Trump says he’s inclined to extend China trade deadline and meet Xi soon


Jeff Mason, David Lawder February 23, 2019

WASHINGTON (Reuters) – President Donald Trump said on Friday there was “a very good chance” the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping.

U.S. and Chinese negotiators had made progress and will extend this week’s round of negotiations by two days through Sunday, Trump told reporters at the White House as he met with his top negotiators and their counterpart, Chinese Vice Premier Liu He.

“I think that we both feel there’s a very good chance a deal will happen,” Trump said.

The Republican president said he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal.

Extending the deadline would put on hold Trump’s threatened tariff increase to 25 percent from 10 percent on $200 billion of Chinese imports into the United States. That would prevent a further escalation in a trade war that already has disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets.

Optimism that the two sides will find a way to end the trade war lifted stocks, especially technology shares. The S&P 500 stock index reached its highest closing level since Nov. 8. Oil prices rose to their highest since mid-November, with Brent crude reaching a high of $67.73 a barrel. [.N] [O/R]

CURRENCY AGREEMENT

Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but U.S. officials long have expressed concerns that China’s yuan is undervalued, giving China a trade advantage and partly offsetting U.S. tariffs.

Announcement of a pact aimed at limiting yuan depreciation was putting “the currency cart before the trade horse,” but would likely be positive for Asian emerging market currencies, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.

“How can you agree to avoid excessive Chinese yuan depreciation or volatility if you have not made an agreement on trade that could have huge FX implications?” Ruskin asked in a note to clients.

In a letter to Trump read aloud by an aide to Liu at the White House, Xi called on negotiators to work hard to strike a deal that benefits both country.

Trump said a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp.

The Justice Department has accused Huawei of conspiring to violate U.S. sanctions on Iran and of stealing robotic technology from T-Mobile US Inc.

Chinese peer ZTE was last year prevented from buying essential components from U.S. firms after pleading guilty to similar charges, crippling its operations.

MEMORANDUMS NO MORE

Trump appeared at odds with his top negotiator, U.S. Trade Representative Robert Lighthizer, on the preliminary terms that his team is outlining in memorandums of understanding for a deal with China. Trump said he did not like MOUs because they are short term, and he wanted a long-term deal.

“I don’t like MOUs because they don’t mean anything,” Trump said. “Either you are going to make a deal or you’re not.”

Lighthizer responded testily that MOUs were binding, but that he would never use the term again.

Reuters reported exclusively on Wednesday that the two sides were drafting the language for six MOUs covering the most difficult issues in the trade talks that would require structural economic change in China.

Negotiators have struggled this week to agree on specific language within those memorandums to address tough U.S. demands for structural changes in China’s economy, according to sources familiar with the talks. The six memorandums include cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade, including subsidies.

An industry source briefed on the talks said both sides have narrowed differences on intellectual property rights, market access and narrowing a nearly $400 billion U.S. trade deficit with China. But bigger differences remain on changes to China’s treatment of state-owned enterprises, subsidies, forced technology transfers and cyber theft of U.S. trade secrets.

Lighthizer pushed back when questioned on forced technology transfers, saying the two sides made “a lot of progress” on the issue, but did not elaborate.

The United States has said foreign firms in China are often coerced to transfer their technology to Chinese firms if they want to operate there. China denies this.

The U.S. Chamber of Commerce on Friday urged the U.S. government to ensure the deal was comprehensive and addressed core issues, rather than one based on more Chinese short-term purchases of goods.

China has pledged to increase purchases of agricultural produce, energy, semiconductors and industrial goods to reduce its trade surplus with the United States.

China committed to buying an additional 10 million tonnes of U.S. soybeans on Friday, U.S. Agriculture Secretary Sonny Perdue said on Twitter. China bought about 32 million tonnes of U.S. soybeans in 2017. The commitments are a “show of good faith by the Chinese” and “indications of more good news to come,” Perdue wrote.

China was the top buyer of U.S. soybeans before the trade war, but Beijing’s retaliatory tariffs on U.S. soybeans slashed business that had been worth $12 billion annually.

Additional reporting by Rajesh Kumar Singh, Makini Brice, Lisa Lambert and Tim Ahmann in Washington and Chris Prentice in New York, writing by Simon Webb and David Lawder; editing by Marguerita Choy and Tom Brown

Source: Reuters “Trump says he’s inclined to extend China trade deadline and meet Xi soon”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

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China has agreed to buy up to $1.2 trillion in U.S. goods: CNBC


February 23, 2019

WASHINGTON (Reuters) – China has agreed to buy up to $1.2 trillion in goods from the United States as part of the current negotiations to end the trade war between the countries, CNBC reported on Friday, citing sources familiar with the situation.

Trump and Chinese President Xi Jinping could meet in late March in Florida, CNBC also reported.

CNBC said though that the two sides remain far apart on a key issue for the United States: the forced transfer of intellectual property. Negotiators have been meeting in Washington this week, with President Donald Trump scheduled to talk with Chinese Vice Premier Liu He on Friday afternoon, in the hopes of coming closer to a trade deal before March 1, when U.S. tariffs on a variety of goods are set to rise to 25 percent from 10 percent.

Two members of the Chinese delegation, who did not give their names, told Reuters they did not know if talks would be extended beyond Friday. They are scheduled to leave for Beijing on Saturday, according to a member of staff at their hotel.

Reuters reported exclusively on Wednesday that the two sides are starting to sketch out an agreement on structural issues, drafting language for six memorandums of understanding on proposed Chinese reforms.

Reporting by Lisa Lambert and Timothy Ahmann in Washington; Editing by James Dalgleish and Chizu Nomiyama

Source: Reuters “China has agreed to buy up to $1.2 trillion in U.S. goods: CNBC”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China’s Major Belt and Road Project in Malaysia to Remain


Bloomberg says in its report “Malaysia Nears Deal With China to Revive $20 Billion Rail” on February 19 that Malaysia has been successful in renegotiating with China on reduction of the cost of the East Coast Rail Link (ECRL) project that Western media regarded as canceled.

Why is Malaysia so anxious to keep the project? That major Belt and Road project benefits Malaysia as it facilitates Malaysia’s railway link with China through Laos and Thailand. Such link was advocated by Malaysian Prime Minister Mahathir when he was prime minister more than a decade ago. With ECRL Malaysia’s port at its western coast will be as important a transport hub as Singapore for China’s exports to its west as it provides railway route for China to bypass the Malacca Strait.

I have pointed out in my post that China has three alternatives to bypass the Malacca Strait for its 21st maritime Silk Road (Belt and Road is the shortened expression of China’s Silk Road economic belt and 21st maritime Silk Road): The Kra Canal, the rail link to Myanmar’s sea port in Bengal Gulf and the rail link to Malaysia’s western coast.

China has built pipelines linking China’s southwest to Bengal Gulf through Myanmar and concluded agreements to build a Myanmar port at the gulf for the link. What Myanmar and China further need is but a railway linking the port with China’s southwest parallel to the pipelines. As a result the link to Malaysian’s eastern coast will but be an alternative to the Myanmar link. Therefore, Malaysia is now more anxious to have the link than China though it finds ECRL too expensive to afford.

The railway will facilitate the development of Malaysia’s underdeveloped areas. It will benefit Malaysia much more than China. That precisely proves the benefit of China’s Belt and Road initiative that provides much needed funds for developing countries in building the infrastructures indispensable for their economic development.

The initiative proves Chinese President Xi Jinping’s mastery of China’s traditional art for being an emperor, the top wisdom of China’s greatest statesmen in Chinese history.

The art is first of all a balancing art.

When China is under the pressure of Western powers led by the United States due to the mindset arisen from Thucydides trap, China shall have found the strength to balance Western powers.

First, China has succeeded in setting up a de factor alliance with Russia to balance US military power.

Second and more important, it has launched its Belt and Road initiative to help developing countries grow into powerful rising economies that balances the economic power of Western developed countries.

Poor United States, jealousy at the gains China will get from its win-win cooperation projects through the initiative does hurt but its trouble is much more greater in dealing with the rise of not only China but also the developing countries in Asia, Eastern Europe, Africa and even Latin America due to China’s Belt and Road initiative.

Comment by Chan Kai Yee on Bloomberg’s report, full text of which can be viewed at https://www.bloomberg.com/amp/news/articles/2019-02-19/malaysia-nears-deal-with-china-to-revive-scrapped-rail-project.


America’s greatest advantage against China is slowly eroding


A soldier jumps over a ring of fire during a tactical training mission in Heihe, northeast China’s Heilongjiang province. As China increases its training operations, experts warn they come closer to parity with the U.S. military. (AFP via Getty Images)

A senior DIA (US Defense Intelligence Agency) official, briefing reporters, acknowledged that China is dramatically closing the gap when it comes to technology, but noted “there is more than just technology involved; there’s experience, there’s experience, there is command structure, there is training, there is proficiency.”

“I think there will be significant growing pains, but they seem to have chosen a blueprint for how they want to move forward to be what they consider an advanced military,” the DIA official said.…

…(T)he consensus seems to be that the PLA will have reformed itself sometime in the next two decades into a force capable of joint operations.

Source: Defense News “America’s greatest advantage against China is slowly eroding”

Summary of the report by Chan Kai Yee, full text of which can be viewed at https://www.defensenews.com/pentagon/2019/02/15/americas-greatest-advantage-against-china-is-slowly-eroding/.


China’s Xi surprises Beijingers with casual pre-new year visit


February 1, 2019

BEIJING (Reuters) – Chinese President Xi Jinping dropped in on surprised diners at a small Beijing restaurant and chatted with deliverymen on Friday on an apparently unscripted visit ahead of next week’s Lunar New Year holiday.

Such relaxed interactions between senior politicians and the public are uncommon in a country where even leaders’ birthdays or family backgrounds are often closely held secrets.

Leaders generally use the time around the festival to make carefully choreographed, well pre-arranged inspection trips around the country where they flag important policy initiatives or areas of concern for the year ahead.

Xi last year visited villagers in a poor southwestern part of China, to press home his campaign against poverty.

On Friday, state television showed Xi walking into the restaurant in a southern district of Beijing known for its traditional alleyways and courtyards, asking how much the food was and how long the owners had been in the city.

As diners stood up to take pictures, Xi told them not to stop eating on his account.

“I’m just passing through,” he said.

As he chatted at a separate location with deliverymen, who speed around Beijing delivering packages on motor-bikes, passersby could be seen in the background walking right behind him, or in one case cycling by.

“Are you not able to go home for the Spring Festival?” he asked one of the deliverymen.

Still, Xi was almost certainly accompanied by his security detail throughout, even if they were not directly shown in the television footage.

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In another much more obviously scripted part of the day, he visited policemen and made dumplings with residents in a courtyard dwelling.

While Xi has cultivated a man-of-the-people image, and is genuinely popular with many Chinese for his war on corruption, he has only rarely had such relaxed interactions since assuming office six years ago.

In 2014, Xi shocked Beijing residents by visiting courtyard homes and chatting with passersby near a shopping street during one of the city’s notorious smoggy days, drawing praise from social media users for his unusual public diplomacy.

The week-long holiday, starting on the eve of the new year, on Monday, is the most important in the Chinese calendar, when millions of people travel home, many for the only time in the year.

Reporting by Ben Blanchard and Philip Wen; Editing by Robert Birsel

Source: Reuters “China’s Xi surprises Beijingers with casual pre-new year visit”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China: Life Springs from Sorrow, Calamity; Death from Ease, Pleasure


That is a famous quote from Gaozi II of Mencius in which Mencius says, “…if abroad there are not hostile states or other external calamities, a country will generally come to ruin. From the above we see how life springs from sorrow and calamity, and death from ease and pleasure.’

That has been proved by quite a few facts in Chinese history. A typical example was China’s Song Dynasty. Song court enjoyed ease and pleasure in spite of the threat of its powerful northern nomadic neighbor as it believed that it could avoid attack from the neighbor by annual contributions of silver and silk to its enemy. It was finally conquered by its neighbor with the emperor and his relatives, wife and concubines taken prisoners by its neighbor.

Mencius teaches country leaders to have the sense of crisis. Now, Chinese President Xi Jinping proves that he has the vision to see potential risks as soon as they emerged. Reuters’ report “Xi keeps China on high alert for ‘black swan’ events: Xinhua” on January 21, 2019 tells the story of Xi giving a speech at the opening session of a Communist Party meeting in Beijing of hundreds of provincial leaders, ministers and top generals on risk control.

The report says, “China must be on guard against ‘black swan’ risks while fending off ‘gray rhino’ events, President Xi Jinping said on Monday, adding that the economy faces deep and complicated changes, state news agency Xinhua reported.”

Reuters believes that Xi gave the warning due to China’s slowest growth rate last quarter in past 28 years.

Xi would not have been such a great leader enjoying such high respect if he had realized the risks and given his warning so late.

As far back as on September 26, 2018, CCTV’s report on his visit to China First Heavy Industries (CFHI) shows Xi speaking to staff and workers there on the screen, “A hundred-mile journey is half completed at ninety miles. In attaining our two century-goals, we are now closer to success than any other time, but are also encountering so many challenges and difficulties that we have never encountered at any other time.”

Through 4 decades of development, China has grown rich to enable it to enjoy ease and pleasure, but that may cause it to come to ruin. However, China now has wise and brave leaders who have clear sense of risks and crisis and the courage and wisdom to fight and win.

They convene the meeting of high officials to rally them and through them Chinese people in general to strive to avoid potential risks and overcome the difficulties.

Chinese people are a heroic people. With wise and brave leaders they can win under very difficult circumstances. That has been proved by Yu Qian;s defense of Chinese capital in Ming Dynasty when Chinese army was annihilated by the enemy, the Korean War where poorly equipped Chinese troops defeated an enemy with air and sea supremacy and most advanced weapons in the world, etc.

Therefore, deal or no deal, China will win the trade war with the US.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-china-economy-xi/xi-keeps-china-on-high-alert-for-black-swan-events-xinhua-idUSKCN1PF0XL.


U.S. eyes Taiwan risk as China’s military capabilities grow


FILE PHOTO: Chinese military vehicles carrying DF-21D anti-ship ballistic missiles, potentially capable of sinking a U.S. Nimitz-class aircraft carrier in a single strike, travel past Tiananmen Gate during a military parade to commemorate the 70th anniversary of the end of World War II in Beijing Thursday Sept. 3, 2015. REUTERS/Andy Wong/Pool/File Photo

Phil Stewart January 16, 2019

WASHINGTON (Reuters) – The United States is closely watching Chinese intentions toward Taiwan, concerned that Beijing’s growing military prowess may increase the risk it could one day consider bringing the self-ruled island under its control by force, a U.S. official said on Tuesday.

The senior U.S. defense intelligence official, who spoke to reporters on condition of anonymity, did not predict that China’s military, known as the People’s Liberation Army (PLA), would take such a step but said such a possibility was the top worry as China expands and modernizes its military capabilities.

“The biggest concern is that … they are getting to a point where the PLA leadership may actually tell Xi Jinping that they are confident in their capabilities,” the official said, referring to China’s president.

Pressed on whether the official was referring to Chinese confidence in its capabilities to be able to successfully win a battle with Taiwan, the official said, “Well, specifically that would be the most concerning to me.”

Taiwan is only one of a growing number of flashpoints in the U.S.-China relationship, including a trade war between the countries, U.S. sanctions on the Chinese military, and China’s increasingly muscular military posture in the South China Sea.

However, in meetings with Pentagon leaders, PLA officials have long described Taiwan as China’s most sensitive issue.

China has repeatedly sent military aircraft and ships to circle the island on drills in the past few years and worked to isolate the island internationally, whittling down its few remaining diplomatic allies.

It has also strongly objected to U.S. warship passages through the Taiwan Strait this year, and issued a terse warning about Taiwan after talks in Beijing on Tuesday with the U.S. Navy’s top officer, Admiral John Richardson.

‘WHATEVER IT TAKES’

In the talks, Chinese General Li Zuocheng, chief of China’s Central Military Commission Joint Staff Department, stressed that Taiwan was “China’s internal affairs” and that Beijing would allow “no external interference.”

“If someone tries to split Taiwan from China, the Chinese military will do whatever it takes to safeguard national reunification, national sovereignty and territorial integrity,” according to an English-language statement here by China’s defense ministry on the talks.

Washington has no formal ties with Taiwan but is bound by law to help it defend itself and is the island’s main source of arms. The Pentagon says Washington has sold Taiwan more than $15 billion in weaponry since 2010.

Xi has stepped up pressure on the democratic island since Tsai Ing-wen from the pro-independence Democratic Progressive Party became president in 2016.

On Jan. 2, Xi said in a speech that China reserved the right to use force to bring Taiwan under its control but would strive to achieve peaceful “reunification.”

Still, the U.S. defense intelligence official cautioned against over-reacting, noting Xi could believe he has plenty of time to achieve reunification with Taiwan.

The official also cautioned that China’s military still faced gaps in its capabilities.

“They could order them to go today, but I don’t think they’re particularly confident in that capability,” the official said.

Also on Tuesday, the Defense Intelligence Agency released a report describing Taiwan as the “primary driver” for China’s military modernization, which it said had made major advances in recent years.

U.S. defense officials have become particularly alarmed about China’s advances in super-fast “hypersonic” technology, which could allow it to field missiles that are far harder to detect.

“The result … is a PLA on the verge of fielding some of the most modern weapon systems in the world. In some areas, it already leads the world,” the report said here

Reporting by Phil Stewart; editing by Will Dunham and James Dalgleish

Source: Reuters “U.S. eyes Taiwan risk as China’s military capabilities grow”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.