US-China trade conflict could take years to resolve — Kudlow

US-China trade conflict could take years to resolve — Kudlow
Kudlow declined to predict outcomes or a specific timeline for reaching any agreements. (AFP)
Updated 07 September 2019

US-China trade conflict could take years to resolve — Kudlow

US-China trade conflict could take years to resolve — Kudlow
  • A deal of this size and scope and central global importance, I don’t think 18 months is a very long time, says Kudlow
  • “We would like to go back to where we were last May, but I don’t know if that’s possible,” says the WH economic adviser

WASHINGTON: White House economic adviser Larry Kudlow said on Friday the United States wants “near term” results from US-China trade talks in September and October but cautioned that the trade conflict could take years to resolve.
Speaking to reporters outside the White House, Kudlow said that although the United States and China have been negotiating on trade and intellectual property issues for 18 months, that was a short period of time in terms of what was at stake and negotiations could go on much longer.
“A deal of this size and scope and central global importance, I don’t think 18 months is a very long time,” Kudlow said.
“The stakes are so high, we have to get it right, and if that takes a decade, so be it,” Kudlow added, drawing parallels to US Cold War competition against the Soviet Union.
But in confirming talks between high-level US and Chinese officials in early October, Kudlow declined to predict outcomes or a specific timeline for reaching any agreements.
The plans for the first in-person US-China trade meetings since late July were set during a phone call on Thursday between Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. Trade deputies are due to meet in mid-September.
The 14-month US-China trade war has escalated sharply since May, when talks broke down after Beijing backtracked on earlier commitments to make changes in law to improve intellectual property protections, curb the forced transfer of US technology to Chinese firms and improve US access to Chinese markets.
Since then, US President Donald Trump has sharply increased existing tariffs on $200 billion worth of Chinese goods and imposed or scheduled new tariffs on virtually all remaining imports from China to increase his negotiating leverage.
Kudlow told Bloomberg TV that he could not speculate on whether the September or October talks could delay a planned tariff increase on Oct. 1 to 30% from 25% on $250 billion worth of Chinese goods.
“We would like to go back to where we were last May, but I don’t know if that’s possible, and I don’t want to predict any outcomes. This is a difficult matter,” told reporters at the White House.
He also said that it was important that Chinese reforms be reflected in changes to its laws and that any deal must have enforcement provisions to ensure that China lives up to its commitments.
He said on Fox Business Network that the September and October talks would cover all of the core issues in the dispute.
“Everything will be on the table. You can rest assured, for example, the absolute key structural issues — the IP theft, the forced transfer of technology, the cyberspace, the clouds, financial services, all of that will be on the table — agriculture purchases, industrial purchases, energy purchases, getting tariff and non-tariff barriers down,” Kudlow said.
While there were no precondition talks, Kudlow told Bloomberg TV that the Trump administration wants “to see results in the near term.”
“When we don’t see results, we take additional actions,” Kudlow said. “On the other hand, if we do see results from these upcoming meetings, then progress will be made.”
Trump said on Twitter that China was hurting economically from the US tariffs but that the new round of talks were positive.
“’China is eating the Tariffs,’” Trump tweeted. “Billions pouring into USA. Targeted Patriot Farmers getting massive Dollars from the incoming Tariffs! Good Jobs Numbers, No Inflation(Fed). China having worst year in decades. Talks happening, good for all!”


Global shares, oil prices falter as US stimulus buzz fades

Global shares, oil prices falter as US stimulus buzz fades
Updated 16 January 2021

Global shares, oil prices falter as US stimulus buzz fades

Global shares, oil prices falter as US stimulus buzz fades

LONDON: Global shares stumbled on Friday as hopes of a fiscal boost from a $1.9 trillion US stimulus plan were smothered by the prospect of stricter lockdowns in France and Germany and a resurgence of COVID-19 cases in China.
European stocks followed Asian markets lower, with the pan-European STOXX 600 down 0.8 percent and London’s FTSE 100 0.8 percent weaker, with the latter clobbered by data showing Britain’s economy shrank in November for the first time since the initial COVID-19 lockdown last spring.
The MSCI world equity index, which tracks shares in 49 countries, was 0.3 percent lower. S&P 500 e-mini futures shed 0.3 percent to 3,779.
Oil prices, which had risen on a weak dollar and strong Chinese import data, dropped as COVID-19 concerns in China hit sentiment.
Brent was down $1.33, or 2.3 percent, after gaining 0.6 percent on Thursday. US West Texas Intermediate crude was down $1.17, or 2.1 percent at $52.44 a barrel, having risen more than 1 percent the previous session.
Brent and US crude were heading for their first weekly declines in three weeks.
Spot gold rose 0.1 percent to $1,847.00 per ounce.
While oil producers are facing unparalleled challenges balancing supply and demand equations with calculus involving vaccine rollouts versus lockdowns, financial contracts have been boosted by strong equities and a weaker dollar, which makes crude cheaper, along with strong Chinese demand.
“The recent resurgence in coronavirus infections, appearance of new variants, delayed vaccine rollouts and renewed lockdown measures in most major OECD economies has clouded the economic and demand recovery,” said Stephen Brennock of oil broker PVM.
“Simply put, near-term demand expectations aren’t too promising.”
Earlier on Friday, an Asian regional share index had edged near record highs after US President-elect Joe Biden proposed a $1.9 trillion stimulus plan to jump-start the world’s largest economy and accelerate its response to the coronavirus.
In prime time remarks on Thursday, Biden outlined a proposal that includes $415 billion aimed at the COVID-19 response, some $1 trillion in direct relief to households, and roughly $440 billion for small businesses and communities hard hit by the pandemic.
But that initial boost later faded as risk appetite waned, lifting bond prices and the dollar, and hitting equities.
“People are saying it’s a big number but markets are almost acting like its a disappointment,” said James Athey, investment director at Aberdeen Standard Investments.
“I think maybe the market was pricing an additional $2,000 cheque going to the US population, but what’s being proposed is a top-up of $1,400 to take the total to $2,000 because $600 has already been agreed.”
Investors also digested the prospect of rising taxes to pay for the plan.
“The concern is what it’s going to mean from a tax stand point,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“Spending is easy to do but the question is how are you going to pay for it? Markets often ignore politics but they don’t often ignore taxes.”
Biden’s comments came after US Federal Reserve Chair Jerome Powell struck a dovish tone in comments at a virtual symposium with Princeton University.
Powell said the US central bank is not raising interest rates anytime soon and rejected suggestions the Fed might start reducing its bond purchases in the near term.
Investor concerns over the prospects for a global economic recovery were raised after France strengthened its border controls and brought forward its night curfew by two hours to 6 p.m. for at least two weeks to try to slow the spread of infections.
German Chancellor Angela Merkel called for “very fast action” to counter the spread of variants of the coronavirus.
Chinese blue chips eased 0.2 percent, snapping a four-week winning streak, after the country on Friday reported the highest number of new COVID-19 cases in more than 10 months.
US earnings season kicked into full swing with results from JPMorgan, Citigroup and Wells Fargo.
JPMorgan Chase reported a much better-than-expected 42 percent jump in fourth-quarter profit on Friday, driven by the release of some of the reserves it had built up against coronavirus-driven loan losses.
Investors will be looking to see if banks are starting to take down credit reserves, resume buybacks, and provide guidance that shows the economy is improving, said Thomas Hayes, chairman of Great Hill Capital in New York.
In the currency market, the US dollar rose.
The dollar index was at 90.407 versus a basket of currencies, up 0.2 percent on the day.
It was on track for a weekly gain of around 0.4 percent, making this its strongest week since November.
Against the stronger dollar, the euro was down 0.2 percent at $1.21325.
US yields stepped back as risk appetite waned. Benchmark 10-year Treasury notes yielded 1.1039 percent, down from a US close of 1.129 percent on Thursday, while the 30-year yield dipped to 1.8451 percent from 1.874 percent.
In Europe, Italy’s bond market was poised to end the week calmer, as 10-year bond yields were down 2 basis points at 0.59 percent.
Italian Prime Minister Giuseppe Conte resisted calls to resign on Thursday after a junior coalition party led by former premier Matteo Renzi pulled out of the government on Wednesday and stripped it of its majority.