Here are the reasons for Trump’s economic war with China

(THIS ARTICLE IS COURTESY OF THE GUARDIAN NEWS)

 

Here are the reasons for Trump’s economic war with China

On Friday the US president ‘hereby ordered’ companies to halt business with China, among other attacks – how did we get here?

Donald Trump and Xi Jinping in Osaka, Japan, on 29 June.
 Donald Trump and Xi Jinping in Osaka, Japan, on 29 June. Photograph: Kevin Lamarque/Reuters

Even by Donald Trump’s standards his Twitter rant attacking China on Friday was extraordinary. In a series of outbursts Trump “hereby ordered” US companies to stop doing business with China, accused the country of killing 100,000 Americans a year with imported fentanyl and stealing hundred of billions in intellectual property.

The attack marked a new low in Sino-US relations and looks certain to escalate a trade war already worrying investors, manufacturers and economists who are concerned that the dispute between the two economic superpowers could trigger a recession.

Not so long ago Trump called China’s president, Xi Jinping, “a good friend”. Now he is an “enemy”. How did we get here?

China, China, China

On the campaign trail Trump railed against China accusing it of pulling off “one of the greatest thefts in the history of the world” and “raping” the US economy.

Trump repeated the word China so often it spawned a viral video of him saying it over and over again. The attacks were a hit with voters and helped get him elected. He has continued lambasting China – to cheers – at rallies ever since.

Pinterest

His main beef? The trade deficit.

Trade deficit

The US imported a record $539.5 bn in goods from China in 2018 and sold the Chinese $120.3 bn in return. The difference between those two numbers – $419.2 bn – is the trade deficit.

That deficit has been growing for years as manufacturing has shifted to low-cost China and, according to Trump, it explains the hollowing out of US manufacturing.

For Trump, and especially for his adviser Peter Navarro, who once described China as “the planet’s most efficient assassin”, trade deficits represent an existential threat to US jobs and national security. China makes up the largest part of the US trade deficit but those fears are also behind his disputes with the EU, Canada and Mexico.

His detractors argue these deficit worries are hyperbole and a result of the US’s stronger economy, which allows consumers to buy goods at cheaper prices.

The truth is probably somewhere in between.

While it’s true that unemployment is at record lows and consumers continue to prop up the economy, manufacturing jobs have been lost (automation is also to blame for this) and with them wage growth (although the hollowing out of unions plays a part here).

But it is not just deficits that concerns Trump.

Thieves

China has a deserved reputation for intellectual property theft. On Friday, Trump estimated China robs the US of “hundreds of billions” a year in ideas.

In March, a CNBC poll found one in five US corporations had intellectual property stolen from them within the last year by China.

According to the Commission on the Theft of American Intellectual Property, the theft costs $600bn a year.

Beijing bucks

Like Tesla, Nio, a Chinese electric vehicle (EV) company, is suffering as subsidies for EVs are phased out. Unlike Tesla, Nio has Xi. China is pumping $1.5 bn into the company to keep it on the road, the latest in a series of handouts that the Trump administration believes are unfair.

Cheap steel and aluminium, subsidized by the Chinese government, are the origins of this trade dispute. According to the White House, last year alone China dumped and unfairly subsidized goods including steel wheels, tool chests and cabinets and rubber bands on to the US market.

To be fair the US too is more than willing to bail out its industries (see: the banks or the automakers) at the taxpayers’ expense. But at this point “fair” is not up for discussion.

Currency manipulator

Earlier this month the US officially accused China of manipulating its currency “to gain unfair competitive advantage in international trade”.

It was the first time since 1994 that such a complaint has been made official and comes as the dollar has strengthened against world currencies. The dispute adds another layer of tension to a complex situation.

China disputed the charge accusing the US of “deliberately destroying international order” with “unilateralism and protectionism”.

The International Monetary Fund (IMF) appears to be on China’s side, arguing the devaluation of the yuan is largely in line with worsening economic conditions in China.

What happens next?

The US has now slapped billions of dollars on tariffs on Chinese goods. China retaliated, again, on Friday with more levies on US goods. China’s economic growth has slowed to levels unseen since 1992; US economic forecasts have also been cut.

American farmers were the first to feel the result, as China has canceled orders, and manufacturers are increasingly gloomy. So far US consumers have not felt the pinch but JP Morgan estimates the average US household will end up paying $1,000 a year for goods if the latest set of tariffs go through.

The unanswerable question is whether any of this will sway Trump. If his supporters continue to see a trade war with China – and the pain it will cause – as the necessary price to Make America Great Again, then the answer is probably no.

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Iraq: Don’t ‘Politicize’ Electricity, Iraq Minister Urges as Summer Nears

(THIS ARTICLE IS COURTESY OF THE SAUDI NEWS AGENCY ASHARQ AL-AWSAT)

 

Don’t ‘Politicize’ Electricity, Iraq Minister Urges as Summer Nears

Wednesday, 15 May, 2019 – 10:30
Iraq’s Minister of Electricity Luay al-Khatteeb. (Getty Images)
Asharq Al-Awsat
With temperatures rising on both the weather and security fronts across the region, Iraq’s freshman electricity minister is warning that politicizing his country’s power sector could have ripple effects around the world.

“Electricity is a national security issue,” Luay al-Khateeb told AFP in a wide-ranging interview at the ministry’s headquarters in Baghdad.

“In the end, any political, economic or security crisis in Iraq will affect the whole region — and the global economy will be open to threat.”

“We’re urging for this file not to be politicized.”

Khateeb, a 51-year-old energy expert, was appointed minister in October with a mandate to revamp Iraq’s grid, which was already ailing before it was further crippled by the ISIS group.

But he faces a pair of formidable political challenges to a typically dry, technical portfolio: the threat of renewed protests and escalating US pressure on energy-supplier Iran.

Demonstrations erupted in 2018 across Iraq against poor services, including the measly few hours of state-provided electricity per day.

This summer will be a de facto referendum on the government´s progress.

Khateeb, optimistic, said his ministry had revived out-of-service stations, fixed transmission lines, and brought temporary generators to battered areas including Mosul that ISIS held in the north.

“On October 25, the week I took office, electricity generation sat at between 9.5 to 10 GW. It is now at 15 GW,” Khateeb said.

Most Iraqi provinces, he added, “will receive no less than 20 hours of electricity per day. This, to be honest, is a level of production the country hasn’t seen in years.”

In the medium term, the ministry is developing solar power, gas-capturing capabilities, and energy deals with neighbors.

It signed contracts worth 700 million euro ($785 million) with Germany’s Siemens last month, amid expectations of similar deals with American rival General Electric.

Around a third of Iraq’s electricity relies on Iran, through 28 million cubic meters (990 cubic feet) of gas piped in to feed stations or the direct import of up to 1,300 megawatts of Iranian-produced electricity.

When Washington reimposed sanctions on Iran last year, it granted Iraq temporary exemptions until late June.

Khateeb declined to say what would happen if the waiver was not again extended.

“I’m not in the business of making predictions, but what I ask for from world powers is a little reasonableness so we can live in peace on this planet,” he told AFP.

Tensions have ramped up between Washington and Tehran, with Baghdad often caught in the middle.

Iraqi government sources say the US is pressuring Baghdad to partner with American companies including General Electric, ExxonMobil and Honeywell as it weans off Iranian energy.

Khateeb acknowledged foreign embassies were pushing for their interests in Iraq’s power sector, but said Baghdad would try to steer clear of the politics.

“The truth is we don’t want to be a scapegoat in conflicts that will negatively affect regional security, and in turn the global economy,” he said.

Besides the ticking clocks of the Iraqi street and geopolitical tensions, Khateeb admitted pressure from within the government itself.

He said he had “inherited a bureaucracy” and was often asked for favors or employment opportunities.

Asked whether he, like Prime Minister Adel Abdul Mahdi, kept his resignation letter close at hand, Khateeb sounded determined.

“One needs to have a thick skin,” he said.

“Either I focus on the politicians, or I focus on the work.”

California Now Has a Bigger Economy Than the United Kingdom

(THIS ARTICLE IS COURTESY OF TIME NEWS)

 

By JONATHAN J. COOPER / AP

May 5, 2018

(SACRAMENTO) — California’s economy has surpassed that of the United Kingdom to become the world’s fifth largest, according to new federal data made public Friday.

California’s gross domestic product rose by $127 billion from 2016 to 2017, surpassing $2.7 trillion, the data said. Meanwhile, the UK’s economic output slightly shrunk over that time when measured in U.S. dollars, due in part to exchange rate fluctuations.

The data demonstrate the sheer immensity of California’s economy, home to nearly 40 million people, a thriving technology sector in Silicon Valley, the world’s entertainment capital in Hollywood and the nation’s salad bowl in the Central Valley agricultural heartland. It also reflects a substantial turnaround since the Great Recession.

“We have the entrepreneurial spirit in the state, and that attracts a lot of talent and money,” said Sung Won Sohn, an economics professor at California State University Channel Islands. “And that’s why, despite high taxes and cumbersome government regulations, more people are coming into the state to join the parade.”

All economic sectors except agriculture contributed to California’s higher GDP, said Irena Asmundson, chief economist at the California Department of Finance. Financial services and real estate led the pack at $26 billion in growth, followed by the information sector, which includes many technology companies, at $20 billion. Manufacturing was up $10 billion.

California last had the world’s fifth largest economy in 2002 but fell as low as 10th in 2012 following the Great Recession. Since then, the largest U.S. state has added 2 million jobs and grown its GDP by $700 billion.

California’s economic output is now surpassed only by the total GDP of the United States, China, Japan and Germany. The state has 12 percent of the U.S. population but contributed 16 percent of the country’s job growth between 2012 and 2017. Its share of the national economy also grew from 12.8 percent to 14.2 percent over that five-year period, according to state economists.

California’s strong economic performance relative to other industrialized economies is driven by worker productivity, said Lee Ohanian, an economics professor at University of California, Los Angeles and director of UCLA’s Ettinger Family Program in Macroeconomic Research. The United Kingdom has 25 million more people than California but now has a smaller GDP, he said.

California’s economic juggernaut is concentrated in coastal metropolises around San Francisco, San Jose, Los Angeles and San Diego.

“The non-coastal areas of CA have not generated nearly as much economic growth as the coastal areas,” Ohanian said in an email.

The state calculates California’s economic ranking as if it were a country by comparing state-level GDP from the Bureau of Economic Analysis at the U.S. Department of Commerce with global data from the International Monetary Fund.

 

China: President Jinping Says Stability Is Needed To Help Global Markets As China Beats Their War Drums

 

 

(THIS ARTICLE IS COURTESY OF THE SHANGHAI DAILY NEWS)

Stability needed next year for stronger global economy

FOR China and the world to witness stronger economic growth next year, one thing is needed: stability.

For an international market trapped in fluctuations during a year of surprising events, a new direction in 2017 is a must, something discussed at a recently ended annual economic policy meeting in Beijing.

“Seeking progress while maintaining stability” was the main theme of this year’s Central Economic Work Conference, according to a statement released by the conference on Friday. Economic priorities for 2017 were also be hammered out.

With a gross domestic product (GDP) accounting for over 15 percent of the global total, China’s growth at 6.7 percent in the third quarter, or between 6.5 percent and 7 percent annually, represents a natural and significant contribution to global economic stability.

That is true more than ever since the International Monetary Fund in October revised down global growth to 3.1 percent for 2016 and 3.4 percent for 2017.

Moreover, the spillover of China’s new economic policies will be strongly felt in the ongoing joint construction of the China-proposed Belt and Road Initiative, which will see development of countries along its route.

STABILITY WITH CONTINUED SUPPLY-SIDE STRUCTURAL REFORM

In combination with the growth trend in the second half of 2016, the important messages Chinese policymakers convey at the key annual economic conference will highlight a clear reform course for the world’s second largest economy.

Stability is a prerequisite for reforms, commented Margit Molnar, head of the China Desk of the Economics Department of the Organization for Economic Cooperation and Development.

Having dealt with such flashpoints like the asset bubble and local government debt, China will help prevent systematic risks, creating conditions for continuing the supply-side structural reform, he told Xinhua.

The economic work conference has maintained supply-side structural reform as necessary for stable growth, with a continued focus on upgrading the country’s economic structure.

Reforms which focus on expanding effective supply in a dynamic supply-demand equilibrium, will promote stability, said Zhao Yao, professor with the business school of Rutgers University in the United States.

LONG-TERM MOVES TO COOL DOWN REAL ESTATE

Homes are for living in rather than speculation, the conference stressed, proposing to use financial, land, taxation, investment and other instruments to establish a fundamental and long-term system to curb real estate bubbles and market volatilities.

Guo Shengxiang, dean of the Australian think tank Academy of APEC Creative Finance, described the idea as “forward-looking”.

“It will be a good news, to stabilize the market, improve people’s well-being and facilitate the development of the real economy,” he said.

The Hong Kong and Shanghai Banking Corp. (HKSB) believes measures to cool down real estate will not thwart China’s economic recovery.

Without a complete tightening of monetary policy, the impact of government regulations could be neutralized by infrastructure investment with financial support, it said.

PRUDENT AND NEUTRAL MONETARY POLICY AGAINST RISKS

The conference defines China’s monetary policies for 2017 as “prudent and neutral”, promising better adjustments to ensure stable liquidity.

Monetary policymaking should adapt to changes in the use of money supply tools, and further efforts are needed for smoother policy transmission, it said.

China will keep the yuan basically stable, while improving the flexibility of exchange rates.

“The stance shows the government is trying to find a subtle balance between stabilizing growth and controlling asset bubbles,” noted Hong Hao, chief China strategist at BOCOM International.

Earlier, a Standard Chartered Bank report predicted financial and monetary policy instruments available to the Chinese government would suffice to support China’s growth in the coming years.