President Trump signed a landmark trade agreement with China, heralding a period of detente in a trade war between the world’s two largest economies fueled by decades of complaints that Beijing was manipulating its currency and stealing trade secrets from American firms.

The pact, detailed in a 94-page document, is only the initial phase of a broader deal that Trump has said may come in as many as three sections.

“Together, we are righting the wrongs of the past,” Trump said in a pomp-filled signing ceremony. “It doesn’t get any bigger than this.”

WHY ‘PHASE ONE’ CHINA TRADE DEAL DOESN’T NEED CONGRESSIONAL APPROVAL, UNLIKE USMCA

The agreement will help grow the U.S. economy in 2020 and 2021 by “at least a half a point of additional GDP” and “probably translate into another million jobs on top of what we’ve already done,” Larry Kudlow, director of the National Economic Council, told FOX News’ “America’s Newsroom” on Wednesday.

President Trump signs a trade agreement with Chinese Vice Premier Liu He, in the East Room of the White House, Wednesday. (AP Photo/Evan Vucci)

During two years of negotiation, there were occasional setbacks because “on some issues, we don’t see eye to eye,” noted Liu He, the Chinese vice premier who represented President Xi Jinping at the signing, but “our economic teams didn’t give up.”

The agreement, which was first reported on Dec. 12, includes commitments from Beijing to halt intellectual property theft, refrain from currency manipulation, cooperate in financial services and purchase an additional $200 billion of U.S. products over the next two years.

STOCKS CELEBRATE PHASE ONE TRADE DEAL WITH RECORD HIGHS

The purchases will include up to $50 billion of U.S. agriculture, according to Trump and Treasury Secretary Steven Mnuchin, $40 billion of which has been confirmed by Chinese sources. China will also buy $40 billion in services, $50 billion in energy and $75 billion to $80 billion worth of manufacturing, the sources said.

Trump acknowledges Vice President Mike Pence, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer. (AP Photo/Evan Vucci)

Lighthizer says the deal is “fully enforceable” if Beijing fails to live up to its end of the agreement, and the pact includes mechanisms for handling violations of intellectual property rights. Its dispute-resolution process will allow either side to appeal if it believes the other is “not acting in accordance” with the agreement.

The document specifies that both China and the U.S. “shall ensure fair and equitable market access” for businesses that depend on the safety of trade secrets. Specific measures that will protect pharmaceutical firms’ intellectual property, govern patents, block counterfeiting on e-commerce platforms and prevent exports of brand-name knockoffs are detailed.

THE US IS NOW IN A PRIME POSITION TO MEET CHINA’S RAVENOUS ENERGY NEEDS

In return, the U.S. will reduce tariffs on some products made in China, but keep duties the White House has imposed on $375 billion worth of merchandise. Following the phase-one signing, $250 billion of Chinese imports will still be subject to a 25 percent tariff and $125 billion of Chinese goods will be under a 7.5 percent levy.

“These tariffs will stay in place until there is a phase two,” Treasury Secretary Steven Mnuchin told FOX Business’ Lou Dobbs. “If the president gets a phase two quickly, he’ll consider releasing tariffs as part of phase two. If not, there won’t be any tariff relief. It has nothing to do with the election or anything else. There’s no secret agreement.”

CLICK HERE TO READ MORE ON FOX BUSINESS

Trump says phase two negotiations will begin “immediately,” though he pointed out Wednesday that China is “doing many more things in phase one than anyone thought possible.”

Source: https://www.foxbusiness.com/markets/us-china-sign-historic-trade-deal

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The post China warned of ‘substantial’ trade war tariff increases by US President Donald Trump if deal is not reached first appeared on Garner Ted Armstrong Evangelistic Association.

In a statement on 6 August, the People’s Bank of China (PBOC) slammed Washington’s decision to designate China as a “currency manipulator”.

The post China Further Weakens Yuan to 11-Year Low After US Blacklists Beijing as ‘Currency Manipulator’ first appeared on Garner Ted Armstrong Evangelistic Association.

Washington is legally obliged under the Taiwan Relations Act of 1979 to help the self-ruled island access defensive weapons, but such transactions are bitterly opposed by Beijing, which considers Taiwan a breakaway province. A new round of weapons sales to Taipei would also risk further inflaming tensions between the U.S. and China as the two countries remain locked in a trade fight.

Multiple people familiar with the weapons-sales plan told The Wall Street Journal that members of Congress have been informally notified of the possible arms sale. Ultimately, the Taiwanese government would have the option to buy some or all of the items included in the proposal, these people said.

Reuters earlier reported the potential sale, which includes Abrams tanks, antitank missiles, medium-range tactical missiles and portable Stinger air-defense missiles. The value could be in excess of $2 billion.

A State Department official, citing U.S. government policy on potential or pending arms sales, declined to comment on or confirm the terms before formal congressional notification.

A representative of the Taiwanese government declined to comment beyond a Ministry of National Defense statement confirming its request for the weapon systems, in accordance with U.S. procedures for foreign military sales.

In Beijing, Chinese Foreign Ministry spokesman Geng Shuang said “China firmly, consistently and unequivocally opposes U.S. arms sales to Taiwan.” He said he urged Washington to recognize the sensitive nature of the matter, honor the One China policy and halt any U.S. arms sales to or military relations with Taiwan.

China and Taiwan have been governed separately since 1949, when China’s Nationalist government retreated to the island after it was ousted from the mainland by Communist Party forces.

The U.S. officially adheres to the One China policy, meaning Washington won’t establish formal diplomatic relations with Taipei, but the U.S. and Taiwan view the sales as crucial for stability in the region. President Trump approved a $1.42 billion arms sale in 2017, and the Obama administration approved a similar transfer in 2015.

With Beijing and Washington at a critical point in the high-stakes trade negotiations, new weapons sales could become a complicating factor in the dispute.

President Trump warned Beijing on Thursday about another potential tariff increase on Chinese goods if negotiators fail to reach a deal. China’s Commerce Ministry reiterated that Beijing wouldn’t shy away from responding to any U.S. escalation, though said it is not seeking a trade war.

Write to Courtney McBride at courtney.mcbride@wsj.com

Source:  https://www.morningstar.com/news/dow-jones/TDJNDN_2019060612086/us-plans-more-than-2-billion-in-weapons-sales-to-taiwan-angering-beijing.html

The post U.S. Plans More Than $2 Billion in Weapons Sales to Taiwan, Angering Beijing first appeared on Garner Ted Armstrong Evangelistic Association.

Of the many topics of national and international concern and interest this week, sanctions on Chinese goods, the consequences for farmers and American consumers has been the top story. Much was made of the plummeting stock market early in the week. When the losses were recovered mid-week, it didn’t even rate notice by the big networks. The most committed media naysayers are looking into their crystal balls, extrapolating how much extra the average family of four will pay for Chinese goods.

Honest observers know the imposition of sanctions against Chinese imports are not intended to last indefinitely, but are hoped to be a strategy to bring the parties to the table and agree to trade format that doesn’t cost the U. S. half a trillion dollars per year, not to mention the wholesale theft of American intellectual property. President Trump is right, and most who’ve looked at the situation agree. China has been ripping off American companies, consumers and engaging in espionage against U. S. technological and military concerns for decades. They knock off every successful brand you can think of and sell all manner of bogus, counterfeit goods complete with the designer label.

The pundits, as usual, are all over the mainstream print and network outlets claiming President Trump lacks understanding and is doing permanent damage to the relationship with China and the American consumer. The move by the administration to banish nations continuing to buy Iran’s oil from American markets affects China directly, because that nation reportedly buys roughly half of all the oil Iran exports.

Much has been made of the U. S. carrier group steaming toward the Persian Gulf in the wake of evidence from Israeli intelligence that Iran is planning military action against American assets or allies in the region. Thursday night brought a news break indicating that Iran is transporting missiles to locations that put them within reach of American bases and forces around the Persian Gulf. Persistently anti-Trump talking heads accuse the President of a complete lack of understanding. They suggest that former UN Ambassador and current National Security Advisor John Bolton is really running America’s foreign policy and will plunge the U. S. into war whether it is the President’s intent or not.

It’s a good time to realize that they’ve been wrong, probably intentionally wrong about everything for as long as we can remember. Trump was going to lose in a landslide, remember? His candidacy was a bad joke. He’s crazy, mean, racist and there’s no end to their blind hatred. They create news with their opinion polls, and then lecture us about “what the American people demand.” It’s infuriating. The good news is that they’re about to get their cabooses handed to them by an Attorney General who’s not part of their cabal. But that’s another subject. The good news is that what became obvious to all informed observers two years ago and more is being borne out as long awaited documents and testimonies are finally becoming public. With any luck, America’s corrupted institutions will be restored to some semblance of honesty. With any luck.

Maybe you saw some of the reports, Live from the border catastrophe this week. Despite the recent news that asylum seekers could legally be returned to Mexico to await adjudication, they’re still flooding across our southern border at the rate of nearly 70,000 plus per month. It was alarming to see border patrol boats fishing people out of the Rio Grande and ferrying them to processing centers in the U. S. People apparently wait until they hear the boats coming to plunge into the river flailing around with makeshift flotation, knowing they’ll get a ride. Today, big blaring headlines report that ICE is hiring contractors to transport illegals to destinations all around the United States. It’s hard to believe it’s happening under the Trump administration, and it’s a hard pill to swallow.

Let’s just put it this way. If the Socialist left ever succeeds in their mission to wreck the leading proponent of freedom and prosperity on earth, tribulation of Biblical proportions will follow. We’ll end up with a One World System, probably run by a coalition of the Vatican and Europe, headed by Germany. That would satisfy Biblical prophecies, and seems to be exactly what the multi-national corporations and technology giants are working toward. Dissenting voices are being silenced on a scale that is unbelievable.

Other than that, everything is hunky dory. Have a great Sabbath,

Mark

Source: http://www.intercontinentalcog.org/fridayupdates.php

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The US President cited “very strong signals” overnight from Beijing, including recognition of a 90-day clock for talks — a key point that had been omitted in readouts from Beijing after Trump’s Saturday night dinner meeting with his Chinese counterpart Xi Jinping in Buenos Aires. The Chinese Ministry of Commerce also reaffirmed Beijing’s pledge to “implementing already-agreed-on specific points as quickly as possible.”

The post Trump changes his tone on China deal after Market slide first appeared on Garner Ted Armstrong Evangelistic Association.

Under pressure from a slowing economy, rising tariffs and skittish investors, China’s government appears to be considering looser controls on the value of the yuan.

On Oct. 31, the official English-language China Daily published a report citing experts’ conclusions that “the government much preferred a freer [yuan] renminbi, or allowing the market to decide its value.”

In the past, such articles in state media have been seen as a way for the People’s Bank of China (PBOC) to gauge market reactions before announcing reforms of exchange rate policy for the currency, also known as the RMB.

Economists were quoted as saying that eased controls on the yuan’s value “could be a wise choice for China, against the backdrop of trade conflicts and economic downside risks.”

One option under consideration would be to widen the band for onshore trading of the currency against the U.S. dollar, which is currently allowed to fluctuate by up to 2 percent from a “central parity rate” set by the PBOC each business day.

The 2-percent limit has been in place since 2014, when the PBOC widened the band from 1 percent up or down. Previous expansions of the corridor took place in 2012 and 2007.

The second and more daring option for liberalization would be to adopt a freely floating exchange rate policy, as practiced by most of the world’s advanced economies.

Such a move could theoretically get the PBOC out of the business of managing exchange rates altogether. Aside from the China Daily gambit, there have been few signs that the government is prepared to go that far.

The China Daily article focused on the implications of exchange rates for monetary policy and the economy in an environment of rising U.S. interest rates and a strengthening dollar.

The experts quoted by the report cited a “dilemma” facing policymakers, whether “to defend the currency by tightening liquidity, which may lead to credit defaults and the fast bursting of asset bubbles; or to tolerate a relatively weaker currency … but ensuring a low interest rate level (that) could sustain strong economic growth.”

Counter-cyclical factor

Yukon Huang, senior fellow at the Carnegie Endowment for International Peace in Washington and a former World Bank country director for China, was quoted as saying that Beijing doesn’t “need to make the renminbi stronger than it should be, as the U.S. dollar is surging in its value.”

The statement appeared to argue against the PBOC’s decision in August to re-introduce a “counter-cyclical factor” in the China Foreign Exchange Rate System (CFETS) to fight further depreciation.

The currency started the year trading at about 6.5 to the U.S. dollar and ended October at 6.97582, down 6.7 percent.

On Monday, China set the parity rate at 6.9245 to the dollar.

The depreciation this year has spurred long-standing U.S. concerns that a cheaper yuan will boost China’s exports unfairly and more recent charges that the slide is intended to mitigate the cost of tariffs that have been imposed so far.

China has responded with repeated assurances that it has not deliberately weakened its currency.

Speaking in Beijing on Nov. 6 at a meeting with major international institutions, Premier Li Keqiang insisted that China “will not engage in competitive devaluation.”

In a semiannual report to the U.S. Congress last month, Treasury Secretary Steven Mnuchin declined to designate China as a currency manipulator but cited “particular concern” with the country’s lack of transparency and the weakness of the yuan.

Psychological barriers

But regardless of the international reactions, China has its own concerns with its currency.

Beyond the implications for interest rates and economic growth, China’s policy choices face the challenges of two psychological barriers, which may have little consequence for economists but can carry considerable weight with investors.

The first psychological barrier that China may defend against is the exchange rate of seven yuan to the U.S. dollar, a threshold that the currency has not crossed since the global slump of 2008.

If the PBOC widens the trading band or switches to a free floating currency, the line could be quickly overstepped.

Although seven to the dollar is only another number to economists, “passing that number would be significant symbolically,” The New York Times said in an analysis last month.

“It would suggest China is prepared to let its currency weaken further still,” the paper said. How far and how fast are open to question, but investors could get more nervous quickly, raising the risk of capital flight.

That may be one reason that state media are testing the waters with a story on possible changes in exchange rate policies. Regulators came close to breaking the seven-to-the-dollar limit in December 2016 but pulled back as the year came to a close.

The PBOC may see the exchange rate barrier as crucial, but it has been skating close to another psychological limit it doesn’t want to breach.

In October, the bank’s foreign exchange reserves declined for the third month in a row to U.S. $3.053 trillion, barely exceeding the $3-trillion mark.

The narrow margin could put the bank in the position of breaking one psychological barrier to defend against another.

Taking the brunt

Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics in Washington, said President Xi Jinping seems more likely to accept a lower value for the yuan.

The currency will be in for a drubbing due to U.S. President Donald Trump’s threat to raise tariffs in any case, unless a trade agreement with China is reached soon.

“I think Chinese leaders have decided to let the yuan take the brunt of Trump’s trade offensive,” Hufbauer said by email.

“So, if Trump imposes the 25-percent tariff rate on Jan. 1 (up from 10 percent), the yuan could drop another 5 percent to 8 percent,” he said.

“Xi wants to preserve China’s hoard of dollars … and not spend it defending the yuan,” Hufbauer said.

Prospects for a trade deal dimmed last week as U.S. Vice President Mike Pence delivered a tough speech at the Asia-Pacific Economic Cooperation (APEC) summit in Papua New Guinea, an event also addressed by China’s President Xi.

While Xi implicitly criticized U.S. tariffs as “short-sighted, Pence said that Washington “could more than double” the U.S. $250 billion in penalties that have already been placed on imports from China.

“The United States … will not change its course until China changes its ways,” Pence said in his speech Saturday.

Clashes with China over the wording of a draft text criticizing “unfair trade practices” prevented an agreement on a joint statement from APEC for the first time in the group’s history, news agencies reported.

Speaking at the White House on Friday, President Trump acknowledged that China had sent a list of concessions in response to U.S. demands on trade and other policy differences, but he dismissed the offers as insufficient.

“It’s not acceptable to me yet,” Trump said, according to The Times.

By widening the trading band for the yuan, China will be able to argue that it is opening up further to the market while it is reaping the benefits of cheapening exports and reducing the impact of tariffs.

Such a choice could keep China’s powder dry in terms of forex reserves, but concerns over capital flight may imply even tighter capital controls.

China’s declining economic growth rates and rising U.S. interest rates have been pushing the yuan in the same direction. A change in exchange rate policy may only determine how far and how fast.

The property market factor

An alternative reading is that a “reform” of exchange rates may be little more than a cover story for the same benefits that would otherwise be achieved by currency manipulation.

But internal considerations in China are likely to be a greater force in driving policy changes.

The China Daily article made repeated references to the bursting of “asset bubbles,” citing the risk that a defense of the yuan would require more credit tightening and risks for the property market.

Years of property investment and appreciation have been met with periodic waves of local buying restrictions, driven in part by Xi’s dictum that houses are “for living in, not for speculation.”

But the buying curbs have done little to keep property prices from rising or prevent apartments from becoming stores of wealth.

Cooling of the sales frenzy has led some developers to offer discounts on unsold units, sparking protests from investors who bought at higher prices.

Reactions to recent demonstrations over housing quality complaints at a Beijing complex built by leading developer Vanke are symptomatic of a downturn in the market, the South China Morning Post reported last month.

Softening property prices are likely to prompt government concerns not only about economic growth but also social stability, giving rise to thinly-veiled terms like “asset bubbles.”

Defending the yuan may imply a tightening of liquidity, but confidence in domestic property investment as a store of wealth may also be hurt if the yuan continues to drop.

Source: https://www.rfa.org/english/commentaries/energy_watch/china-considers-currency-changes-11192018095305.html

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