Trade War with China

Biscuits said:

So China isn’t even withdrawing tariffs while US has to... China only has to buy some US goods and switch tariffs away from Trump voter base, and that’s what US mouthpieces are ready to admit... It looks like the one who will recieve an unequal treaty is themselves.

This is looking more and more like the Doklam affair. Much tough talk and speeches about attacking China. Yet it ends up with retreat and China doing the exact same thing as it did before the conflict.

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Quickie said:

Wow.. they look so friendly to each other. Compare this to the pictures of Chinese and American teams in the trade talks. Their sour faces are even more sour than lemons.

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U.S., Japan to continue trade talks after two-day meeting in Washington

U.S. Trade Representative Robert Lighthizer (R) meets with Japan's Economic Revitalization Minister Toshimitsu Motegi outside of the Office of the United States Trade Representative in Washington D.C., the Unites States, April, 16, 2019. A statement released by Office of the United States Trade Representative (USTR) on Tuesday said the negotiators from the United States and Japan would continue their talks on a bilateral trade agreement. (Xinhua/Liu Jie)

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Quickie said:

Wow.. they look so friendly to each other. Compare this to the pictures of Chinese and American teams in the trade talks. Their sour faces are even more sour than lemons.

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ZeEa5KPul said:

Well, people are usually very happy to see their pets after a long day at work. Their happiness is somewhat less when they see their rivals.

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Hendrik_2000 said:

Not really I watch NHK and Motegi said that Japanese agriculture access or subsidy is not up to discussion Japan rural voter is the base for LDP. Right now Japan agi is of high quality but very expensive because access from import is limited they have high tariff or high quarantine requirement

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ZeEa5KPul said:

Well, people are usually very happy to see their pets after a long day at work. Their happiness is somewhat less when they see their rivals.

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The U.S. trade deficit fell to an eight-month low in February as imports from China plunged, temporarily providing a boost to President Donald Trump's “America First” agenda and economic growth in the first quarter.

The surprise second straight monthly narrowing in the trade gap reported by the Commerce Department on Wednesday was also driven by soaring aircraft exports, which are likely to reverse after Boeing halted deliveries of its troubled 737 MAX aircraft. MAX planes have been grounded indefinitely following two deadly crashes.

Economists warned the trade deficit would remain elevated regardless of whether the United States and China struck a trade deal that was to the White House's liking because of Americans' insatiable appetite for cheaper imports.

Talks between Washington and China to resolve the trade friction have been continuing. The United States is also embroiled in conflicts with other trading partners, including the European Union, contributing to big swings in exports and imports data in recent months.

“Even if trade negotiations are resolved in such a way as to reduce the bilateral trade deficit with China, one of the Trump administration's stated goals, this would likely divert trade flows to other countries and have little impact on the top-line U.S. trade deficit,” said Emily Mandel, an economist at Moody's Analytics in West Chester, Pennsylvania.

The trade deficit tumbled by 3.4 percent to 49.4 billion U.S. dollars in February, the lowest level since June 2018. Economists polled by Reuters had forecast the trade shortfall widening to 53.5 billion U.S. dollars in February.

The goods trade deficit with China – a focus of the Trump administration's protectionist trade policy – decreased by 28.2 percent to 24.8 billion U.S. dollars in February as imports from the world's No. 2 economy plunged by 20.2 percent. U.S. exports to China jumped by 18.2 percent in February.

Washington last year imposed tariffs on 250 billion U.S. dollars worth of goods imported from China, with Beijing retaliating with duties on 110 billion U.S. dollars worth of American products. Trump has defended the duties as necessary to protect domestic manufacturers from what he says is unfair foreign competition.

Trump has delayed tariffs on 200 billion U.S. dollars worth of Chinese imports. The White House argues that substantially reducing the trade deficit would lift annual economic growth by at least 3 percent on a sustainable basis, a feat that economists have said is impossible because of low productivity and population growth.

Growth estimates raised

February's smaller trade deficit suggests the economy will probably avoid a sharp slowdown in growth that had been feared at the start of the year. The goods trade deficit declined by 1.7 percent to an eight-month low of 72.0 billion U.S. dollars in February.

When adjusted for inflation, the overall goods trade deficit fell by 1.8 billion U.S. dollars to 81.8 billion U.S. dollars, also the lowest since last June. Goldman Sachs raised its first-quarter gross domestic product estimate by four-tenths of a percentage point to a 2.1-percent annualized rate.

The Atlanta Federal Reserve bumped up its GDP forecast to a 2.4-percent pace from a 2.3-percent rate. The economy grew at a 2.2-percent rate in the fourth quarter.

“It sounds like pencils are being sharpened in order to revise up first-quarter GDP forecasts,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

In February, goods exports increased by 1.5 percent to 139.5 billion U.S. dollars. The surge in goods exports is unlikely to be sustained given slowing global economic growth. The dollar's strength last year means U.S.-manufactured goods are less competitive in foreign markets.

Shipments of civilian aircraft soared by 2.2 billion U.S. dollars in February. Exports of motor vehicles and parts increased by 0.6 billion U.S. dollars. There was a small rise in soybean exports. Economists expect soybean exports to remain moderate because of an outbreak of swine flu that has reduced demand for soybean meal in China.

In February, imports rose by 0.2 percent to 259.1 billion U.S. dollars. Consumer goods imports increased by 1.6 billion U.S. dollars in February, led by a 2.1-billion-U.S.-dollar rise in imports of cellphones and other household goods.

Imports of industrial supplies and materials fell by 1.2 billion U.S. dollars. Capital goods imports rose slightly, pointing to slower business spending on equipment.

Crude oil imports fell to 173.7 million barrels, the lowest since March 1992, from 223.1 million barrels in January. An increase in domestic production has seen the United States become less dependent on foreign oil.

“We see more potential for stronger imports in coming months, which would reestablish a trend toward wider deficits,” said Andrew Hollenhorst, an economist at Citigroup in New York.

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• Nominal growth rate of household consumption actually slowed further to 7.3 per cent from a year earlier, down from 8.0 per cent in the fourth quarter
• But gross domestic product, fixed asset investment and retail sales improved from the fourth quarter, highlighting improved sentiment

Chinese consumer spending “stabilised but has not fully recovered” in the first quarter of the year even though overall economic growth was stronger than expected due to Beijing’s stimulus measures, according to a China investment strategist and former US diplomat.

The nominal growth rate of household consumption actually slowed further to 7.3 per cent, down from 8.0 per cent in the fourth quarter and 7.6 per cent in the first quarter a year ago.

But gross domestic product, fixed asset investment and retail sales all improved from the fourth quarter, highlighting improved overall economic sentiment, although it remained weaker than during the first quarter last year, according to data released by the National Bureau of Statistics (NBS).

Retail sales rose 8.7 per cent in the first quarter compared to a year earlier, up from 8.4 per cent in the fourth quarter. But retail sales data does not fully capture spending on services and includes purchases by government agencies and so is not a true reading of private consumption.

Consumer spending, based on a broader NBS survey of households, remained relatively subdued in the first quarter.

“The household survey covers a full range of services, such as education, health care, entertainment, which provide a fuller picture [of consumer spending]. [China’s] consumption story has stabilised but has not fully recovered,” said Andy Rothman, who spent 17 years in the US foreign service focusing on China.

Private consumption is the largest contributor to the Chinese economy, accounting for 65 per cent of overall gross domestic product (GDP) growth, according to Rothman. Household consumption includes not only purchases of goods but also services, which make up about 44 per cent of consumer spending.

China’s consumption problems are highlighted by Taiyuan Road in Shenyang, the capital and largest city of China’s northeast Liaoning province, with shopping centres closed in the early evening, showing little sign of an upturn. Inside the shops that were open, sales staff outnumbered customers, while attempts to lure shoppers inside were largely unsuccessful.

Last year’s poor sentiment among the country’s entrepreneurs and investors, which was China’s biggest weakness, is stabilising partly because of expectations that the trade dispute with the United States will end soon, added Rothman.

“While a [Donald] Trump – Xi [Jinping] deal is likely on the horizon, it will not resolve the longer term challenges in bilateral relations. But, taking a trade war off the table is a prerequisite for starting to address those challenges,” said Rothman.

In addition, Beijing has introduced significant stimulus measures since last autumn to boost growth. Analysts estimated that Beijing’s stimulus, through expansionary monetary policy, tax cuts and infrastructure spending, is equivalent to as much as 4.25 per cent of GDP this year.

Despite the better-than-expected first quarter data, Li Wei, senior economist at China Standard Chartered Bank, warned of the risk of optimism running ahead of reality.

“We expect China’s export growth to slow in 2019 on moderating global economic growth,” putting downward pressure on growth, Li said.

Robin Xing, an economist at Morgan Stanley, agreed that sluggish consumer sentiment was especially striking given that real income growth had actually accelerated. Xing calculated that the real consumption growth rate slowed to a five-year low of 7.1 per cent from a year earlier in the first quarter from 8.8 per cent in the fourth quarter last year.

Lu Ting, chief China economist at Nomura International, noted that Beijing has continued to show concerns about the economic outlook, given the government’s plan for a new round of measures to boost consumer spending.

Last week, the National Development and Reform Commission (NDRC), China’s top state planner, distributed a draft on its proposed stimulus measures for cars, home appliance and consumer electronic products.

Nomura’s Lu said the NDCR’s proposal would cut the sales tax by half for rural residents and double the quota for new vehicle licences in some major cities, with sales of cars and home appliances expected to benefit from the stimulus this year and next.

“A rebound in auto and home appliance sales growth should help to deliver a real and more sustainable growth recovery,” Lu said.

Consumption concerns intensified after

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fell for a ninth straight month in March. Total automotive sales fell to 2.52 million, down 5.2 per cent from a year earlier.

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