Published: Sat, April 14, 2018

China says Xi pledges unrelated to USA trade spat

China says Xi pledges unrelated to USA trade spat

If the trade war escalates, what options does China have?

Those arguing for continuing constructive engagement are on the defensive as Trump administration leaders depict China's challenge in stark terms as a "whole of government" plan to weaken the United States and undermine its interests, while attempting to dominate the global economy and re-establish China's historical sphere of influence in Asia.

In stock markets, U.S. S&P 500 E-mini futures rose by as much as 1.5 percent and were last up 1 percent.

However, reason does not always prevail in politics, and there may have to be tit-for-tat tariffs and trade conflict, if not all-out war, before the two sides can come back and negotiate something that would probably look a lot like what is on offer now.

Because the actions will not be carried out immediately, there may be room for manoeuvre.

While the current dispute has focused on trade, many other factors are in play, bringing out the bargaining qualities and transactional natures of the two leaders and their administrations.

"The assumption was China would not respond too aggressively and avoid escalating tensions".

He noted that neither side had yet called for enforcement of the tariffs. He reiterated plans to allow more foreign participation in sectors like automobile manufacturing and banking, and said China would strengthen measures to protect intellectual property rights.

In his remarks, Xi sought to calm any US fears that China aimed to challenge its supremacy.

The US State Department also hailed Xi's remarks.

MARKET INSIGHT: "With the war drums quietly beating in the White House, markets tend to ignore the "run of the mill" type issues like FOMC minutes", Stephen Innes, head of Asian trading at OANDA, said in a commentary, referring to the rate-setting Federal Open Market Committee.

The US is targeting what it says is the massive theft of American intellectual property, as well as restrictions on US goods entering the Chinese market, creating a large US trade deficit. That helped banks because higher yields mean they can make more money from mortgages and other types of loans.

The country will work hard to import more products that are competitive and needed by the Chinese people.

Both countries' lists are, for now, no more than threats.

Trump responded on April 3 announcing plans to place tariffs on $50 billion (Rs 3.24 lakh crore) worth of imports on goods such as electrical machinery, which are a significant Chinese export.

China's tariff list covers aircraft that would probably include older models such as Boeing's workhorse 737 narrowbody jet, but not newer models like the 737 MAX. Beijing has targeted a succession of USA industries with a combination of these measures and subsidies - for example, aluminum, autos, microprocessors and artificial intelligence.

The dollar briefly extended early losses, while China's yuan skidded in offshore trade. The drop would have been even steeper if it wasn't for the US$18 billion in Chinese acquisitions announced in 2016 but completed past year, the report said.

China is threatening the tariffs in response to Trump moving to enact protectionist measures as punishment for Chinese theft of USA intellectual property.

"It's a showcase of the capability of the US armed forces not only by sea but also by air", Philippine army Lt. Gen. Rolando Bautista said after joining a tour of the 97,000-ton carrier.

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