US-China trade war intensifies as punitive tariffs kick in

Workers at a swimwear factory in Yinglin town in Jinjiang, in China's eastern Fujian Province. China's top envoy, Foreign Minister Wang Yi, called on the United States to remain "cool-headed." (AFP)
Updated 23 August 2018

US-China trade war intensifies as punitive tariffs kick in

BEIJING: The US and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of each other’s goods, even as mid-level officials from both sides resumed talks in Washington.
The world’s two largest economies have now slapped tit-for-tat tariffs on a combined $100 billion of products since early July, with more in the pipeline, adding to risks to global economic growth.
China’s Commerce Ministry said Washington was “remaining obstinate” by implementing the latest tariffs, which kicked in on both sides as scheduled at 12:01 p.m. in Beijing.
“China resolutely opposes this, and will continue to take necessary countermeasures,” it said in a brief statement.
“At the same time, to safeguard free trade and multilateral systems, and defend its own lawful interests, China will file a suit regarding these tariff measures under the WTO dispute resolution mechanism,” it said.
President Donald Trump has threatened to put duties on almost all of the more than $500 billion of Chinese goods exported to the US annually unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programs and tariff structures, and buys more US goods.
That figure would be far more than China imports from the US, raising concerns that Beijing could consider other forms of retaliation, such as making life more difficult for American firms in China or allowing its yuan currency to weaken further to support its exporters.
Trump administration officials have been divided over how hard to press Beijing, but the White House appears to believe it is winning the trade war as China’s economy slows and its stock markets tumble.
“They’re not going to give that up easily. Naturally they’ll retaliate a little bit,” US Commerce Secretary Wilbur Ross said on CNBC on Wednesday at a Century Aluminum smelter in Hawesville, Kentucky.
“But at the end of the day, we have many more bullets than they do. They know it. We have a much stronger economy than they have, they know that too,” Ross said.
Economists reckon that every $100 billion of imports hit by tariffs would reduce global trade by around 0.5 percent.
The tariffs took effect amid two days of talks in Washington between mid-level officials from both sides, the first formal negotiations since US Commerce Secretary met with Chinese economic adviser Liu He in Beijing in June.
Business groups expressed hope that the meeting would mark the start of serious negotiations over Chinese trade and economic policy changes demanded by Trump.
However, Trump on Monday told Reuters in an interview that he did not “anticipate much” from the talks led by US Treasury Under Secretary David Malpass and Chinese Commerce Vice Minister Wang Shouwen.
Trump has rattled Beijing, and spurred rare criticism within the highest levels of China’s ruling Communist Party over its handling of the trade war, sources have said.
Beijing has denied US allegations that it systematically forces the unfair transfer of US technology and has said that it adheres to World Trade Organization rules.
The official Xinhua news agency said in a commentary on Thursday that China had approached the latest round of talks in good faith, but that Washington remains vague about what it wants.
“As US President Donald Trump said in his book on making deals, ‘the point is that you can’t be too greedy.’ The two sides (would be wise to)
define their top concerns in this round of talks and outline a roadmap, in a bid to find a way out of the current impasse and toward the final settlement of the issues.”
Washington’s latest tariffs apply to 279 product categories including semiconductors, plastics, chemicals and railway equipment that the Office of the US Trade Representative has said benefit from Beijing’s “Made in China 2025” industrial plan to make China competitive in high-tech industries.
China’s list of 333 US product categories hit with duties includes coal, copper scrap, fuel, steel products, buses and medical equipment.


Saudi Arabia raises more than SR15bn in bond sale

Updated 28 March 2020

Saudi Arabia raises more than SR15bn in bond sale

  • Gulf oil exporters are increasingly turning to debt sales to help fund spending in a low oil price environment

JEDDAH: Saudi Arabia has sold more than SR15 billion in Islamic bonds, as the Kingdom seeks to develop its local debt market.

The Kingdom’s Finance Ministry said on Friday that it had closed the book to investors on its March 2020 riyal-denominated sukuk program.

The total amount raised by the sukuk sale was SR15.568 billion, divided into three tranches that mature in five, 10 and 30 years.

Gulf oil exporters are increasingly turning to debt sales to help fund spending in a low oil price environment while at the same time developing their own capital markets as part of ongoing diversification reforms.

“The closure of the issuance of government bonds exceeding 15 billion riyals shows many positive elements,” said Abdullah Ahmad Al-Maghlouth, a member of the Saudi Economic Society. 

“Such as confirming the robustness of the Kingdom’s credit rating and the strength of the Saudi economy; that the Kingdom’s debt-to-GDP ratio is still far lower than many other G20 countries; the Finance Ministry’s ability to deal with the requirements of asset and liability management; as well as the Kingdom’s strong foreign-exchange reserves in dollars, among others.”

The Kingdom’s strong credit rating means it can borrow more cheaply than many other Mideast economies despite a weaker oil price.

Economic analyst Fahd Al-Thunayan said: “The Ministry of Finance, represented by the National Debt Management Center, continued its efforts in developing local debt markets and providing the required balance in financing public-budget expenditures, through the optimal mixture of the use of reserves and borrowing within the upper limits, like a percentage of the GDP, where the local issuances reached 65 percent of the total debt in the year 2019.”