US and China hold more trade talks, but Kim visit overshadows discussions

Members of the US negotiation team leave a hotel for the second day of talks in Beijing, seeking to resolve a number of thorny issues that have threatened an all-out trade war between the world’s two biggest economies. (AFP)
Updated 08 January 2019
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US and China hold more trade talks, but Kim visit overshadows discussions

  • Negotiators are seeking to resolve a number of thorny issues that have threatened an all-out trade war between the world’s two biggest economies
  • Without a resolution, punitive US duty rates on $200 billion in Chinese goods are due to rise to 25 percent from 10 percent on March 2

BEIJING: US officials held a second day of trade talks with Chinese counterparts in Beijing on Tuesday, overshadowed by an unannounced visit from North Korean leader Kim Jong Un.
This is the first time the two sides have met face-to-face since US President Donald Trump and President Xi Jinping agreed to a tariff truce during a meeting in Argentina on December 1.
The US delegation, which is led by Deputy US Trade Representative Jeffrey Gerrish and includes officials from the Treasury, Commerce, Agriculture and Energy departments, left its hotel without talking to reporters ahead of the talks.
Negotiators are seeking to resolve a number of thorny issues that have threatened an all-out trade war between the world’s two biggest economies.
These include more Chinese purchases of US goods and services to reduce a yawning trade gap, increased access to China’s markets, stronger protection of intellectual property and a reduction in Beijing’s subsidies to Chinese companies.
Neither side has yet provided any details about the talks in Beijing.
The temporary cease-fire came after the two sides imposed import duties on more than $300 billion of each other’s goods.
US Commerce Secretary Wilbur Ross said Monday that China’s economy is more vulnerable to the fallout from the trade war.
“It certainly has hurt the Chinese economy,” Ross told CNBC, noting that China exports many more goods to the United States than the other way around.
Ross said there was a “very good chance” of reaching an agreement, although monitoring compliance would present a challenge.
Without a resolution, punitive US duty rates on $200 billion in Chinese goods are due to rise to 25 percent from 10 percent on March 2.
The second day of trade negotiations coincided with an unannounced visit by North Korean leader Kim Jong Un for talks with Xi in Beijing, amid speculation of a second meeting between Kim and Trump.
Some analysts say that China — Pyongyang’s key diplomatic ally and main source of trade — could use Kim’s visit as a bargaining chip in the US trade talks.
But Bonnie Glaser, a senior adviser at the Center for Strategic and International Studies, said the timing of the North Korean leader’s arrival could be coincidental.
“I don’t see any linkage with the trade talks,” said Bonnie Glaser, a senior adviser at the Center for Strategic and International Studies.
“China’s ability to use (North Korea) as leverage has diminished considerably since Trump opened his own channel to Kim,” she said.
A separate geopolitical issue angered China on Monday when a US Navy guided-missile destroyer sailed near disputed islands in the South China Sea — a vast expanse claimed by Beijing.
China called it a violation of its sovereignty which has damaged “peace, safety and order” in the waterway.
The United States periodically sends planes and warships through the area to signal to Beijing its right under international law to pass through the waters.


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 23 April 2019
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.