu—Huawei’s software boss, told HDC that the company has learned lessons a year into its own OS. “Developing a good ecosystem is far harder than developing good technologies… We don’t have along history of software development in China.”
Beyond consumer adoption, weaning millions off Google, the challenge for Huawei is to get its domestic rivals to play ball. No mean feat given there’s no Google-shaped burning platform for them to jump from to maintain their export sales. But China will push and cajole. This could fast become a national strategy. “I hope developers and partners can unite with us in this historic moment,” Wang said, “in this way a Chinese ecosystem can be long-lasting and thriving… Today we are taking the first step.”
Huawei’s smartphone-centric ecosystem was born out of its premium devices that competed head-to-head with Samsung and Apple. The thought that this ecosystem might now be launched onto a market absent those flagships is a twist that was never envisaged until last month. And Huawei users will not be expecting that as a potential outcome from next year—even now, Chinese consumers are snapping up Huawei devices, fearing supplies will run out early next year.
Most HDC write-ups have focused on the news that, finally, Huawei has confirmed that HarmonyOS is getting prepped for smartphones and will be a replacement for Android. “Maybe starting from next year we will see smartphones with HarmonyOS,” Yu told the developer conference. The question as to who will make those smartphones, though, might be much more important.
If—and it’s a huge if—Huawei can coral Chinese (and maybe even non-Chinese?) smartphone makers to jump from Android to its own operating system and app store, it will be a massive achievement. It will also be a serious threat to Google’s lock on the Android market and to market-leader Samsung. Again, though, let’s not be too hasty with any predictions. We haven’t even started a debate yet as to whether the U.S. would go so far as to sanction manufacturers who opt for Huawei’s OS.
Source: Forbes “Huawei Launches ‘Historic’ New Strike At Android To Beat Google And Samsung”
Note: This is Forbes’ article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
By Reuters Staff
SEPTEMBER 19, 20207:21 PMUPDATED 14 HOURS AGO
BEIJING (Reuters) – China’s economy remains resilient and there are ample policy tools at Beijing’s disposal despite rising external risks, President Xi Jinping said in remarks published on Saturday.
The world’s second-largest economy has steadily recovered from a virus-induced slump, but analysts say policymakers face a tough job to maintain stable expansion over the next several years to turn China into a high-income nation.
“The basic characteristics of China’s economy with sufficient potential, great resilience, strong vitality, large space for manoeuvre and many policy instruments have not changed,” Xinhua news agency quoted Xi as saying.
China has strong manufacturing capacity, very large domestic markets and huge investment potentials, Xi said.
Xi reaffirmed a “dual circulation” strategy that would help steer the economy towards greater self-reliance, as U.S. hostility and a global pandemic increase external risks.
China still enjoyed “strategic opportunities” in its development, although the coronavirus pandemic has exacerbated global challenges as globalisation slows and unilateralism and protectionism are rising, Xi was quoted as saying at a meeting on the country’s 14th five-year plan (2021-2025).
“We must seek our development in a more unstable and uncertain world,” he said.
Xi urged calmness amid rising difficulties and challenges.
“The great rejuvenation of the Chinese nation can never be achieved easily with the beating of gongs and drums,” he said.
Reporting by Kevin Yao; Editing by Alex Richardson
Ssource: Reuters “China’s economy remains resilient despite external risks, says Xi”
Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
Trump is making false claims about his record in struggling states like Ohio and Michigan. The jobs haven’t come back. They’ve been offshored to China.
John Cavanagh, Opinion contributor
As he courts Midwestern voters, President Donald Trump is returning to hard-hit manufacturing regions where he made big, bold promises in his last campaign. “If I’m elected…. you won’t lose one plant, I promise you that,” he told Michigan voters at a rally in October 2016. In fact, his big stick approach to global trade negotiations would bring jobs back home. Or so he claimed.
Four years later, it’s clear that Trump’s trade policies have failed U.S. workers. Instead of more good jobs, his ever-escalating trade wars have led to higher costs, lost markets, and more plant closures. Economic Policy Institute research shows that nearly 1,800 U.S. factories disappeared between 2016 and 2018.
In manufacturing-heavy Ohio, Trump’s tit-for-tat tariff battle with China was a major factor in the drop in annual job growth from 36,200 in 2016 to 3,700 in 2019, according to a new report I co-authored. Average weekly earnings for Ohio manufacturing workers also declined during this period.
In Michigan, Fiat Chrysler, General Motors, and Ford have all closed plants since Trump’s brash campaign trail commitments. Auto companies as a whole reduced their investment in the state by 29% over the three full years of Trump’s presidency, compared with the previous three years under Obama.
Trump tariff battle with China hurts
Where were U.S. manufacturing companies investing? China. Trump’s war of words with Beijing has done nothing to stop American companies from pouring resources into this fast-growing market.
In 2019, U.S. firms invested $14 billion in China — more than in 2016, the year Trump was elected. Tesla and General Motors led the pack, with massive investments in electric vehicle production. These two companies’ decisions to expand in China were motivated in part by Beijing’s consumer subsidies for pollution-reducing technologies.
But Trump also bears personal responsibility for encouraging offshoring because of the corporate tax cuts he pushed through Congress in 2017. U.S.-based companies no longer owe Uncle Sam anything on offshore profits up to a certain threshold. Above that level, they owe a federal tax rate that’s just half of what they’d pay for domestic profits.
As a result, corporations can save on their IRS bills by shipping jobs overseas. Big companies like General Motors took their tax break and then shipped thousands of jobs out of Ohio, Michigan, and other states.
Trump’s economic debacle:Biden’s central message must be his plan for American recovery
What’s Trump saying now, as he once again stumps in these struggling industrial powerhouses?
Don’t expect any apologies for his broken promises. Instead, you’ll hear false claims about all the car plants he’s supposedly created in these states. On Sept. 10 in Freeland, Michigan, he went so far as to claim that he’d “brought back our manufacturing jobs” and added: “If Biden wins, China wins.”
Of course, these are lies. The jobs haven’t come back. But even as he doubles down on his failed trade war with China, Trump continues to reward the corporations that offshored jobs there.
More broken promises from Trump
For instance, the president is now lobbing grenades directly at Chinese firms like technology giant Huawei and the TikTok video app. Meanwhile, he’s proposing tax breaks for big U.S. companies that return jobs to the United States. Essentially, taxpayers would have to pay big corporations to try to buy their jobs back.
There’s a better way to address the hemorrhaging of U.S. manufacturing jobs.
We need a trade policy overhaul that lifts up wages and working conditions for workers everywhere — including in China. If corporations were to face strong penalties for violations of labor and human rights, they would be less eager to slash U.S. jobs to exploit workers elsewhere.
Don’t buy his tough act: Trump has been a great president for China. For America amid coronavirus, not so much.
That would be good news for workers in all countries. And in light of the pandemic, when the large-scale offshoring of production for personal protective equipment created critical shortages, keeping more production at home would be good news for the rest of us, too.
This new trade policy should be part of an overall economic plan that ensures large corporations are contributing their fair share to our national recovery. To get America back on its feet, we’ll need strategically targeted public investment in job creation, health and social services, new infrastructure, and the green industries of the future. Any trade rules that restrict such crisis responses must be abolished.
Trump’s brute force tactics with China have backfired. We need a fresh new alternative that will deliver a worker-centered recovery — and make us better prepared for future crises.
John Cavanagh is director of the Institute for Policy Studies and a co-author of “How Trade Policy Failed U.S. Workers — and How to Fix It,” published by IPS, Boston University’s Global Development Policy Center and the Groundwork Collaborative.
Source: USA Today “Trump trade wars have led to lost US jobs and factories. We need a worker-centered recovery.”
Note: This is USA Today’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
By Emma Farge, Philip Blenkinsop
SEPTEMBER 15, 202010:33 PMUPDATED 34 MINUTES AGO
GENEVA/BRUSSELS (Reuters) – The World Trade Organization found on Tuesday that the United States breached global trading rules by imposing multibillion-dollar tariffs in President Donald Trump’s trade war with China, a ruling that drew anger from Washington.
The Trump administration says its tariffs imposed two years ago on more than $200 billion in Chinese goods were justified because China was stealing intellectual property and forcing U.S. companies to transfer technology for access to China’s markets.
But the WTO’s three-member panel said the U.S. duties broke trading rules because they applied only to China and were above maximum rates agreed to by the United States. Washington had not then adequately explained why its measures were a justified exception, the panel concluded.
“This panel report confirms what the Trump administration has been saying for four years: the WTO is completely inadequate to stop China’s harmful technology practices,” U.S. Trade Representative Robert Lighthizer said in response.
China’s Commerce Ministry said Beijing supported the multilateral trading system and respected WTO rules and rulings, and hoped Washington would do the same.
The decision will have little immediate effect on the U.S. tariffs and is just the start of a legal process that could take years to play out, ultimately leading to the WTO approving retaliatory measures if it is upheld – moves that China has already taken on its own.
The United States is likely to appeal Tuesday’s ruling. That would put the case into a legal void, however, because Washington has already blocked the appointment of judges to the WTO’s appellate body, preventing it from convening the minimum number required to hear cases.
The WTO panel was aware it was stepping into hot water. It noted that it had looked only into the U.S. measures and not China’s retaliation, which Washington has not challenged at the WTO.
“The panel is very much aware of the wider context in which the WTO system currently operates, which is one reflecting a range of unprecedented global trade tensions,” the 66-page report concluded.
The panel recommended the United States bring its measures “into conformity with its obligations”, but also encouraged the two sides to work to resolve the overall dispute.
“Time is available for the parties to take stock as proceedings evolve and further consider opportunities for mutually agreed and satisfactory solutions,” it said.
During a two-year trade war with Beijing, Trump threatened tariffs on nearly all Chinese imports – more than $500 billion – before the two countries signed a “Phase 1” trade deal in January. Extra tariffs are still in place on some $370 billion worth of Chinese goods, and $62.16 billion in duties have been collected since July 2018, U.S. Customs data here show.
Trump has described the WTO as “horrible” and biased towards China, often threatening to quit.
However, during an ABC News town hall on Tuesday, Trump continued to back a trade deal signed with China in January, and suggested Beijing was now buying record amounts of U.S. corn, soybeans and beef because Chinese leaders knew he was “very, very unhappy” about their handling of the coronavirus pandemic.
As he left the White House for that event, Trump said he would “have to do something about the WTO because they’ve let China get away with murder.”
He said he needed to take a closer look at the ruling, but added: “I’m not a big fan of the WTO – that I can tell you right now. Maybe they did us a big favor.”
The decision could help fuel a Trump decision to leave the WTO or underpin U.S. arguments for reforming the 25-year-old trade body, said Margaret Cekuta, a former USTR official who helped write a crucial report on China’s intellectual property abuses that preceded Trump’s tariffs.
“It gives the administration ammo to say the WTO is out of date,” said Cekuta, now a principal with the Capitol Counsel lobbying firm, adding U.S. officials could argue that the WTO’s inability to rule on intellectual property rights left it ill-prepared to deal with the global economy.
Trump, critical of multilateral institutions, has already quit the U.N. cultural organisation UNESCO and plans to leave the World Health Organization.
Reporting by Emma Farge and Philip Blenkinsop; Writing by Philip Blenkinsop; Additional reporting by David Lawder, Andrea Shalal, Doina Chiacu and Steve Holland in Washington and Meg Shen in Beijing; Editing by Peter Graff and Peter Cooney
Source: Reuters “WTO finds Washington broke trade rules by putting tariffs on China; ruling angers U.S.”
Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
By Philip Blenkinsop, Robin Emmott
SEPTEMBER 14, 20204:39 PMUPDATED 8 HOURS AGO
BRUSSELS (Reuters) – European Union leaders told Chinese President Xi Jinping on Monday to open up markets, respect minorities and step back from a crackdown in Hong Kong, also asserting that Europe would no longer be taken advantage of in trade.
Anxious to show that the EU will not take sides in a global standoff between China and the United States, German Chancellor Angela Merkel joined the bloc’s chief executive and chairman to deliver a tough-talking message to Beijing.
“Europe is a player, not a playing field,” European Council President Charles Michel, who chaired the video summit, told reporters in reference to a growing sense in Europe that China has not met its promises to engage in fair and free trade.
With more than a billion euros a day in bilateral trade, the EU is China’s top trading partner, while China is second only to the United States as a market for EU goods and services.
China’s Xi was not part of the post-summit news conference and there was no joint statement, but the state-owned Xinhua News Agency reported that Xi rejected any interference in Chinese affairs, particularly on human rights.
“Chinese people will not accept ‘an instructor’ on human rights and oppose ‘double standards’, Xinhua reported Xi as saying during the video summit. “China is willing to strengthen exchanges with the European side based on the principle of mutual respect so that the two sides can both make progress.”
The European Union accuses China of breaking a host of global trade rules, from overproduction of steel to stealing Western intellectual property, which Beijing denies.
European attitudes have also hardened towards Beijing because of the novel coronavirus, which many scientists believe originated in China, and because of a new security law on Hong Kong that the West says curtails basic rights.
“We are really serious about having access to the Chinese market and tearing down the barriers,” European Commission President Ursula von der Leyen said at the news conference.
Merkel said she and her two EU colleagues had pressed Xi to be clear about whether it really wanted an investment agreement that is being negotiated between the two and which would force China to open up its markets.
“We put on pressure … to make progress on the investment agreement,” Merkel told reporters from Berlin.
“Overall, cooperation with China must be based on certain principles – reciprocity, fair competition. We are different social systems, but while we are committed to multilateralism, it must be rules-based,” she added.
The demand for a level playing field was justified today given China’s economic transformation in the past 15 years, Merkel said.
The EU also wants stronger commitments on climate change from China, the world’s top polluter.
The EU and China did sign a deal to protect each other’s exported food and drinks items from feta cheese to Pixian bean paste.
While modest, the new deal is a trade coup for Europe as U.S., Australian or New Zealand producers will no longer be able to use the protected names on their exports to China, although there is a transition period for certain cheeses.
Reporting by Philip Blenkinsop and Robin Emmott; Additional reporting by Paul Carrel, Michelle Adair and Thomas Escritt in Berlin, editing by Louise Heavens/Emelia Sithole-Matarise, Grant McCool and Jonathan Oatis
Source: Reuters “Tear down your barriers, EU says after summit with China’s Xi”
By Reuters Staff
SEPTEMBER 15, 202010:47 AMUPDATED 22 MINUTES AGO
BEIJING (Reuters) – China’s finance ministry said on Tuesday it will extend existing tariff exemptions for 16 products from the United States including lubricants, whey and fish meal by an additional year.
The products received exemptions from retaliatory tariffs imposed by China on U.S. goods as counter measures to U.S. Section 301 action in 2019. The extension will last through Sept. 16, 2021, the ministry said.
Source: Reuters “China extends tariff exemptions for 16 U.S. products”
Xi urges researchers to put their minds to solving a range of weaknesses undermining social and economic development
Answers must be found for issues from pollution to the country’s reliance on overseas supplies of imported crop seed, he says
Liu Zhen in Beijing
Published: 10:00pm, 13 Sep, 2020
Pollution is one of the practical problems holding back social and economic development in China, Xi Jinping says. Photo: Getty
Chinese President Xi Jinping has issued a rallying cry to the country’s scientific community, urging them to overcome weaknesses “strangling” China, especially its reliance on overseas technology.
Xi told a forum in Beijing on Friday that more than ever before China needed scientific solutions to its problems, state news agency Xinhua reported on Saturday.
“Amid fierce international competition, unilateralism and protectionism, we must work out our own way to upgrade, become more innovative and make more breakthroughs from scratch,” he said.
The call came a day after the United States further restricted use of American technology by Chinese companies, and expanded bans on Chinese science students studying in the US.
On Thursday, the US State Department announced it had revoked the visas of more than 1,000 Chinese nationals who were studying or doing research in the US, accusing them of having ties with Chinese military, a move the Chinese side described as “sheer political persecution and racism”.
Xi said China faced “deep and complex” changes in the domestic and international environment, which demanded faster advances in science.
He said that some of the main areas of research should be to overcome the agricultural sector’s reliance on imported seed; to resolve the need to import various critical components in core manufacturing technology; and to ease the country’s dependence on overseas oil supplies.
He also listed a number of “practical problems” holding back economic and social development that “China must tackle”.
These included a lack of advanced agricultural technology, pollution and poor distribution of water resources.
The country’s ageing population also needed improvements in pharmaceuticals and medical equipment, he said.
“For technologies where there can be imminent breakthroughs and solutions, you must quickly move forward; for strategic technologies that take time, you must deploy resources in advance,” Xi told the scientists.
China’s hi-tech industries capitalise on Covid-19 pandemic health care needs
While stressing the need for greater self-reliance, Xi also said China must be more open, inclusive and proactive in strengthening international scientific cooperation.
“The more blockades and suppression we face, the less we should isolate ourselves,” Xi said.
He said there was a particular need now to promote cooperation with researchers from other countries to contain the coronavirus, from developing vaccines to improving tests for the pathogen.
Xi said China would try to attract top professionals and create a “competitively attractive environment and conditions” for scientists from overseas to work in China.
“We will gradually allow international science and technology organisations to set up in China, allow foreign scientists to work in Chinese science and technology institutions, and make China a free arena for open global cooperation in science and technology,” Xi said.
In addition, the president called on Chinese scientists to be “patriotic and innovative”, invoking the examples of researchers who developed the country’s nuclear weapons, missiles and satellites from the 1950s to the 1970s.
“I hope you, our scientists … carry forward the spirit of [the patriotic scientists], shoulder your historical duty and integrate your own scientific pursuit into the great cause of building a modern socialist country,” Xi said.
Xi laid out a strategy of “concentrating resources” under the socialist state system to “push forward key technological breakthroughs”, such as establishing a group of national laboratories and restructuring existing ones to form a strategic force in science.
Xi promised more state investment in basic science and more support from the business and finance communities. He also pledged more official sweeteners, including bank financing and tax breaks, for institutions and companies doing basic scientific research.
Source: SCMP “Xi Jinping calls on science to solve the big problems choking China”
Note: This is SCMP’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
This reblogger’s note: US trade and tech war has made China realize that it shall make great efforts to develop science and technology in order to overcome its reliance on forigh technology so that China may not be in great difficulties when its imports of the vital goods are cut in a crisis. Xi’s speech shows US trade and tech war attacks have made China realize that. It is indeed a little late to realize that but there is still time to catch up.
Focus on improving oneself and maintaining opening up instead of protectionism or retaliation. That is the wise approach.
Due to globalization, China imports lots of instead of making itself lots of semiconductor chips. Perhaps, imports are better cost effective. Now, US restriction of chips supply may cause great troubles to China. For example, US sanctions to deprive Huawei the supply of chips it needs for its mobile phones and equipment may kill Huawei if Huawei does not have huge Chinese market.
The troubles are even greater for Chinese military as it uses the best chips in its weapons and equipment. Most of the chips Chinese military uses are civilian chips adapted for military use. Even those specialized for weapons and military equipment are mostly designed by the military but made by civilian foundries. Often, the foundries do not care what the chips it is contracted to make are used for. Therefore, China’s Semiconductor Manufacturing International Corp (SMIC). certainly may have made and been making and will make chips for Chinese military though it has no links to Chinese military according to Associated Press’ article “Chinese chipmaker denies military ties as US steps up feud” yesterday (https://news.yahoo.com/chinese-chipmaker-denies-military-ties-042525048.html).
However, this blogger believes that due to high requirements for the chips Chinese military needs and SMIC’s low technology, Chinese military has to source its chips abroad, perhaps from TSMC, Qualcomm, etc. Therefore, US restriction of chip supplies makes China really suffer.
If there is a real war instead of trade and tech war between China and the US, US restriction of chip supply may greatly weaken Chinese military. Fortunately, there is but a trade and tech war.
China has to learn a lesson from the trouble. It has to make great efforts to reduce its reliance on the supply of vital goods not only semiconductor chips so that it will not suffer when there is a real crisis.
As for retaliation with the restriction of supply of vital goods such as rare earth elements, this blogger believes it is not a good idea. On the contrary, China has to aggravate US reliance to be able to cause bigger trouble to the US when there is a real crisis.
Article by Chan Kai Yee.