China appeals to Washington for quick end to trade war

A worker loads imported goods on a truck at a distribution company outside the container port in Qingdao in east China's Shandong province. (Chinatopix via AP)
Updated 17 October 2019

China appeals to Washington for quick end to trade war

  • Beijing says it will buy more American goods but has yet to confirm the details
  • Tariff hikes by both sides on billions of dollars of imports have battered factories and farmers

BEIJING: China appealed to Washington for a quick end to their trade war but gave no indication Thursday what additional steps Beijing might want before carrying out what President Donald Trump says is a promise to buy up to $50 billion of American farm goods.
Trump agreed Friday to delay a tariff hike in exchange for Chinese purchases of US exports. Beijing says it will buy more American goods but has yet to confirm the details, leaving companies wondering whether Chinese leaders have other demands including a possible end to punitive US tariffs before that goes ahead.
Negotiators are “striving to reach a consensus on the text of the agreement as soon as possible,” said a Ministry of Commerce spokesman, Gao Feng. “I can’t disclose the specific details.”
US Treasury Secretary Steven Mnuchin told reporters Wednesday that officials were still ironing out details of a preliminary agreement.
Companies welcomed the deal as a small but promising possible step toward breaking a deadlock in the 15-month-old fight over China’s trade surplus and technology ambitions.
Tariff hikes by both sides on billions of dollars of imports have battered factories and farmers, weighing on global economic growth. Trump delayed a tariff due to take effect Tuesday on $250 billion of Chinese goods but another increase on $160 billion of imports still is scheduled for Dec. 15.
Economists warned the truce fails to address more basic complaints about Beijing’s plans for government-led creation of global competitors in robotics and other technologies.
Washington, Europe, Japan and other trading partners say those violate Chinese market-opening commitments and are based on stealing or pressuring companies to hand over know-how.
China wants “economic and trade relations back on the right track at an early date,” Gao said at a weekly news briefing.
Achieving results will “restore market confidence and also is highly significant for stabilizing the global economic situation,” he said.
On Tuesday, a foreign ministry spokesman said China would “further speed up procurement” of American farm exports but gave no scale or time frame.
China has bought 20 million tons of US soybeans and 700,000 tons of pork this year, according to the spokesman, Geng Shuang. China imported about 33 million tons of American soybeans annually before the tariff fight and collapsed to 16.6 million tons last year.


HP rejects Xerox takeover bid, says open to acquiring Xerox instead

Updated 18 November 2019

HP rejects Xerox takeover bid, says open to acquiring Xerox instead

  • In rejecting Xerox's $33.5 billion cash-and-stock acquisition offer, HP said the offer “significantly” undervalued the personal computer maker
  • Xerox made the offer for HP on Nov. 5 after resolving its dispute with its joint venture partner Fujifilm Holdings Corp.
NEW YORK: HP Inc. said on Sunday it was open to exploring a bid for US printer maker Xerox Corp. after rebuffing a $33.5 billion cash-and-stock acquisition offer from the latter as “significantly” undervaluing the personal computer maker.
Xerox made the offer for HP, a company more than three times its size, on Nov. 5, after it resolved a dispute with its joint venture partner Fujifilm Holdings Corp. that represented billions of dollars in potential liabilities.
Responding to Xerox’s offer on Sunday, HP said in a statement that it would saddle the combined company with “outsized debt” and was not in the best interest of its shareholders.
However, HP left the door open for a deal that would involve it becoming the acquirer of Xerox, stating that it recognized the potential benefits of consolidation.
“With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction,” HP said in its statement.
The move puts pressure on Xerox to open its books to HP. Xerox did not immediately respond on Sunday to a request for comment on whether it will engage with HP in negotiations as the potential acquisition target, rather than the acquirer.
HP on Sunday published Xerox CEO John Visentin’s Nov. 5 offer letter to HP, in which he stated that his company was “prepared to devote all necessary resources to finalize our due diligence on an accelerated basis.”
Activist investor Carl Icahn, who took over Xerox’s board last year together with fellow billionaire businessman Darwin Deason, said in an interview with the Wall Street Journal last week that he was not set on a particular structure for a deal with HP, as long as a combination is achieved. Icahn has also amassed a 4% stake in HP.
Xerox had offered HP shareholders $22 per share that included $17 in cash and 0.137 Xerox shares for each HP share, according to the Nov. 5 letter. The offer would have resulted in HP shareholders owning about 48% of the combined company. HP shares ended trading on Friday at $20.18.
Many analysts have said there is merit in the companies combining to better cope with a stagnating printing market, but some cited challenges to integration, given their different offerings and pricing models.
Xerox scrapped its $6.1 billion deal to merge with Fujifilm last year under pressure from Icahn and Deason.
Xerox announced earlier this month it would sell its 25% stake in the joint venture for $2.3 billion. Fujifilm also agreed to drop a lawsuit against Xerox, which it was pursuing following their failed merger.

Test for new HP CEO
In 2011 as the centerpiece of its unsuccessful pivot to software. Little over a year later, it wrote off $8.8 billion, $5 billion of which it put down to accounting improprieties, misrepresentation and disclosure failures.
More recently, HP has been struggling with its printer business segment recently, with the division’s third-quarter revenue dropping 5% on-year. It has announced a cost-saving program worth more than $1 billion that could result in its shedding about 16% of its workforce, or about 9,000 employees, over the next few years.
Xerox’s stock has rallied under Visentin, who took over last year as CEO. However, HP said on Sunday that a decline in Xerox’s revenue since June 2018 from $10.2 billion to $9.2 “raises significant questions” regarding the trajectory of Xerox’s business and future prospects.