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China may retaliate to US Huawei ban using rare earth metals

Rare earth metals are minerals which are very hard to extract and in which China is one of the world’s biggest supplier of, these metals are used in various products like mobile phone cameras and automobile catalytic converters.

The US is one of the world’s biggest consumers of rare earth metals coming from China. Media in China has now suggested that China may limit exports of rare earths to the US escalating the trade war even further, after the US banned Chinese telecommunications company Huawei.

80% of Chinese rare earth metal exports are to the US and the limitation of these metals will spark price increases for a number of tech products made by US companies. President Donald Trump avoided putting rare earth metals on the tariff list for this very reason.

So far consumer and producers in both countries are bearing the brunt of the US-China Trade war, which is also propelling a negative outlook on global and tech markets. The trade war is escalating and both sides are claiming to have the upper hand, with no end in sight while holding the world hostage.

 By Mokgethi Mtezuka

Trump visits Japan, North Korea resumes missile testing

US President Donald Trump travelled to Japan to meet with Prime Minister Shino Abe for a four day visit which started on Saturday. On the agenda will be the new US-Japan trade deal, the new raising in tension with North Korea.

The US-North Korea deal seems to be back in the improbable category even though Trump has claimed that there is still a chance for a deal. North Korea on the other hand has returned to testing its missile which is a further indication of a no deal situation.

Japan is the US’s closest Asian partner with military, technology and financial ties link the two countries since the Second World War, North Korea’s missile test is very worrisome for Japan due its proximity, while Trump and South Korea have done played the recent aggressions by not calling out Kim Jong-un.

Trump’s visit to Japan also serves as good getaway from Washington as there is a push by certain democrats to have him impeached according to CNN.com. With the trade war with China escalating and no deal with North Korea, Japan could be a good place for Trump to score and easy win in Asia.

By Mokgethi Mtezuka

US and China gain mutual understanding as they edge closer to trade deal

The US and China are getting closer to reaching an agreement and ending the trade war. After 3 different meeting with delegations from both side, the two biggest economies in the world look to making some headway.

Both countries have achieved a mutual understanding and are hopeful the agreement they come up with will benefit the whole world, not just the US and China. Balancing in the trade deficit is the main goal of the US and protection on intellectual property is the secondary and the reason for trade tariffs, to begin with.

If the two countries can come to a deal it will bring much relief to the US and Chinese business hurt by the trade war and could bring about a realignment of global trade.

The Chinese economy which is the driving force in the global economy has slowed due to trade tension with the US, this has, in turn, has had an indirect effect on other countries who deal with both markets. Many observers are looking for this trade war to end and for stocks to return to normal.

 

Source: cnbc.com

China- US Trade War could result in both countries being less reliant on each other

As the US-China trade continues, questions about the end goals of the trade war, what are the two countries are to benefit? The trade tension is creating a rift between the countries, as both are trying to diminish the reliance on each other.

The USA under President Donald Trump’s administration now considers China as its biggest threat. The Trump administration believes that China is involved in unfair trade practices.  The US believes that China wants take advantage of US foreign policy and the rules and regulations of the World Trade Organisation (WTO).

For China its main worry is its dependency on technology and the finished products it consumes that come from the USA. China’s worry has resulted in an initiative, Made in China 2025. Through this initiative china plans on becoming a leader in high-tech production and design lowering its need for foreign tech makers.

The United States and China need each other, the trade war is resulting in losses for both parties. Essentially the only thing the trade war is doing is dividing the world forcing lessor economic powers to choose between the America and China.

The divide has forced other countries to really look at which of the two superpowers is in their best interest to align with. As many multinational companies manufacture there products in China, the US tariffs coupled with rising labour costs in China, have driven many of these organization to consider moving production to countries with cheaper labour or back to their home country.

Source: bloomberg.com

 

[OPINION] Trade wars effects on emerging economies

The ongoing US-China trade war has far reaching global ramifications; many emerging economies now are starting to feel the pinch as these two superpowers lock heads. This has now created a lot of uncertainty in the global community.  The uncertainty has led to less risk taking in investment in emerging markets.

The 2018 global growth was predicted to be 3.7% now new forecast put it at 3.5%, these may be effects of the trade war. The lack of global growth may have detrimental effects on emerging economies such as South Africa which is facing a technical recession.

The trade war has also affected other emerging economy countries, Brazil has been impacted through global commodity prices.

It does not profit Brazil, when it substitutes US soybeans imported by China. Brazil also stands to lose in other markets such as the exporting of iron ores, grains and meats being affect in the long term as the trade war progress.

Other countries such as India are ripping benefits of the trade war. Tensions between US-China are leading to a decrease in Chinese import of US oil, which allows India to replace China and obtain lower price due to the lower demand for US oil.

China is suffering from losses of the trade war but neither US or China have any advantage as both countries are losing. China and the US are set to lose more as the tensions deepen. The US has already stated that more tariffs are coming for China while china is planning its retaliation.

Russia unlike China has a deeper conflict with the US as they are suffering from US and EU sanctions. The sanctions have a more direct impact on their economy and lowering the value of their currency.

By Mokgethi Mtezuka’

No progress on US-China talks, as new tariffs are introduced

The China – US trade war is bound to escalate as both governments failed to reach consensus in the two days of talks. China and the U.S met this week, with the analysts and both sides having low expectations. No further talks have been announced.
The talks, led by U.S. Treasury Undersecretary for International Affairs, David Malpass and Vice Commerce Minister Wang Shouwen, is the first significant interaction between the two countries since June.

Chinese officials also raised that there will be no further discussions until after November’s mid-term elections in the US. The absence of progress between the sides and the looming prospect of further sanctions adds uncertainty for business, alleges Bloomberg.

The White House released a statement saying that the countries “exchanged views on how to achieve fairness, balance, and reciprocity in the economic relationship, by addressing structural issues in China” identified by the U.S. in an investigation into Chinese IP practices. The two countries will have further talks, said China commerce ministry.

The talks concluded yesterday, just hours after Beijing and Washington rolled out their latest round of tit-for-tat tariffs.

Source: Bloomberg

US-China trade talks meeting

 

China and the United States are taking a step to ease trade war tensions. U.S. Treasury under Secretary David Malpass is set to meet Chinese counterpart Wang Shouwen in Washington this week, the first meeting between senior officials since June, when talks in Beijing between Commerce Secretary Wilbur Ross and Vice Premier Liu ended without a settlement.

Economists do not expect much from the meeting. The meeting is aimed at coming up with possible solutions for the tensions for the meeting of Chinese President Xi Jinping and U.S President Donald Trump.

This week’s discussions take place as the Trump administration imposes previously announced tariffs on a remaining $16 billion of $50 billion in Chinese goods. In another sign the U.S. isn’t about to relent, the U.S. Trade Representative (USTR) on Monday started a week-long session of planned hearing an additional $200 billion in tariffs proposed by President Donald Trump. More than 1,500 witnesses have submitted written testimony.

Source: Money Watch

China to send trade delegation to US to prevent trade war escalation

There might finally be a break in the US-China trade tension, as China is now looking to engage in talks. China is sending a trade delegation to Washington DC later this month, to see if they can find an impasse.

China and the US did have official talks in May when the US Treasury and Commerce department officials went to Beijing before the tariffs where announced. The US and China are the world’s two biggest economies with both being each other’s most important trade partners.

The Trade tariffs were initiated by the US, blaming unfair Chinese trade practices. US tariffs are costing China $34 billion on imports, with US President Donal Trump planning on introducing more tariffs this month. China is attempting to halt any more escalation, as they too have retaliated with their own tariffs on US goods.

The trade war was starting to cause damage to US farming, China’s economy and other developing and emerging markets that were indirectly affected. Talks between the US and China are much needed as the trade war has no positive end result for any country.

The goal for the US is changing how China does business and allows for fair and reciprocal trade, as well as the protection of US intellectual property.

Source: america.cgtn.com

Turkey doubles tariffs on some U.S. imports over economy ‘attacks’

Turkey has doubled their tariffs on some U.S. imports, such as passenger cars, alcohol and tobacco.

This comes after increased tension between the two North Atlantic Treaty Organisation (NATO) allies, which have sent the Turkish lira tumbling to record lows against the dollar.

U.S. President Donald Trump said last Friday that he had authorised higher tariffs on aluminium and steel imports from Turkey.

Turkish President Tayyip Erdogan signed a decree published in Turkey’s Official Gazette. The declaration included that the country has doubled the tariffs on passenger cars to 120%, on alcoholic drinks to 140%, and on leaf tobacco to 60%.

According to Reuters, tariffs were also doubled on goods such as cosmetics, rice and coal.

Vice President FuatOktay wrote on Twitter: “The import duties were increased on some products, under the principle of reciprocity, in response to the U.S. administration’s deliberate attacks on our economy.”

Markets are concerned by Erdogan’s influence over the economy and his resistance to interest rate increases to tackle double-digit inflation.

The Turkish lira rebounded some 8% on Tuesday, helped by news of a planned conference call on Thursday in which the finance minister will seek to reassure international investors.

On Wednesday, the lira traded at 6.4125 to the U.S. dollar, weakening from a close of 6.3577 a day earlier.

Erdogan said Turkey is the target of an economic warand has made repeated calls for Turks to sell their dollars and euros to shore up the currency.

Source: Reuters

China’s cyber-security may be used as weapon as Trade War tensions escalate

The quickly soaring relations between China and the United States has resulted in both countries looking for as much leverage as they can find. For the USA it’s relying on its own economic strength to protect against any serve suffering, and for China it seems as its internet firewall may be a new weapon in the escalating trade battles.

According to Bloomberg.com, the Chinese online population is measured at 731 million people, which could be very lucrative to USA tech companies if they had access. The reason for the limited or completely restricted access is due to the Great Chinese Firewall or the rules, standards, legislature and technologies which governs the Chinese’ online activities and accessibility.

The firewall for example forbids access to popular US sites like YouTube, Google, Facebook, Twitter and US media outlets like the New York Times and the Washington Post. The firewall could be China’s no-so-obvious weapon against US tariffs, the Chinese government could easily add more US tech companies to the list of restrictive access.

China does this by adding new standards to its firewall, which usually starts as recommendations but are likely to be approved by the government. Later on these standards can become a part of China’s legal framework. These new Chinese standards can increase the financial costs of foreign companies, slow the pace of operating in China and sometimes turn firms against doing business in China.

The biggest problem the US may face in the long term is that China’s use of internet standards may not end, even if the US should over turn its tariff policy, these standards could actually become Chinese law and the official way of doing business in China.

By Mokgethi Mtezuka’