Saturday, July 7th, 2018


Departing ZTE executive describes 'deep humiliation' in farewell letter

HONG KONG, July 7 ― A departing senior executive at China's ZTE Corp, which is fighting a crippling US supplier ban, said in a letter to staff yesterday that his departure amid a Sino-US trade war was “deeply humiliating”. Zhang Zhenhui was…

Trump's US$500b trade threat makes China's already battered investors shiver

SHANGHAI, July 7 ― Six months of wrangling over trade tariffs with the United States has wiped out about a fifth of China's stock market value and driven its currency down sharply. But those moves may have just been a downpayment on what is yet to…

China to keep on reform, market opening path, says PM

SOFIA, July 7 ― China will keep to the path of reform and opening up its markets that has lifted its growth, Premier Li Keqiang said today, a day after the United States and China slapped tariffs on US$34 billion (RM137 billion) worth of the…

Duelling tariffs raise fears of long US-China trade battle

BEIJING, July 7 ― The United States and China exchanged the first salvos in what could become a protracted trade war yesterday, slapping tariffs on US$34 billion (RMRM137 billion) worth of each others’ goods and giving no sign of willingness to…

Trade war already threatens to ruin Christmas for retailers

NEW YORK, July 7 — It may only be July, but Christmas is fast-approaching for US retailers — and the threat of an escalating trade war with China has industries that have so far been spared increasingly worried their goods will be next on the…

Mega IPOs are spawning Asian billionaires at a torrid pace

HONG KONG, July 7 — Another day. Another IPO. Another Chinese billionaire magically appears. Mu Rongjun, the co-founder of food-delivery behemoth Meituan Dianping, is poised to be the latest to join the club as the company announced plans to go…

US hits Chinese firm Sinovel with US$1.5m fine for stealing technology

WASHINGTON: A US court on Friday imposed the maximum fine of US$1.5 million (RM6.06 million) of Chinese firm Sinovel for stealing trade secrets from an American company producing wind turbines, the Justice Department said.

The decision comes on the day Washington unleashed 25% import tariffs on US$34 billion (RM137.36 billion) in Chinese products to punish the country for what President Donald Trump has said is the rampant theft of American technology.

After being charged in 2013, Sinovel was convicted in January by a US court of stealing the trade secrets of AMSC, a US-based company formerly known as American Superconductor, which lost US$550 million and 700 jobs — more than half its global workforce — as a result, the Justice Department said in a statement.

The two companies this week reached a settlement and Sinovel has one year to pay US$25 million to AMSC, after paying US$32.5 million this week. The Chinese firm also will repay US$850,000 to other victims.

“Rather than pay AMSC for more than US$800 million in products and services it had agreed to purchase, Sinovel instead hatched a scheme to brazenly steal AMSC's proprietary wind turbine technology, causing the loss of almost 700 jobs and more than US$1 billion in shareholder equity at AMSC,” acting Assistant Attorney General John Cronan said in statement.

“As demonstrated by this prosecution, intellectual property theft poses a serious threat to American companies.”

Sinovel used the stolen technology, including software, to regulate the flow of power from turbines to electrical grids, to produce its own wind turbines and retrofit existing turbines, prosecutors said.

The company also hired away an AMSC engineer to help steal source code for the key software in 2011, the statement said. — AFP

China counterpunches against US in growing trade war

WASHINGTON/BEIJING: China on Friday struck back against US President Donald Trump's trade offensive, intensifying the expanding and unpredictable dispute between the world's two largest economies.

Late Friday, China announced it was expanding its existing complaint against the United States at the World Trade Organization, hours after the countries slapped tit-for-tat tariffs on billions of dollars of cross-border trade.

Beijing called the new stage of the confrontation — which began when Washington pulled the trigger on 25% duties on US$34 billion annual imports of Chinese machinery, electronics and other goods — “the largest trade war in economic history.”

And China's foreign ministry said retaliatory tariffs of equal size and scope had taken effect “immediately.”

There was confusion about exactly what US products would be hit in the initial wave of tariffs as China's Commerce Ministry had not published an updated list.

Economists have warned escalating trade frictions could throttle global growth and strike at the heart of the world trading system, causing economic shockwaves and potentially disrupting years of global growth.

US trade data released Friday showed exports hit a record, as importers bumped up purchases, particularly of tariff-targeted US soy beans, to build up supplies before the new duties hit.

Analysts said this was the quiet before the storm, with US exports likely to fall off in the third quarter as both sides feel the effects of worsening trade relations.

The new tariffs could just be the opening skirmish in the trade war, as US President Donald Trump has vowed to hit as much as US$450 billion in Chinese goods, the vast majority of that country's imports.

That would add to disputes underway with Canada, Mexico and the European Union, which could worsen if he goes ahead with threatened tariffs on autos.

China's government also announced it was adding this round of US tariffs to an existing complaint filed with the WTO in April shortly after Washington unveiled the threat to punish Beijing for its policies on intellectual property.

Economic threat

Months of dialogue between the two economic superpowers, including in the WTO, appeared to have failed, with Trump warning just hours before the tariffs came into effect that Washington was ready to escalate the dispute with duties on hundreds of billions of dollars more in Chinese imports.

Trump repeatedly has slammed what he describes as Beijing's underhanded economic treatment of the United States. The US trade deficit in goods with China ballooned to a record US$375.2 billion last year, stoking his ire.

US officials accuse China of building its industrial dominance by stealing the “crown jewels” of American technological know-how through cyber-theft, forced transfers of intellectual property and state-sponsored corporate acquisitions.

A US court on Friday imposed the maximum US$1.5 million fine for theft of trade secrets by the Chinese company Sinovel in a case that typified Washington's complaints about Beijing's conduct.

Prosecutors said AMSC lost 700 jobs and more than US$1 billion in shareholder equity after Sinovel stole technology, including software, used in producing and operating wind turbines.

Sinovel has agreed to pay AMSC a total of US$52.5 million in restitution.

Despite dire warnings about the impact on the US, Trump believes the robust American economy can outlast its rivals in the current battle.

But China also believes its economy, with a greater focus on domestic demand and a reduced dependence on exports, can ride out the storm.

China central banker Ma Jun said the first punches will have only a “limited impact” on the nation's economy, trimming GDP growth by 0.2% points.

With only US$130 billion in US imports to retaliate against, Beijing has said it will take “qualitative” and “quantitative” measures against the US, triggering fears it could cripple the operations of US multinationals operating there.

Russia joins the fray

China's Premier Li Keqiang said on a visit to Sofia that “A trade war benefits no-one because it hurts free trade and the multilateral process.”

Global markets initially wobbled at the news but soon forged higher with Wall Street finishing up solidly on bullish employment numbers while Asian and European stocks also cast aside their worries, at least for now.

On the streets of Beijing, there were some concerns that prices would rise due to the tariffs but also a determination to support the Beijing authorities in the trade war.

“I will try my best to support domestic products. I think products made in China are the best,” said one shopper in a Beijing grocery story, who gave his name as Yang.

Moscow also announced Friday it had slapped 25% tariffs on some US goods, joining the global push-back against Trump's offensive. — AFP

Global stocks mostly rise even as US-China trade war gets real

NEW YORK: Global stock markets advanced Friday, overcoming earlier wobbles prompted by China and the United States firing opening salvos in a trade war that pits the world's two biggest economies against each other.

Wall Street gained on the back of a solid US employment report that was strong enough to reassure investors of the health of the economy, but did not exhibit robust enough wage growth to suggest the Federal Reserve will need to raise interest rates more aggressively.

All three major US indices ended higher, with the Nasdaq chalking up its second straight gain of more than one percent.

European markets finished modestly higher, even as trade worries remained investors the biggest concern, dealers said.

US President Donald Trump on Friday rolled out 25 percent tariffs on $34 billion of Chinese goods in what Beijing called the “largest trade war” in economic history.

China said it was hitting back with retaliatory measures on US goods but did not immediately providing precise details on what products would be targeted in the first wave.

Impact 'limited for now'

“Trump is bringing the world close to a genuine trade war,” said Holger Schmieding, chief economist at Berenberg.

But in the end, European and US markets followed the example of Asian markets which gained as investors went bargain-hunting, dealers reported.

Tokyo stocks led the gains in Asia, closing 1.1% higher, with markets in Shanghai and Hong Kong up by around half a percentage point.

Li Daxiao, analyst at Yingda Securities, said news of the tariffs had already been priced in.

“After the US tariffs announcement, the negative news finally came out and has already been digested over recent weeks. Therefore investors are not in as much of a panic as before, and the market sentiment will reverse,” Li said.

Stanley Chik, from Bright Smart Securities International in Hong Kong, said “the impact of tariffs on economic growth appears limited for now, giving the market a breathing spell.”

But these could be just the first skirmishes in a long war, with financial markets worried about a knock-on effect on the wider global economy and the broader trading system.

Trump has threatened to impose tariffs on as much US$450 billion annual Chinese imports — virtually all of China's exports to the US — as he seeks to advance his “America First” protectionist agenda.

Beijing has accused the US of “firing on the whole world” with the measures, pointing out that most of the Chinese goods under attack are made by companies with large foreign investment — including American.

Key figures around 2030 GMT

New York – Dow: UP 0.4% at 24,456.48 (close)

New York – S&P 500: UP 0.9% at 2,759.82 (close)

New York – Nasdaq: UP 1.3% at 7,688.39 (close)

London – FTSE 100: UP 0.2% at 7,617.70 points (close)

Frankfurt – DAX 30: UP 0.3% at 12,496.17 (close)

Paris – CAC 40: UP 0.2% at 5,375.77 (close)

EURO STOXX 50: UP 0.2% at 3,446.66 (close)

Hong Kong – Hang Seng: UP 0.5% at 28,315.62 (close)

Tokyo – Nikkei 225: UP 1.1% at 21,788.14 (close)

Shanghai – Composite: UP 0.5% at 2,747.23 (close)

Euro/dollar: UP at US$1.1744 from US$1.1691 at 2100 GMT Thursday

Pound/dollar: UP at US$1.3281 from $1.3222

Dollar/yen: DOWN at 110.43 yen from 110.64 yen

Oil – Brent Crude: DOWN US$0.28 cents at US$77.11 per barrel

Oil – West Texas Intermediate: UP US$0.86 cents at US$73.80 per barrel

US$1 = RM4.04


Key points of Britain’s post-Brexit trade plan

LONDON: Here are the key points of the British government's proposal agreed Friday for the future relationship with the European Union after Brexit, centred on a new “free trade area for goods”.

The plan says it would avoid checks on the border between Northern Ireland and Ireland and protect manufacturing supply lines, while also fulfilling domestic promises to end the jurisdiction of the European Court of Justice (ECJ), control migration and allow Britain to establish its own trade policy.

Common rulebook for goods

Britain and the EU would maintain a “common rulebook for goods including agri-food”, with London agreeing in a treaty to “ongoing harmonisation” only with those EU rules necessary to reduce friction at the border.

It says the plan would smooth trade in agricultural, food and fisheries products, and protect integrated supply chains and just-in-time processes that are vital to, for example, the automotive industry.

Britain would expect to play a “strong role” in shaping the international standards which underpin these rules.

Britain's parliament would also reserve the right to reject any new rules, while recognising the “consequences for market access, security cooperation or the frictionless border”.

Britain would leave the EU's Common Agricultural Policy and Common Fisheries Policy.

Flexibility for services

Britain would retain regulatory flexibility for its dominant services sector, “where the potential trading opportunities outside the EU are the largest”, in return for restricted access to EU markets.

It accepts the end to current “passporting” rights allowing British financial firms to operate freely in the EU, but suggests arrangements “that preserve the mutual benefits of integrated markets and protect financial stability”.

Standards and competition

Britain would legally commit to a common rulebook on state aid rules, and establish “cooperative arrangements between regulators” on competition.

Both sides would agree to maintain high regulatory standards for the environment, climate change, social and employment and consumer protection.

European Court

The EU and Britain would establish a “joint institutional framework” to ensure the consistent interpretation of legal agreements between them.

In Britain this could be done by British courts, “with due regard to EU case law” in the relevant areas, but the ECJ would no longer have jurisdiction.

Both sides would need to agree a means of resolving disputes, including through binding independent arbitration.

Customs arrangements and free trade

Britain proposes that it would “apply the UK's tariffs and trade policy for goods intended for the UK, and the EU's tariffs and trade policy for goods intended for the EU”.

This arrangement, which would have to be phased in, would eliminate the need for customs checks and controls between Britain and the EU, “as if a combined customs territory”.

This would give Britain the right to control its own tariffs and strike trade deals with non-EU nations — including “potentially” joining the 11-nation Trans-Pacific Partnership, the document said.

Free movement of people

Britain would end free movement of people from the EU, but proposes British and EU citizens continue to travel and apply for study and work in each other's territories.

No deal option

The government restated that it is in interests of both sides to reach an agreement.

But “given the short period remaining before the necessary conclusion of negotiations this autumn, we agreed preparations should be stepped up” for a range of potential outcomes, including that no deal is reached. — AFP