WASHINGTON/BEIJING (Reuters) - The United States and China gave signs on Thursday that they will resume trade talks as the two economic superpowers discussed the next round of in-person negotiations in September ahead of a looming deadline for additional U.S. tariffs.
A new round of U.S. tariffs on some Chinese goods is scheduled to take effect on Sunday, threatening to escalate an already bitter trade war.
President Donald Trump said some discussions were taking place on Thursday, with more talks scheduled. China’s commerce ministry also said a September round of meetings was being discussed by the two sides, but said it was important for Washington to cancel a tariff increase.
“There is a talk scheduled for today at a different level,” Trump said in an interview with Fox News Radio, without giving details. A spokesman for the United States Trade Representative could not immediately be reached for comment on the planned call.
“China wants to make a deal,” Trump said in the interview, adding that China was losing millions of jobs under pressure from U.S. tariffs. “I think they want to make a deal, I sort of think they have to make a deal. We’ll see what happens.”
The Trump administration on Sunday is scheduled to begin collecting 15% tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and many types of footwear.
Rising fears about the health of the global economy have prompted talk of recession, spreading anxiety about jobs and growth.
The US-China trade war is casting a shadow over the world economy and warning signs of a looming downturn have flashed on financial markets.
Recession poses no immediate threat to the biggest economies in Asia, although they are slowing down. Yet some smaller economies in the region - including Hong Kong and Singapore - are definitely at risk.
They are what Louis Kuijs, head of Asia economics at Oxford Economics, calls the "innocent bystanders" in the trade fight between Washington and Beijing.
"These are small, open economies, where trade - and trade with China - is extremely important," says Mr Kuijs.
Here's a look at what's driving the slowdown in Asia's top economies, as well as the countries at risk of recession:
China
Growth in the world's second-largest economy has been for easing for years. The latest figures show China's gross domestic product (GDP) grew 6.2% in the second quarter, its slowest pace since the early 1990s.
The trade war that has seen Washington impose tariffs on billions of dollars' worth of Chinese goods is adding more strain.
It has hurt some Chinese firms, with roughly 20% of the country's exports sent to the US. But perhaps more harmful to businesses is the lack of clarity over when the long-running dispute will end.
"The one thing that is affecting business plans is the uncertainty of the US-China trade war, probably more important than the tariffs," says Mr Kuijs.
"The uncertainty is a major factor of [the concerns] we see globally."
Beijing has taken a series of steps this year to support the economy, including tax cuts and infrastructure spending. For 2019, the government is targeting growth of between 6% and 6.5%.
Japan
Mr Kuijs points out that what happens to China matters a lot to the rest of Asia.
The slowdown there and the trade war have knocked business confidence in Japan, a country also grappling with softer global demand for its exports, such as electronic equipment and car parts.
But its latest economic figures were fairly upbeat. Preliminary data showed GDP increased 0.4% in the second quarter - beating an expected 0.1% rise - thanks to strong consumer spending.
Image copyrightGETTY IMAGES
Still, the world's third-largest economy faces a threat to spending when a long-awaited sales tax increase is introduced in October.
"Conditions probably won't remain as healthy as they are now, as domestic demand is set to weaken after the tax hike," Capital Economics Japan economist Marcel Thieliant says.
India
Over in Asia's third-largest economy, growth has faltered amid sluggish demand at home and weak investment. India's latest quarterly GDP growth dropped to a five-year low of 5.8%. The next GDP reading, due 30 August, could be weaker still.
The country has relied on domestic consumption to spur its huge economy, but spending has slowed sharply.
Car sales are one troubling example. In July, passenger vehicle sales plunged 31%, the steepest monthly fall in nearly two decades. The sector has slashed jobs and cut production as sales dry up.
So far this year, India's central bank has cut rates four times. The benchmark rate currently sits at a near-decade low.
More stimulus measures to boost the economy, which is also battling the threat of a widening trade conflict with the US, are expected this year.
Hong Kong
The Asian financial hub is fighting the pressures of a slowdown in China, the trade war and political unrest. Some economists expect that combination to push the territory into recession before long.
Gross domestic product shrank 0.4% in the three months to June compared with the previous quarter.
But those figures did not capture the impact of the pro-democracy protests that have gripped Hong Kong for more than two months, hitting tourism and retail sales.
Economists at DBS and Capital Economics are among those expecting that third-quarter numbers, due out in November, will show Hong Kong has fallen into a technical recession, defined as two consecutive quarters of negative growth.
Singapore
The trade-dependent city state has been hit by weak global demand, slowing growth in China and the trade war.
Singapore is reliant on high-tech exports - and softer demand for electronics around the world has darkened its economic outlook.
The economy shrank by 3.3% in the second quarter, on a seasonally adjusted annualised basis. That prompted the government to cut its growth forecasts for 2019 to between 0% and 1%.
Oxford Economics expects that third-quarter GDP numbers, due in October, will show a contraction, meaning that Singapore will enter a technical recession.
Mr Kuijs says the impact of the trade war on Hong Kong and Singapore is "larger than in China itself, even though no one is imposing any tariffs on these countries".
South Korea
Concerns swirled earlier this year that South Korea could slip into recession. But it managed to avoid that outcome after huge government spending helped the economy swing back to growth in the second quarter.
Gross domestic product grew 1.1% in the three months to June compared with the previous quarter, when South Korea posted its sharpest contraction since the global financial crisis. In July, the country's central bank cut rates for the first time in three years.
Much of the pain has been caused by faltering tech exports, driven by the global electronics slowdown. That trade is crucial to South Korea, since electronics account for around 30% of the country's exports. A simmering trade battle with Japan is adding more uncertainty to South Korea's growth prospects.
UK tech companies secured a record £5.5bn in foreign investment in the first seven months of this year, research shows.
This was more than the amount invested per capita in the US tech sector in the same period, the Department of Digital, Culture, Media and Sport said.
Experts say the weaker pound is drawing investors to the UK tech sector, which leads Europe in terms of funding.
US and Asian firms invested most in the period, according to the study.
Collectively, these two regions spent $3.7bn (£3.02bn; €3.31bn) in the first seven months of the year - overtaking the $2.9bn invested across the whole of 2018.
It comes as overall foreign direct investment (FDI) in the UK is falling, amid uncertainty over Britain's future trading arrangements with the EU.
According to the Department for International Trade, FDI hit a six-year low in June.
Commenting on the tech investment figures, culture secretary Nicky Morgan said: "These fantastic figures show the confidence overseas investors have in UK tech, with investment flows from the US and Asia at an all-time high.
"We have a long-standing reputation for innovation and the statistics endorse our reputation as one of the best places in the world to start and grow a digital business."
Increasingly, UK companies have been heading abroad to regions like to Asia to raise capital.
"I've seen a lot more requests from UK start-ups tapping Asian markets capital financing in comparison to a year ago," said Aditya Mathur, founder and managing director of Singapore based venture capital fund elev8.vc.
"They typically want access to the Asian market that is large and diverse, and for that they need an Asian investor to help them understand these markets, and also provide the kind of financing they're looking for."
Hedging tool
UK tech firms also provide Asian investors with a way to hedge against the trade war, analysts say.
"Foreign investment into both the US and Chinese tech sectors has gone down because of the trade war and because Europe has provided several attractive investment opportunities lately" said Yoram Wijngaarde, founder and chief executive of Dealroom, the company that pulled together the figures for the research.
"The UK provides an attractive opportunity for funds looking to grow their investments."
Image captionCompanies in the UK's fintech and financial sector were some of the most attractive
"It's our biggest concern right now," said Russ Shaw, founder of Tech London Advocates, a campaign group promoting London's technology sector.
"One in five tech workers in London is from the EU. We're growing these businesses, and the money is flowing in, but we don't have enough talent in the country.
"We need a transition plan for companies who need to know what to do about staffing after 31 October. Otherwise it undermines our credibility."
Mr Shaw has said one of the ways the UK could mitigate these risks is by making the immigration process for overseas workers easier and more welcoming in the future.
BEIJING (Reuters) - China is willing to resolve its trade dispute with the United States through “calm” negotiations and resolutely opposes the escalation of the conflict, Vice Premier Liu He, who has been leading the talks with Washington, said on Monday.
The increasingly bitter trade war between the world’s two largest economies sharply escalated on Friday, with both sides leveling more tariffs on each other’s exports.
U.S. President Donald Trump announced an additional duty on some $550 billion of targeted Chinese goods on Friday, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods.
However, Trump appeared on Sunday to back off on his threat to order U.S. companies out of China.
Liu, speaking at a tech conference in southwest China’s Chongqing, said nobody benefited from a trade war.
“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” Liu, who is President Xi Jinping’s top economic adviser, said, according to a government transcript.
“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world,” he added.
U.S. companies are especially welcome in China, and will be treated well, Liu said.
“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” he added.
“We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”
It was not clear exactly how Trump could get U.S. companies to leave China.
U.S. Treasury Secretary Steven Mnuchin said Trump could order companies out of China under the International Emergency Economic Powers Act if he declared a national emergency.
The trade war has damaged global growth, upset allies, and raised market fears that the world economy will tip into a recession.
Global stock markets reeled on Monday after the latest measures, while China’s yuan currency fell to a fresh 11-year low. Investors streamed into the safe harbors of sovereign bonds and gold.
Chinese state media on Monday blasted the United States.
The official China Daily said in an editorial that Washington would “never be allowed to control China’s fate”.
“It has become unquestionably clear that his administration’s tariff war against China is politically motivated. What Washington wants from its largest trade partner is for it to be content to play second fiddle and meekly do as it demands,” the English-language paper wrote in an editorial.
“Washington has again taken the initiative to escalate the fight in the hope that Beijing will throw in the sponge as early as possible. But Beijing regards the trade war as an unavoidable trial by fire, from which the country will emerge stronger.”
The Global Times, a widely-read tabloid published by the ruling Communist Party’s official People’s Daily, said leaving the Chinese market would be “suicide” for U.S. companies, especially for auto firms.
“U.S. companies are welcome to invest and operate in the Chinese market, but if some U.S. companies want to obey Trump’s order and join Washington’s trade war, the result is bleak. A decision to give up the Chinese market is just suicide,” the paper said in its editorial.
Reporting by Ben Blanchard and Yawen Chen; Editing by Michael Perry & Kim Coghill
WASHINGTON (Reuters) - Top negotiators for Japan and the United States on Thursday failed to reach an agreement on a two-way trade deal and decided to extend talks for another day in a last-ditch effort to bring tangibles to a weekend bilateral summit.
After marathon four-hour talks with U.S. Trade Representative Robert Ligthizer on Thursday, Japanese Economy Minister Toshimitsu Motegi told reporters that the two countries were “getting closer to reach a conclusion”.
But he added that negotiations were taking time because they involved details covering a wide range of areas that directly affect both country’s national interest.
“It’s as expected but we’re spending quite a long time,” Motegi said of the negotiations, adding that he will meet with Lighthizer again on Friday.
Motegi is visiting Washington D.C. for talks with Lighthizer, where the two sides hope to narrow gaps on areas such as agriculture and automobiles in order to clinch an early bilateral deal.
Thursday’s talks followed a five and a half hour meeting on Wednesday, suggesting negotiators were making last-minute efforts to reach some agreement when Japanese and U.S. leaders meet on the sidelines of a weekend Group of Seven summit in France.
Motegi said he will fly straight to France and may join the meeting between Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump, where the two will likely discuss trade among other topics.
When asked whether the bilateral summit could reach a conclusion on trade, Motegi said: “We’ll see what we can do (in talks) tomorrow.”
Under his “America First” policy, Trump has been urging Japan and other trading partners to take steps to fix what he sees as unfair trade imbalances with the United States.
During his visit to France, Trump will talk to his counterparts about how to open up their markets to ensure U.S. businesses have avenues to sell good and services.
While separate trade talks with China and Europe have made little headway, Trump is keen to clinch an early deal with Japan that would open up its politically sensitive agriculture sector, as well as curbing Japan’s U.S.-bound auto exports.
Japan, on the other hand, wants the United States to cut tariffs on imports of car parts and industrial goods - something Washington is reluctant to do.
Additional reporting by Tetsushi Kajimoto and Leika Kihara in TOKYO; Editing by Chris Gallagher and Michael Perry
BEIJING (Reuters) - China said on Thursday it hopes the United States will stop its wrong tariff action, adding that any new tariffs would lead to escalation.
The United States said early this month it would slap duties on $300 billion of Chinese goods from Sept. 1, which would effectively extend its tariffs to all of China’s exports to the United States.
But President Donald Trump later backed off part of the plan, delaying duties on some items such as cellphones, laptops and other consumer goods to mid-December, in the hopes of blunting their impact on U.S. holiday sales.
“Despite the U.S. decision to delay tariffs on some Chinese goods .... if the United States rides roughshod over China’s opposition and impose any new tariffs, China will be forced to adopt retaliatory actions”, Ministry of Commerce spokesman Gao Feng told a news briefing.
Gao said trade teams from both sides have been keeping in touch, when asked whether the Chinese vice Premier Liu He would travel to Washington for the next round of face-to-face talks.
When asked if Washington has raised the Hong Kong issue with China during the trade negotiations, Gao referred to Trump’s previous remarks that Hong Kong is part of China and it is not necessary for the U.S. to intervene.
“I hope U.S. side can stick to its words,” said Gao.
President Donald Trump over the weekend warned against a crackdown in Hong Kong like Beijing’s suppression of pro-democracy protests in Tiananmen Square in 1989, which would make reaching a deal he has been seeking to end a trade war with China “very hard”.
Reporting by Yawen Chen and Se Young Lee; Editing by Kim Coghill
President Donald Trump has confirmed he is considering a new, temporary payroll tax cut to help boost the US economy.
White House officials had earlier dismissed reports that the administration was discussing the move.
But speaking to reporters, the president said a "payroll tax is something that we think about, and a lot of people would like to see that".
US workers pay payroll taxes on their earnings to finance health insurance, social security, and pensions.
Mr Trump has been talking up the US economy in recent days amid growing unease about a potential recession. "We're very far from a recession," he told the reporters.
A strong economy is seen as key to his re-election prospects in 2020, but continuing trade tensions with China have sparked concerns about an imminent slowdown.
Tax cuts when the president took office helped boost the economy and sparked a surge in share prices on Wall Street. But many economists think the impact of those cuts is starting to wane.
The president said: "We're looking at various other tax reductions - but I'm looking at that all the time anyway. Tax reductions - that's one of the reasons why we're in such a strong economic position."
He also suggested his administration was looking at possible cuts in capital gains tax, but emphasised that nothing has been decided. Such a move would be likely to face challenges from Democrats in Congress.
Interest rates
The president again pressed the Federal Reserve to cut interest rates. "We're looking for a rate cut, we could be really greatly helped if the Fed would do its job and do a substantial rate cut." He has previously called for a one percentage point cut.
Mr Trump also spoke about continuing trade tensions with China, hinting that a deal with Beijing could still be some way off.
"China's [economy] had the worst year they've had in 27 years. They want to make a deal with us, but I can tell you I'm not ready to make a deal unless they are going to make the right kind of deal."
The US central bank should consider cutting interest rates by one percentage point and introduce "some quantitative easing" stimulus measures, president Donald Trump has said.
In a Twitter post he again complained about a strong dollar, which "is sadly hurting other parts of the world".
The remarks came hours after the president said the US economy is not falling into a recession.
The economy is doing "tremendously well", he said.
Mr Trump has posted a series of critical tweets in recent months aimed at the Federal Reserve and its chief Jerome Powell. Last week the president called him "clueless" for not cutting rates sooner.
A US-China trade war, gloomy economic data from Germany, and uncertainties over the UK's exit from the European Union have unsettled share markets.
There are also worries that the bond markets are flashing recession signals. It is now cheaper for the US government to borrow for 10 years rather than two - an indication that lenders fear short-term economic risks have increased.
Mr Trump's suggestion on Monday that the Fed should consider a return to its crisis-era money-printing programme comes despite him insisting a day earlier that the US economy was in good health.
"I don't think we're having a recession," the president said. "We're doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they're loaded up with money".
He pointed to last week's healthy profits from Walmart, the US retailer often described as the world's biggest, and pointed to a strong performance from US consumers.
'QE not the answer'
"Most economists actually say we are not going to have a recession. Most of them are saying we will not have a recession, but the rest of the world is not doing well like we are doing."
White House economic adviser Larry Kudlow also said on Sunday there was "no recession in sight", telling Fox News Sunday: "Consumers are working. Their wages are rising. They are spending and they are saving."
Fed member Eric Rosengren, president of the Boston Federal Reserve Bank, warned that any lowering of interest rates could encourage a build up of debt as consumers borrow more.
"And is this the right stage in the cycle for us to encourage people to be taking on more debt?" he said in an interview broadcast on Bloomberg Television. Mr Rosengren was one of two dissenting votes at the US central bank on its decision last month to cut borrowing costs for the first time since 2008.
He also warned against more stimulus, saying that just because other countries are weak does not means the US should be easing.
Markets around the world were rattled last week by the movement in the bond markets, which also knocked stock markets.
On Wednesday last week, US stock markets fell by about 3% when the yield curve inverted, although they had recovered lost ground by the end of the week.
Last month, the US Federal Reserve cut interest rates for the first time since 2008, and more cuts are expected. Janus Henderson's Laura Foll told the BBC's Today Programme that the US central bank was "responding to global events" such as the contraction in both the UK and German economies during the second quarter.
Image copyrightEPAImage captionThe Bundesbank says the main reason for Germany's slowing economy is the manufacturing sector
The German economy contracted by 0.1% in the second quarter of the year, according to figures released last week, and its central bank said on Monday that it could shrink again in the third quarter - indicating a recession.
"Overall economic performance could again decline slightly," the Bundesbank said in a monthly report. "The main reason for this is the continuing downturn in industry."
The US economy also slowed in the last quarter, growing at an annualised pace of 2.1%.
The US president has published about 40 tweets either criticising Fed chairman Jerome Powell or pushing for a rate cut.
"Of course, it is really hard to know how much of an effect Trump is having," Ms Foll said.
"I don't think you can rule out the extreme pressure the Fed is under from Trump, but it is really hard to know how much of a direct knock-on effect that is having on policy."
