China will safeguard national interests in response to US trade moves

Tariffs of $60 billion are expected to be imposed on China. (REUTERS)
Updated 22 March 2018

China will safeguard national interests in response to US trade moves

BEIJING: China will actively take steps to safeguard its interests as well as those of its industries, Vice Commerce Minister Wang Shouwen said, in light of what he described as acts of trade protectionism on the part of the US.
The US decision to launch trade investigations is a unilateral act of protectionism, the Chinese commerce ministry said in a statement on Wednesday, citing a speech by Wang in New Delhi.
President Donald Trump is expected to unveil tariffs on up to $60 billion in Chinese technology and telecoms products by Friday, two officials briefed on the matter said on Monday.
The tariffs will be imposed under Section 301 of the 1974 US Trade Act, following an intellectual property probe that began in August last year.
“Taking trade restrictive measures will not only impede normal international trade order but also cause serious damage to the multilateral trade system,” Wang said at a two-day World Trade Organization ministerial meeting that ended on Tuesday.
Trump has accused the Chinese government of forcing US companies to transfer their intellectual property to China as a cost of doing business there.
Voicing hopes that Beijing and the United States could avoid a trade war, Chinese Premier Li Keqiang said on Tuesday that China would open its economy further, so that foreign and Chinese firms can compete on an equal footing.
But one day later, Chinese tabloid Global Times said in an editorial that US subsidies for its soybean farmers have given them an unfair competitive advantage in selling to China and strong restrictive measures need to be taken to prevent dumping.
While the widely-read paper is run by the ruling Communist Party’s People’s Daily, its stance does not necessarily equate with Chinese government policy.
Expectations of tariffs on some Chinese goods have alarmed dozens of US business groups, who said they would raise prices for consumers, kill jobs and drive down financial markets.
Fears of a global trade war have risen after Trump imposed hefty import tariffs on steel and aluminum earlier this month under Section 232 of the 1962 US Trade Expansion Act, which allows safeguards based on “national security.”
The move provoked strong protests from US allies, including South Korea, Japan and Canada.
In a “field guide” on a potential China-US trade war, S&P Global Ratings said any retaliation by major US trading partners will derail a synchronized global economic recovery.
In any case, China’s trade openness and its reliance on trade for GDP growth both peaked over decade ago, and China’s growth story is increasingly a domestic one, the ratings agency said.
S&P has an A+ rating on China, on par with ratings from Moody’s Investors Service and Fitch.
Fitch Ratings on Wednesday affirmed its China rating, but said heightened trade tensions with the United States pose a downside risk to the ratings agency’s baseline outlook.

Abu Dhabi’s aviation ambitions up in the air

Updated 3 min 3 sec ago

Abu Dhabi’s aviation ambitions up in the air

QUOTE: “The market demographics and the economics of hubbing (still) make airports in the Gulf very attractive.” Andrew Charlton, Aviation Advocacy

The inaugural non-stop Qantas flight between Perth and London earlier this month may have been hailed as the future of aviation by the airline industry, but it’s unlikely to have prompted much celebrating in Abu Dhabi.

The prospect of ultra-long haul flights, which reduce journey times by cutting out the need for stopovers, strikes at the heart of the business model of the likes of Dubai and Abu Dhabi, which have sprung to prominence in recent years as major transit centers for global air travel.

“The Gulf airports burst onto the scene as the airframe technology changed and the long-haul hubbing model was created,” Andrew Charlton, the managing director of consulting firm Aviation Advocacy.

“The Qantas flights from Perth show that the technology is again changing; in the end, the technology always wins.”

Mr. Charlton cautioned that the impact in the short-term on Abu Dhabi and other hubs would be minimal, noting that ultra-long haul would not be available to most passengers.

What’s more, “the market demographics and the economics of hubbing (still) make airports in the Gulf very attractive,” he said.

But ultra-long haul travel is just the latest in a series of issues impacting Abu Dhabi’s aviation strategy, with progress slowing in the wake of lower oil prices and operational issues at Etihad, the emirate’s flag-carrier.

The high-profile Midfield Terminal at Abu Dhabi International Airport, designed to expand capacity to 45 million passengers per year (a downgrade from original plans), has faced numerous delays, with its expected opening date pushed back from late-2017 until the end of 2019.

The increase in capacity, designed to coincide with the growth of Etihad Airways, no longer seems as urgent a priority, as the emirate cuts back on spending in the wake of lower oil revenues. Etihad’s international expansion strategy, launched in 2017, is now very much on hold.

Etihad’s strategy of acquiring a series of stakes in global airlines, in a bid to transform itself into a global rival to the likes of Dubai’s Emirates, hit the buffers last year, with the bankruptcy of Alitalia and Air Berlin, two of its largest interests. Etihad subsequently sold its stake in European regional carrier Darwin Airline, with rumors earlier this month that it may also look to offload its stake in Virgin Australia, after the latter canceled its last route to Abu Dhabi earlier last year.

Etihad did not respond to a request for comment.

The loss of Etihad’s international subsidiaries has taken its toll on Abu Dhabi’s passenger traffic. Abu Dhabi Airports has not released traffic figures for 2017, but passenger numbers for the 11 months to the end of November fell 3.7 percent year on year to 21.5 million.

That trend appears to have deepened so far this year; Abu Dhabi Airports last week announced an 11 percent drop in passenger traffic for the first quarter of the year, falling to 5.5 million, with aircraft movements dropping 15 percent to 35,788.

The drop in cargo was even more pronounced, falling 25 percent year on year to 142,492 metric tons.

Traffic through the emirate is “likely to see further reductions,” said John Strickland, director of JLS Consultancy.

Earlier this month, Etihad announced it was cutting flights to Edinburgh and Perth in Australia, as part “of several adjustments that we are making to our network in 2018 in order to improve system profitability,” an Etihad spokesman said at the time. This followed the axing of its Dallas route late last year.

Mr. Charlton said that Abu Dhabi’s hub strategy remains solid for the moment, but that the loss of Alitalia and Air Berlin “certainly slows things down.”

Abu Dhabi Airports did not respond to a request for comment.

“We are continuously working toward fortifying Abu Dhabi International Airport’s presence as a key airport hub within the region, by enhancing our existing network and connecting with new and wider markets globally,” said Saoud Al Shamsi, the Acting chief commercial officer of Abu Dhabi Airports, in a statement coinciding with the Arabian Travel Market exhibition in Dubai.

“We are optimistic about the sector’s performance in the coming years that will continue to be key in our efforts to implement enhancements to our services.”