US, China negotiators resume trade war talks

US President Donald Trump and Chinese leader Xi Jinping agreed to revive negotiations when they met on the sidelines of the G20 summit. (File/AFP)
Updated 10 July 2019

US, China negotiators resume trade war talks

  • Talks had broken down in May over US accusations that Beijing had reneged on its commitments
  • Washington and Beijing have hit each other with punitive tariffs covering more than $360 billion in two-way trade

WASHINGTON: Top US and Chinese negotiators held phone talks on Tuesday as the world’s top two economies seek to resolve their trade war, more than a week after they declared a truce.
Talks had broken down in May over US accusations that Beijing had reneged on its commitments, and the dispute escalated with the two sides exchanging steep increases in punitive tariffs.
But US President Donald Trump and Chinese leader Xi Jinping agreed to revive negotiations when they met on the sidelines of the G20 summit in Japan on June 29.
US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer spoke with Chinese Vice Premier Liu He and Commerce Minister Zhong Shan on Tuesday.
White House economic adviser Larry Kudlow told reporters the talks “went constructively” but it was “too soon for details.”
In an interview with the Fox Business Network, Kudlow described the discussions as “preliminary” and said meetings will “probably” be arranged, but did not give more details.
Kudlow noted that Trump has agreed to hold off on imposing new tariffs and will allow certain US products to be sold to Chinese telecom giant Huawei.
“Having said that, we have a very strong — I want to underscore this — a very strong expectation that China will really shortly, maybe immediately, begin to purchase US agricultural products,” he told the US broadcaster.
The Chinese commerce ministry said in a brief statement that the two sides exchanged “opinions on implementing the consensus reached between the two countries’ heads of state in Osaka.”
Washington and Beijing have hit each other with punitive tariffs covering more than $360 billion in two-way trade and those duties remain in place.
After his meeting with Xi in Osaka, Trump said he would refrain from imposing tariffs on more Chinese products. He had previously threatened to put punitive duties on an additional $300 billion in Chinese exports.
He also triggered a backlash in the US Congress by agreeing to soften some US export restrictions on components to Huawei, though Trump stipulated that officials would take care to avoid creating new risks to US national security.
The United States had imposed tough sanctions on the company, whose equipment US officials fear could be used as Trojan horses for China’s intelligence services.
The cease-fire comes as the US presidential campaign has started ahead of the November 2020 election.
Asked about speculation that Beijing may be waiting to see how the race plays out, Kudlow said it “would be a very big mistake on their part.”
“I think that kind of thinking would probably do great damage to these trade talks,” he said.
But he suggested that the US was in no hurry to finalize a deal.
“Speed is not an issue, quality is the issue,” Kudlow said. “And so I make no forecast on that and reiterate this view. There’s no timetable, none of that stuff.”


Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

Updated 59 min 4 sec ago

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

  • Price regarded as a sensible compromise and that it will sell the IPO
  • Experts said the Aramco valuation was justified by the financial metrics

DUBAI: Investment professionals and energy experts delivered a mainly enthusiastic response to the pricing of shares in Saudi Aramco and the overall valuation of the biggest oil company in the world at between $1.6 trillion and $1.7 trillion.

Al Mal Capital, a Dubai-based investment bank, said that it was positive on the Aramco initial public offering (IPO) on that kind of valuation, which it said was justified by the financial metrics.

“We believe Aramco’s IPO is a central pillar of Saudi Arabia’s Vision 2030. In our view, the broader privatization of state assets will likely accelerate the flow of foreign capital into the Kingdom, improve liquidity and transparency as well as continue to help diversify its economy away from its dependency on oil. While many investors were skeptical about the ability of Saudi Arabia to roll out its ambitious agenda, they seem to be right on track.”

Tarek Fadhallah, chief executive officer of Nomura Asset Management in the Middle East, said via Twitter: “My first impression is that the price is a sensible compromise and that it will sell the IPO. Aramco should easily raise the $8.5bn from retail investors but the 29 global coordinators, managers and financial advisers will need to find the other $17 billion. A few billion from China would help.”

Robin Mills, chief executive of the Qamar Energy consultancy, said; “I think it’s a reasonable compromise. The price is well above most independent valuations but well below the aspirational price. It implies dividend yields a bit lower than the super-majors (the independent oil companies), but a similar price earnings ratio (the measure of the share price rated according to profits). Retail and local investors should be sufficient. We’ll have to see about the foreign investors.”

Ellen Wald, energy markets consultant and author of the book Saudi, Inc., said American investor would still be undecided on the IPO. 

“Remember, investors don’t put money in because they think the value is accurate. Smart investors put money in because they think the value will rise. It all depends on whether they see signs the price will rise during their time frame.”

American oil finance expert David Hodson, managing director of BluePearl Management, said: “This valuation seems to be more reasonable based on the fundamentals. Potential investors in Western markets will base their decision on cold hard facts like dividends and growth prospects. From what we now know, Aramco is offering them a compelling investment proposition to consider.”