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.


BMW plans massive cost cuts to keep profits from sputtering

Updated 20 March 2019
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BMW plans massive cost cuts to keep profits from sputtering

  • ‘Our business model must remain a profitable one in the digital era,’ chief executive Harald Krueger said
  • Total number of employees is set to remain flat at around 135,000 worldwide

MUNICH: German high-end carmaker BMW warned Wednesday it expects pre-tax profits “well below” 2018 levels this year as it announced a massive cost-cutting scheme aimed at saving $13.6 billion (€12 billion) in total by 2022.
A spokesman said that “well below” could indicate a tumble of more than 10 percent.
The Munich-based group’s 2019 result will be burdened with massive investments needed for the transition to electric cars, exchange rate headwinds and rising raw materials prices, it said in a statement.
Meanwhile it must pump more cash into measures to meet strict European carbon dioxide (CO2) emissions limits set to bite from next year.
And a one-off windfall in 2018’s results will create a negative comparison, even though pre-tax profits already fell 8.1 percent last year.
Bosses expect a “slight increase” in sales of BMW and Mini cars, with a slightly fatter operating margin that will nevertheless fall short of their 8.0-percent target.
“We will continue to implement forcefully the necessary measures for growth, continuing performance increases and efficiency,” finance director Nicolas Peter said at the group’s annual press conference.
BMW aims to achieve €12 billion of savings in the coming years through “efficiency improvements” including reducing the complexity of its range.
“Our business model must remain a profitable one in the digital era,” chief executive Harald Krueger said.
This year, most new recruits at the group will be IT specialists, while the total number of employees is set to remain flat at around 135,000 worldwide.
Departures from the sizeable fraction of the workforce born during the post-World War II baby boom and now reaching retirement age “will allow us to adapt the business even more to future topics,” BMW said.
All the firm’s forecasts are based on London and Brussels reaching a deal for an orderly Brexit and the United States foregoing new import taxes on European cars.
“Developments in tariffs” remain “a significant factor of uncertainty” in looking to the future, finance chief Peter said, adding that “the preparations for the UK’s exit from the EU will weigh on 2019’s results as well.”
In annual results released ahead of schedule last Friday, BMW blamed trade headwinds and new EU emissions tests for net profits tumbling 16.9 percent in 2018, to €7.2 billion.