Japan, China agree trade war will harm global economy

Top officials from the world’s third- and second-largest economies attended a high-level economic dialogue in Tokyo on Monday, April 16, and discussed the growing trade two between the US and China. (Reuters)
Updated 16 April 2018
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Japan, China agree trade war will harm global economy

TOKYO: Japan and China agree that a trade war will have serious consequences for the world economy, Japanese Foreign Minister Taro Kono said on Monday after a high-level economic dialogue between the world’s third- and second-largest economies.
Concern is growing about a trade row between China and the US in which the two nations have threatened each other with tariffs. Japan has been criticized by US President Donald Trump on trade and been hit with tariffs on steel and aluminum, but it has not yet threatened counter-tariffs.
“We have shared understanding that a trade war, no matter which country has brought it about, would have a very large impact on the prosperity of the international economy,” Kono told reporters after the first such dialogue in more than seven years.
Kono and the Chinese government’s top diplomat, State Councillor Wang Yi, co-chaired the Tokyo meeting. Wang is also foreign minister.
Financial markets have been roiled recently over fears that a full-blown US-China trade war could shatter global trade and economic growth.
Trade issues will likely be at the forefront of a summit between Japan’s Prime Minister Shinzo Abe and President Trump later this week. Tokyo is eager to avoid being pushed into talks on a two-way free trade agreement aimed not only at market access but at monetary and currency policies.
Kono also said it was possible that Japan works with China on Beijing’s Belt and Road projects.
“It is quite possible that Japan cooperates with China on various (Belt and Road) projects on a case by case basis where international standards are met,” Kono said.
Chinese President Xi Jinping’s Belt and Road Initiative, unveiled in 2013, aims at building a modern-day Silk Road connecting China by land and sea to Southeast Asia, Central Asia, the Middle East, Europe and Africa.
Abe and Xi pledged last year to reset the sometimes-touchy relationship between Asia’s two largest economic powers.
Wang, who spent eight years in Japan as a diplomat including three as ambassador, said the changing economic climate presented fresh opportunities.
“After reopening these talks, we’re both standing at new starting points to discuss future cooperation that will, I hope, lead to fresh economic growth for both nations,” Wang said at the start of the economic dialogue.
Wang is the first Chinese foreign minister to visit Japan in a bilateral context in nine years. He and Kono discussed a broad range of issues, including North Korea, on Sunday night.


French Q1 growth slowdown tests ECB optimism

Updated 8 min 42 sec ago
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French Q1 growth slowdown tests ECB optimism

  • French inflation data offered ECB central bankers some relief on Friday
  • Consumer spending growth, traditionally the main motor of the French economy, grew only 0.2 percent in the first quarter

PARIS: French economic growth slowed slightly more than expected at the start of the year, official data showed on Friday, a day after the European Central Bank played down concerns of softness in the broader euro zone economy.
The INSEE statistics agency said in a first estimate that the euro zone’s second-biggest economy grew 0.3 percent in the first three months — the slowest rate since the third quarter of 2016.
That marked a slowdown from 0.7 percent growth recorded in the final three months of last year and was slightly below economists’ average forecast for 0.4 percent in a Reuters poll.
Slower business investment and exports in the face of a stronger euro were the main drags on the economy in the first quarter, a breakdown of the data showed.
French Finance Minister Bruno Le Maire said the growth slowdown came as no surprise after the exceptionally strong end to 2017.
“I think growth is solid in Europe and sustainable but we all know there are some clouds on the horizon,” he said on the sidelines of a meeting with EU counterparts in Bulgaria, citing the risk of a trade war and interest rate increases.
The European Central Bank sought to calm concerns about a slowdown in the euro zone economy on Thursday with sources telling Reuters policymakers were keen not to upset investors’ expectations that its stimulus program would end this year.
French inflation data offered ECB central bankers some relief on Friday, showing consumer prices rose the most in five and a half years in April to 1.8 percent, just below the ECB’s 2.0 percent target.
Weak inflation had been the main justification for the ECB’s €2.55 trillion stimulus program.
Capital Economics economist Jessica Hinds said that the slowdown was likely to prove a blip, forecasting the French economy would grow 2.3 percent this year and next after expanding 2.0 percent in 2017.
“Granted, the activity surveys have softened since the start of the year. But they are still consistent with quarterly GDP growth of about 0.6 percent,” Hinds said in a research note.
“And investment is set to grow at a decent pace thanks to President (Emmanuel) Macron’s pro-business approach. Meanwhile, the continued improvement in the French labor market points to solid growth in consumer spending,” she added.
Consumer spending growth, traditionally the main motor of the French economy, grew only 0.2 percent in the first quarter despite exceptionally cold temperatures boosting energy consumption in February.
Meanwhile businesses slowed investment growth to 0.5 percent from 1.6 percent in the previous three months while overall production of goods and services slowed to only 0.3 percent from 0.9 percent.
Manufacturing production fell particularly sharply, down 1.1 percent as companies such as carmaker Renault and pharmaceutical group Sanofi said the euro’s strength had hit their sales.
As a result, exports swung from a sharp increase in the fourth quarter to a slight decrease in the first three months of 2018. Since imports were flat, foreign trade had no impact on overall growth, INSEE said.