Facing US trade uncertainty, China seeks closer ties with neighbors

Japan’s Prime Minister Shinzo Abe speaks at a bilateral meeting with China’s Premier Li Keqiang in southwest China’s Sichuan province on Wednesday. (Reuters)
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Updated 26 December 2019

Facing US trade uncertainty, China seeks closer ties with neighbors

  • Beijing willing to strengthen economic cooperation with Japan in third-country markets, says prime minister

CHENGDU: China made overtures on trade to Japan and South Korea and offered support for an infrastructure initiative as it hosted the leaders of its two neighbors this week amid strained ties with the US.

Chinese Premier Li Keqiang said on Wednesday at a meeting with Japanese Prime Minister Shinzo Abe that Beijing was willing to strengthen economic cooperation with Japan in third-country markets.

At the meeting on the sidelines of a trilateral summit in the southwestern city of Chengdu, Li added that China would “further open up its services industry” to Japan.

During a separate meeting on Monday with South Korean President Moon Jae-in, Li said China was willing to work on a rail network linking Korea with China and Europe, Yonhap news agency reported.

Li’s remarks come as China and the United States edge closer to an initial trade agreement after imposing tariffs on billions of dollars worth of goods over nearly two years in a bruising trade war that has hit the global economy.

On Friday, US President Donald Trump touted a “very good talk” he had held with China’s President Xi Jinping on a deal to resolve the dispute.

However, details of the so-called “phase one” deal between the world’s two largest economies have yet to be published in writing, with officials citing incomplete translation and legal work.

Meanwhile, relations between the pair have been further strained by US legislators’ support for the pro-democracy movement in Hong Kong, and their condemnation of the mass internment of Muslim minorities in the western Chinese region of Xinjiang.

Li stressed on Wednesday the importance of China’s trade ties with Japan and South Korea, saying their vast volume of trade was due to the “joint protection of regional stability and peace.”

China, Japan and South Korea held a summit on Tuesday that also touched on a planned free-trade agreement between the three nations, which has been many years in the making.

Trade among the trio was worth more than $720 billion in 2018, according to a joint statement issued Tuesday night by the leaders.

The countries will “speed up the negotiations” on the agreement and “strive to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment”, the statement said.

The leaders plan for the new trilateral free trade agreement (FTA) to build on a separate, sprawling China-backed Asian trade pact, which if signed would be the world’s biggest trade deal.

That pact, called the Regional Comprehensive Economic Partnership (RCEP), was meant to account for 30 percent of global GDP and loop in half of the world’s people.

But India rejected the RCEP deal at a summit in November, dealing it a major blow.

The remaining members of RCEP, which include all 10 ASEAN states plus China, Japan, South Korea, Australia and New Zealand, are aiming to sign it next year after reviewing an agreed draft text.

“Negotiations on the trilateral FTA will become more active as soon as they are able to conclude the negotiation on RCEP,” Japanese foreign ministry spokesperson Masato Otaka said Tuesday.


Oil giants’ production cuts come to 1m bpd as they post massive write-downs

Updated 10 August 2020

Oil giants’ production cuts come to 1m bpd as they post massive write-downs

  • Crude output worldwide dropped sharply after the market crashed in April

LONDON: The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter, and slashed production rates as the coronavirus pandemic caused a drastic fall in fuel prices and demand.

The dramatic reductions in asset valuations and decline in output show the depth of the pain in the second quarter. Fuel demand at one point was down by more than 30 percent worldwide.

Several executives said they took massive write-downs because they expect demand to remain impaired for several more quarters as people travel less and use less fuel due to the ongoing global pandemic.

Of those five companies, only Exxon Mobil did not book sizeable impairments. But an ongoing reevaluation of its plans could lead to a “significant portion” of its assets being impaired, it reported, and signal the elimination of 20 percent or 4.4 billion barrels of its oil and gas reserves.

By contrast, BP took a $17 billion hit. It said it plans to recenter its spending in coming years around renewables and less on oil and natural gas.

Weak demand means oil producers must revisit business plans, said Lee Maginniss, managing director at consultants Alarez & Marsal. He said the goal should be to pump only what generates cash in excess of overhead costs.

“It’s low-cost production mode through the end of 2021 for sure, and to 2022 to the extent there are new development plans being contemplated,” Maginniss said.

London-based BP has previously said it plans to cut its overall output by roughly 1 million barrels of oil equivalent (BOEPD) by the end of 2030 from its current 3.6 million BOEPD.

Of the five, Exxon is the largest producer, with daily output of 3.64 million BOEPD, but its production dropped 408,000 BOEPD between the first and second quarters. The five majors, which include Chevron Corp, Royal Dutch Shell and Total SA, also cut capital expenditures by a combined $25 billion between the quarters.

Crude output worldwide dropped sharply after the market crashed in April. The Organization of the Petroleum Exporting Countries agreed to cut output by nearly 10 million barrels a day to balance out supply and demand in the market.