China-US trade tension dominates opening day of Bloomberg New Economy Forum

Henry Kissinger (L) speaks with Bloomberg editor-in-chief John Micklethwait at the Bloomberg New Economy Forum in Singapore. (AFP)
Updated 06 November 2018
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China-US trade tension dominates opening day of Bloomberg New Economy Forum

  • China vice president firmly against 'unilateralism'
  • Mandelson says WTO at a 'crossroads'

SINGAPORE: World trade issues dominated the opening day of the Bloomberg New Economy Forum (NEF) in Singapore, with some speakers at the event expressing optimism that rising tensions between the US and China might not prove a stumbling block to global growth.
Wang Qishan, vice president of China, defused worries with an apparent olive branch offered to US President Donald Trump. “Both sides will gain from co-operation and will lose from confrontation,” he said in the keynote address.
“On trade, China will stay calm and will be open to negotiation. China is ready to have discussions with the USA on areas of mutual concern, and reach a solution satisfactory to both sides,” he added.
In the opening speech, Michael Bloomberg, founder of the global media group that has organized the NEF, quoted Henry Kissinger, former US secretary of state who was also at the event; “Talk is good. If you’re talking, you’re not fighting.”
The Chinese politician underlined, however, that his country was “firmly against unilateralism and trade protectionism” — terns that have become a coded reference to the tariffs erected by Trump on Chinese imports. He also condemned the “cold war mentality and power politics,” in another veiled reference to the US.
“Such rapid changes have split some countries and societies. The polarization of right-leaning populism has manifested itself in political demands, which has led to unilateral policies against globalization and seriously affected the international political ecosystem,” Qishan added.
Peter Mandeslon, a former British trade minister, said that the World Trade Organization — the global regulatory body under attack by Trump — was “at a crossroads” but that it was not necessarily doomed. “There is a risk of collapse but we are not quite at that point yet,” he said.
He said that the reasons the WTO was in trouble was as much for political as of economic reasons. “People are turning against trade because they feel they are not getting their fair share of the pie. The politics has got to work better if we’re going to restore confidence in trade,” he said.
Mandelson said that China was a “huge issue” for world trade.
DBS Group, the Singaporean bank that is one of the biggest trade finance facilitators in Asia, downplayed the effects so far of US-China confrontation on trade.
Piyush Gupta, the DBS chief executive, said: “The direct effect will not be very material. It is very hard to shift supply chains,” adding that fears of a trade war between the two biggest economies in the world had been “somewhat overblown.”
A session on the Chinese “belt and road” initiative also heard fears about the spreading influence of China in its dealings with central Asia, the Middle East and Africa via the huge infrastructure investment program it has launched.
Some countries — including Malaysia, Sri Lanka and Pakistan — have expressed fears over the leverage China had on their economies as a result of the initiative.
Robert Blackwell, former US ambassador to India, said China should work more closely with partner governments to alleviate the concerns and employ more local labor. “But will they do that? I doubt it,” he added.


Lufthansa announces overhaul of budget carrier Eurowings

Updated 24 June 2019
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Lufthansa announces overhaul of budget carrier Eurowings

  • Lufthansa cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16
  • Eurowings’ long-haul business would be managed by Lufthansa in the future

BERLIN: Lufthansa on Monday announced a turnaround plan for Eurowings in which the budget carrier will focus on short-haul flights and seek a 15 percent cut in costs by 2022 in the hope of returning to profit.
The German airline cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16. Eurowings’ revenue was also forecast to fall sharply in the second quarter.
Lufthansa said its Eurowings fleet would be standardized on the Airbus A320 family and it would seek to boost productivity at Eurowings by limiting itself in Germany to one air operator’s certificate.
Brussels Airlines — the Belgian national flag carrier which Lufthansa took control of in 2016 — would not be integrated into Eurowings, Lufthansa said. A turnaround plan for Brussels Airlines will be announced in the third quarter.
Lufthansa also said it would start pegging its dividend payout ratio to net profit in the future to give the group more flexibility. It would pay out a regular dividend of 20 percent-40 percent of net profit, adjusted for one-off gains and losses.
Lufthansa said Eurowings’ long-haul business would be managed by Lufthansa in the future.
Carsten Spohr, Chief Executive Officer of Lufthansa, said Monday’s announcements sent “a clear signal that this company cares about its shareholders and tries to create value for them.”
Lufthansa said its Network Airlines — made up of Lufthansa, Swiss and Austrian Airlines — would aim to use innovations in sales and distribution to make a contribution to increasing unit revenues by 3 percent by 2022.
Network Airlines will aim to reduce unit costs continuously by 1 to 2 percent annually, the airline said.