Archive for ‘President Donald Trump’

11/04/2019

U.S., China agree to establish trade deal enforcement offices – Mnuchin

WASHINGTON (Reuters) – The United States and China have largely agreed on a mechanism to police any trade agreement they reach, including establishing new “enforcement offices,” U.S. Treasury Secretary Steven Mnuchin said on Wednesday.

Mnuchin, speaking on CNBC television, said that progress continues to be made in the talks, including a “productive” call with China’s Vice Premier Liu He on Tuesday night. The discussions would be resumed early on Thursday, Washington time, he added.

“We’ve pretty much agreed on an enforcement mechanism, we’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters,” Mnuchin said, adding that there were still important issues for the countries to address.

Mnuchin declined to comment on when or if U.S. tariffs on $250 billion worth of Chinese goods would be removed. Although President Donald Trump said recently that a deal could be ready around the end of April, Mnuchin declined to put a timeframe on the negotiations, adding that Trump was focused on getting the “right deal.”

“As soon as we’re ready and we have this done, he’s ready and willing to meet with President Xi (Jinping) and it’s important for the two leaders to meet and we’re hopeful we can do this quickly, but we’re not going to set an arbitrary deadline,” Mnuchin added.

The United States is demanding that China implement significant reforms to curb the theft of U.S. intellectual property and end forced transfers of technology from American companies to Chinese firms.

Washington also wants Beijing to curb industrial subsidies, open its markets more widely to U.S. firms and vastly increase purchases of American agricultural, energy and manufactured goods.

The Chinese commerce ministry on Thursday confirmed that senior trade negotiators from both countries discussed the remaining issues in a phone call following the last round of talks in Washington.

“In the next step, both trade teams will keep in close communication, and work at full speed via all sorts of effective channels to proceed with negotiations,” Gao Feng, the ministry’s spokesman told reporters in a regular briefing in Beijing.

Mnuchin did not address whether the enforcement structure would allow the United States a unilateral right to reimpose tariffs without retaliation if China fails to follow through on its commitments.

People familiar with the discussions have said that U.S. negotiators are seeking that right, but that China is reluctant to agree to such a concession. Alternatively, the United States may seek to keep tariffs in place, only removing them when China meets certain benchmarks in implementing its reforms.

Mnuchin said he and U.S. Trade Representative Robert Lighthizer, who is leading the negotiations, are focused on “execution” of drafting the documents in the trade agreement.
The two sides are working on broad agreements covering six areas: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade, according to two sources familiar with the progress of the talks.
“Some of the chapters are close to finished, some of the chapters still have technical issues,” Mnuchin said.
Source: Reuters
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09/04/2019

China’s bridge to North Korea opens 3 years after it was built – but why now?

  • Buses from the North make return trip to China on Monday, according to South Korean media
  • Opening of Jian-Manpo border crossing had been delayed during heightened tension over sanctions on the North
The bridge crosses the Yalu River on the border between China and North Korea. Photo: Kyodo
The bridge crosses the Yalu River on the border between China and North Korea. Photo: Kyodo
China and North Korea have finally opened a border bridge built between the two countries in 2016, in a potential boost to the North’s economy as Beijing tries to balance its concerns about its neighbour against ongoing international pressure for it to denuclearise.
A border checkpoint and bridge connecting the Chinese city of Jian with North Korea’s Manpo were open on Monday, following three years of delays since they were built.

Four buses crossed the border from North Korea in the morning and returned to the hermit kingdom about an hour later carrying about 120 people, who included tourists, according to South Korean media. It was not known whether the people travelled from North Korea or boarded the buses in China.

The bridge had remained closed on its completion in 2016, with Beijing taking a cautious approach at a time when it faced international scrutiny of whether it was fully implementing UN Security Council sanctions on the North.

to enforce the sanctions after a UN committee accused it and South Korea of being reluctant to enforce a ban on coal exports from the North.

But there has been a change in the status of the Jian-Manpo border crossing – built near to where Kim’s father, the former leader Kim Jong-il, was reported to have crossed the border in 2010 in a rare trip outside his country.

Kim’s second summit with Trump in February collapsed against a backdrop of continued economic struggles for North Korea. Beijing is wary of instability around the North Korean regime posing a threat to the security of China’s northeast, fearing an influx of refugees into one of its poorest regions.

North Korea’s trade has suffered to the extent that the Korea Development Institute said in February it had almost collapsed.

The North’s exports to China – which accounts for the bulk of its trade – plunged 87 per cent year-on-year in 2018, according to data compiled by South Korea’s Korea

International Trade Association, while there have been myriad other economic problems at a time when Kim has vowed to deliver on the economy.

In April last year, Kim announced that Pyongyang was moving away from its twin-track “byungjin” policy of developing nuclear weapons and the economy simultaneously to focus exclusively on rebuilding the economy.

Boo Seung-chan, adjunct professor at the Yonsei Institute for North Korean Studies in Seoul, said the bridge’s primary use would be to boost tourism in North Korea, which is not restricted by the UN sanctions.

“Tourism is the only sector left for the North Koreans to earn foreign revenue,” Boo said. “Besides, China can only offer its financial help through the tourism sector as it does not wish to violate UN sanctions.

“China’s Korean peninsula policy is to maintain the stability of the region. It may also be drawing a road map for when sanctions may be lifted, finding its means to accelerate its economic engagement to increase its sphere of influence.”

Source: SCMP

07/04/2019

US and China edge closer to ‘epic’ trade deal, says Trump

A woman works on socks that will be exported to the US at a factory in Huaibei in China's eastern Anhui province on August 7, 2018Image copyrightGETTY IMAGES

President Donald Trump says the US has found agreement on some of the toughest points in trade talks with China.

He said a deal could come in the next four weeks, but added some sticking points remained.

The Chinese echoed the optimism, with President Xi Jinping touting substantial progress, according to the Chinese state news agency Xinhua.

The US and China have been in talks since December trying to end a trade war that is hurting the global economy.

Mr Trump said the US and China had agreed on “a lot of the most difficult points” but that “we have some ways to go”.

He was speaking from the White House, before a meeting with Chinese Vice Premier Liu He.

The US president said if there was a deal, he would hold a summit with President Xi.

“This is an epic deal, historic – if it happens,” said Mr Trump.

“This is the Grand Daddy of them all and we’ll see if it happens. It’s got a very good chance of happening.”

Sticking points in negotiations in recent weeks have included how fast to roll back tariffs and how a deal would be enforced.

Mr Trump suggested at the press conference that some of these persisted.

He said it would be tough for the US to allow trade to continue with China in the same way as in the past, if a deal did not materialise.

‘Conflicting signals’

The world’s two largest economies imposed tariffs on billions of dollars worth of one another’s goods over the past year.

Negotiations between them have continued since a trade truce was agreed in December, but have at times been rocky.

The BBC’s China correspondent Robin Brant said that both sides were – yet again – giving conflicting signals.

Mr Liu said the US and China had reached a new consensus on important issues like the text of the economic and trade agreement, Xinhua reported.

While that echoed Mr Trump’s comments, US Trade Representative Robert Lighthizer sounded more cautious. He said there were still some major issues left in trade talks, according to reports.

Mr Brant said there was clearly still significant distance between the two sides on the crucial issue of enforcement.

What’s being discussed?

The US accuses China of stealing intellectual property from American firms, forcing them to transfer technology to China.

Washington wants Beijing to make changes to its economic policies, which it says unfairly favour domestic companies through subsidies and other support, and wants China to buy more US goods to rein in a lofty trade deficit.

China accuses the US of launching the largest trade war in economic history, and is unlikely to embrace broader structural changes to its economy.

An aerial view of a port in Qingdao in China's eastern Shandong province on March 8, 2019Image copyrightGETTY IMAGES

What’s at stake?

Failure to achieve a deal may see the US more than double the 10% tariffs on $200bn (£153bn) of Chinese goods and impose fresh tariffs.

Mr Trump has in the past threatened to tax all Chinese goods going into the US.

The US has already imposed tariffs on $250bn worth of Chinese goods, and China has retaliated with duties on $110bn of US products.

The damaging trade war has already cast a shadow over global trade and the world economy.

Source: The BBC

05/04/2019

US and China edge closer to ‘epic’ trade deal, says Trump

A woman works on socks that will be exported to the US at a factory in Huaibei in China's eastern Anhui province on August 7, 2018Image copyrightGETTY IMAGES

President Donald Trump says the US has found agreement on some of the toughest points in trade talks with China.

He said a deal could come in the next four weeks, but added some sticking points remained.

The Chinese echoed the optimism, with President Xi Jinping touting substantial progress, according to the Chinese state news agency Xinhua.

The US and China have been in talks since December trying to end a trade war that is hurting the global economy.

Mr Trump said the US and China had agreed on “a lot of the most difficult points” but that “we have some ways to go”.

He was speaking from the White House, before a meeting with Chinese Vice Premier Liu He.

The US president said if there was a deal, he would hold a summit with President Xi.

“This is an epic deal, historic – if it happens,” said Mr Trump.

“This is the Grand Daddy of them all and we’ll see if it happens. It’s got a very good chance of happening.”

Sticking points in negotiations in recent weeks have included how fast to roll back tariffs and how a deal would be enforced.

Mr Trump suggested at the press conference that some of these persisted.

He said it would be tough for the US to allow trade to continue with China in the same way as in the past, if a deal did not materialise.

‘Conflicting signals’

The world’s two largest economies imposed tariffs on billions of dollars worth of one another’s goods over the past year.

Negotiations between them have continued since a trade truce was agreed in December, but have at times been rocky.

The BBC’s China correspondent Robin Brant said that both sides were – yet again – giving conflicting signals.

Mr Liu said the US and China had reached a new consensus on important issues like the text of the economic and trade agreement, Xinhua reported.

While that echoed Mr Trump’s comments, US Trade Representative Robert Lighthizer sounded more cautious. He said there were still some major issues left in trade talks, according to reports.

Mr Brant said there was clearly still significant distance between the two sides on the crucial issue of enforcement.

What’s being discussed?

The US accuses China of stealing intellectual property from American firms, forcing them to transfer technology to China.

Washington wants Beijing to make changes to its economic policies, which it says unfairly favour domestic companies through subsidies and other support, and wants China to buy more US goods to rein in a lofty trade deficit.

China accuses the US of launching the largest trade war in economic history, and is unlikely to embrace broader structural changes to its economy.

An aerial view of a port in Qingdao in China's eastern Shandong province on March 8, 2019Image copyrightGETTY IMAGES

What’s at stake?

Failure to achieve a deal may see the US more than double the 10% tariffs on $200bn (£153bn) of Chinese goods and impose fresh tariffs.

Mr Trump has in the past threatened to tax all Chinese goods going into the US.

The US has already imposed tariffs on $250bn worth of Chinese goods, and China has retaliated with duties on $110bn of US products.

The damaging trade war has already cast a shadow over global trade and the world economy.

Source: The BBC

06/03/2019

China to make forced technology transfer illegal as Beijing tries to woo back foreign investors

  • Issue a key demand made by US President Donald Trump as part of the ongoing US-China trade war
  • China expected to pass new foreign investment law next week during National People’s Congress

26 Feb 2019

Foreign direct investment in China amounted to US$135 billion in 2018, an increase of 3 per cent from a year earlier, according to Chinese government data. Photo: EPA

Foreign direct investment in China amounted to US$135 billion in 2018, an increase of 3 per cent from a year earlier, according to Chinese government data. Photo: EPA
Beijing will make it illegal to force foreign investors to transfer their technology to Chinese partners while also lowering market barriers for foreign firms to enter the domestic market, a senior economic planning official said on Wednesday, highlighting an effort to lure overseas investment inflows.
China is expected to pass a new law next week intended to protect the interests of foreign investors, both as a response to demands from the United States that have formed part of the ongoing trade war negotiations, and to help shore up economic growth, which slowed last year to its lowest rate in 28 years.
Foreign investors will be allowed to set up ventures in which they have full ownership, instead of being forced into joint ventures with local partners, in more industries, said Ning Jizhe, a vice-chairman of the National Development and Reform Commission, in Beijing on Wednesday during the National People’s Congress.

But foreign investment into the world’s second biggest economy have slowed over last decade, which could deprive China of access to advanced technologies and marginalise the country in the development of future global supply chains.

Beijing is trying to lure more foreign capital and technology to support its plan to upgrade its manufacturing industries and boost the development of new, hi-tech sectors.

“China will roll out more opening-up measures in the agriculture, mining, manufacturing and service sectors, allowing wholly foreign-owned enterprises in more fields,” Ning said.

China law to protect intellectual property, ban forced tech transfer
Since December, China has been rushing to draft legislation for a new foreign investment law, a key clause of which prohibits local government’s from forcing transfer of technology in return for being allowed to conduct business in their jurisdictions.
The National People’s Congress is expected to endorse the new 

“After passing the law, the government will take serious measures to obey and implement it,” Ning added.

He said that China will remove market entry restrictions for foreign investors to ensure that domestic and foreign firms “are treated as equals.”

Ning Jizhe, a vice-chairman of the National Development and Reform Commission. Photo: EPA
Ning Jizhe, a vice-chairman of the National Development and Reform Commission. Photo: EPA

However, the jury is still out whether Beijing’s promises of fair treatment, market access and protection for intellectual property rights will be enough to generate a steady inflow of hi-tech investment.

The US has long complained that China has been unwilling to implement previous commitments under the World Trade Organisation to open up its market – allegation Beijing denies.

Shen Jianguang, chief economist at JD Digits, an arm of Chinese e-commerce firm JD.com, said restrictions on foreign investment will exist in China despite the government’s promises.

China’s domestic market remains large and attractive for some foreign investors, he said.

“Foreign investors are still very interested in the Chinese market, if the openness of the economy is sufficient,” Shen added.

Source: SCMP

06/03/2019

Huawei: The story of a controversial company

The African Union headquarters in Addis Ababa is a shiny spaceship-like structure that glistens in the afternoon sun.

With its accompanying skyscraper, it stands out in the Ethiopian capital.

Greetings in Mandarin welcome visitors as they enter the lifts, and the plastic palm trees bear the logos of the China Development Bank.

African Union HQ, Addis Ababa

African Union HQ, Addis Ababa

 

Everywhere, there are small indications that the building was made possible through Chinese financial aid.

In 2006, Beijing pledged $200m to build the headquarters. Completed in 2012, everything was custom-built by the Chinese – including a state-of-the-art computer system.

For several years, the building stood as a proud testament to ever-closer ties between China and Africa. Trade has rocketed over the past two decades, growing by about 20% a year, according to international consultancy McKinsey. China is Africa’s largest economic partner.

But in January 2018, French newspaper Le Monde Afrique dropped a bombshell.

It reported that the AU’s computer system had been compromised.

The newspaper, citing multiple sources, said that for five years, between the hours of midnight and 0200, data from the AU’s servers was transferred more than 8,000km away – to servers in Shanghai.

This had allegedly continued for 1,825 days in a row.

Le Monde Afrique reported that it had come to light in 2017, when a conscientious scientist working for the AU recorded an unusually high amount of computer activity on its servers during hours when the offices would have been deserted.

It was also reported that microphones and listening devices had been discovered in the walls and desks of the building, following a sweep for bugs.

The reaction was swift.

Both AU and Chinese officials publicly condemned the report as false and sensationalist – an attempt by the Western media to damage relations between a more assertive China and an increasingly independent Africa.

But Le Monde Afrique said that AU officials had privately expressed concerns about just how dependent they were on Chinese aid – and what the consequences of that could be.

In the midst of all of this, one fact remained largely unreported.

The main supplier of information and communication technology systems to the AU headquarters was China’s best-known telecoms equipment company – Huawei.

The company says it had “nothing” to do with any alleged breach.

Huawei “served as the key ICT provider inside the AU’s headquarters”, said Danielle Cave of the Australian Strategic Policy Institute, in a review of the alleged incident.

Huawei headquarters in Shenzhen, China

Huawei headquarters in Shenzhen, China

“This doesn’t mean the company was complicit in any theft of data. But… it’s hard to see how – given Huawei’s role in providing equipment and key ICT services to the AU building and specifically to the AU’s data centre – the company could have remained completely unaware of the apparent theft of large amounts of data, every day, for five years.”

There is no evidence to indicate that Huawei’s telecoms network equipment was ever used by the Chinese government – or anyone else – to gain access to the data of their customers.

Indeed, no-one has ever gone on record to confirm that the AU system was compromised in the first place.

But these reports played into years of suspicions about Huawei – that a large Chinese company might find itself unduly influenced by the Chinese government.

Ren and the rise of Huawei

“When I first started out 30 years ago… we didn’t really have any telephones. The only phones we had were those hand-cranked phones that you see in old World War II films. We were pretty undeveloped then.”

Huawei’s founder and chairman Ren Zhengfei is reminiscing to the BBC about the origins of the world’s second-biggest smartphone firm, while sitting in the Huawei headquarters in Shenzhen – a symbol of the success that he’s worked his whole lifetime for.

A long marbled staircase, covered in plush red carpet, greets you as you first walk in.

At the top of the stairs, a giant painting depicts a traditional Chinese New Year scene.

Inside Huawei's Shenzhen HQ

Inside Huawei’s Shenzhen HQ

A few kilometres away in Dongguan, Huawei’s latest campus is even more eye-catching.

The site – designed to accommodate the company’s 25,000 R&D staff – comprises 12 “villages”, each of which recreates the architecture of a different European city, among them Paris, Bologna and Granada.

It’s as if Silicon Valley had been re-imagined by Walt Disney. Long corridors of Roman pillars and picturesque French cafes adorn the campus, with a train connecting the different areas, running through manicured gardens and past an artificial lake.

It’s a world away from the environment that Mr Ren found himself in when he first started the company in 1987. “I founded Huawei when China began to implement its reform and opening up policy,” he says. “At that time, China was shifting from a planned economy to a market economy. Not only people like myself, but even the most senior government officials, did not have the vaguest idea of what a market economy was. It seemed it was hard to survive.”

Ren was born in 1944 in Southern China – a tumultuous, chaotic place, one of the poorest regions in an already destitute country.

For a long time, hardship was all he ever knew.

He was from a family of seven children. “They were very poor,” says David De Cremer, who has co-written a book on Ren and Huawei.

“I think hardship is something that you can see throughout his life, and which he keeps emphasising himself.”

To escape that life of poverty and drudgery, Ren did what many young Chinese men of that era did. He joined the army.

Soldiers from the People's Liberation Army, 1972

Soldiers from the People’s Liberation Army, 1972

“I was a very low-ranking officer in the People’s Liberation Army,” he says. “I served in an ordinary construction project, not a field unit. At the time, I was a technician of a company in the military, and then I became an engineer.”

He left the military in 1983 when China began to downsize its forces, and went into the electronics business.

By his own admission, he wasn’t a great businessman at first.

“I was someone who had been in the military all my life at the time, used to doing what I was told,” he says. “Suddenly, I began to work in a market economy. I was at a total loss. So I too suffered losses, I too was deceived, and I was cheated.”

But he was quick to learn, and was a keen student of Western business practices and European history.

“I did research on what exactly a market economy was all about,” he says. “I read books on laws, including those about European and US laws. At that time, there were very few books on Chinese laws, and I had to read those on European and US laws.”

Five years later, he founded Huawei – the name can be translated as “splendid achievement” or “China is able” – to sell simple telecoms equipment to the rural Chinese market. Within a few years, Huawei was developing and producing the equipment itself.

Sometime in the early 90s, Huawei won a government contract to provide telecoms equipment for the People’s Liberation Army.

By 1995, the company was generating sales of around US$220,000, mainly from selling to the rural market.

The following year Huawei was given the status of a Chinese “national champion”. In practice, this meant the government closed the market to foreign competition.

At a time when China’s economy was growing by an average of 10% per year, this was no small advantage. But it was only when Huawei started to expand overseas in 2000, that it really saw its sales soar.

In 2002, Huawei made US$552m from its international market sales. By 2005 its international market contracts exceeded its domestic business for the first time.

Ren’s early days in business instilled in him a desire to protect his company from the whims and fancies of the stock market. Huawei is privately held and employee-owned. This gave Ren the power to plough more money back into research and development. Each year, Huawei spends US$20bn on R&D – one of the biggest such budgets in the world.

“Publicly listed companies have to pay a lot of attention to their balance sheets,” he says. “They can’t invest too much, otherwise profits will drop and so will their share prices. At Huawei, we fight for our ideals. We know that if we fertilise our ‘soil’ it will become more bountiful. That’s how we’ve managed to pull ahead and succeed.”

One story from the early days of the company tells how Ren was cooking for his staff (he loves to cook, or so the story goes). Suddenly he rushed out of the kitchen and announced to the room: “Huawei will be a top three player in the global communications market 20 years from now!”

And that’s exactly what happened. In fact, those ambitions were surpassed.

Today, Huawei is the world’s biggest seller of network telecommunications equipment.

From aspiring to be a company like Apple, it now sells more smartphones than Apple.

But shadows have continued to loom over Huawei’s international success.

Ren and Huawei’s links to the Chinese Communist Party have raised suspicions that the company owes its meteoric rise to its powerful political connections in China. The US has accused Huawei of being a tool of the Chinese government.

It’s an accusation which Ren denies. “Please don’t think that Huawei has become what it is today because we have special connections,” he says. “Even 100% state-owned companies have failed. Do good connections mean you will succeed then? Huawei’s success is still very much due to our hard work.”

The case against

It was 1 December 2018. US President Donald Trump and China’s President Xi Jinping were dining on grilled sirloin followed by caramel rolled pancakes at the G20 summit in Buenos Aires.

They had a lot to discuss. The US and China were in the middle of a trade war – imposing tariffs on each other’s goods – and growth forecasts for both countries had recently been cut as a result. This was adding to the fear of a slowing global economy.

In the event, the two leaders agreed a truce in the trade war, with Donald Trump tweeting that “Relations with China have taken a BIG leap forward!”

Xi Jinping and Donald Trump at dinner, December 2018

Xi Jinping and Donald Trump at dinner, December 2018

But thousands of kilometres north in Canada, an arrest was taking place that would throw doubt on this rapprochement.

Meng Wanzhou, Huawei’s chief financial officer and Ren Zhengfei’s eldest daughter, had been detained by Canadian officials while transferring between flights at Vancouver airport.

The arrest had come at the request of the US, who accused her of breaking sanctions against Iran.

“When she was detained, as her father, my heart broke,” says Ren, visibly emotional. “How could I watch my child suffer like this? But what happened, has happened. We can only depend on the law to solve this problem.”

Meng Wanzhou being driven to court in Canada

Meng Wanzhou being driven to court in Canada

Huawei’s problems were just beginning. Nearly two months later, the US Department of Justice filed two indictments against Huawei and Ms Meng.

Under the first indictment, Huawei and Ms Meng were charged with misleading banks and the US government about their business in Iran.

The second indictment – against Huawei – involved criminal charges including obstruction of justice and the attempted theft of trade secrets.

Both Huawei and Ms Meng deny the charges.

January 2019: Acting US attorney general Matthew Whittaker announces charges against Huawei and Meng Wanzhou

January 2019: Acting US attorney general Matthew Whittaker announces charges against Huawei and Meng Wanzhou

The charge of stealing trade secrets centres on a robotic tool – developed by T-Mobile – known as Tappy.

According to legal documents, Huawei had tried to buy Tappy, a device which mimicked human fingers by tapping mobile phone screens rapidly to test responsiveness.

T-Mobile was in partnership with Huawei at the time, but it rebuffed the Chinese firm’s offers, fearing it would use the technology to make phones for T-Mobile’s competitors.

It’s alleged that one of Huawei’s US employees then smuggled Tappy’s robotic arm into his satchel so that he could send its details to colleagues in China.

After the alleged theft was discovered, the Huawei employee claimed that the arm had mistakenly fallen into his bag.

Huawei claimed that the employee had been acting alone, and the case was settled out of court in 2014. But the latest case is built on email trails between managers in China and the company’s US employees, linking Huawei management to the alleged theft.

The indictment also details evidence of a bonus scheme from 2013, offering Huawei employees financial rewards for stealing confidential information from competitors.

Huawei has denied any such scheme exists.

Meng Wanzhou, photographed in 2014

Meng Wanzhou, photographed in 2014

This is not the first time that Huawei has been accused of stealing trade secrets. Over the years companies like Cisco, Nortel and Motorola have all pointed the finger at the Chinese firm.

But US fears about Huawei are about much more than industrial espionage. For more than a decade, the US government has seen the company as little more than an arm of the Chinese Communist Party.

These concerns have been brought to the fore with the advent of “fifth generation” or 5G mobile internet, which promises download speeds 10 or 20 times faster than at present, and much greater connectivity between devices.

As the world’s biggest telecoms infrastructure provider, Huawei is one of the companies best placed to build new 5G networks. But the US has warned its intelligence partners that awarding contracts to Huawei would be tantamount to allowing the Chinese spy on them.

US Secretary of State Mike Pompeo recently cautioned against Huawei, saying, “If a country adopts this and puts it in some of their critical information systems, we won’t be able to share information with them.”

US Secretary of State Mike Pompeo

US Secretary of State Mike Pompeo

The UK, Germany and Canada are reviewing whether Huawei’s products pose a security threat.

Australia went a step further last year, and banned equipment suppliers “likely to be subject to extrajudicial directions from a foreign government”.

Huawei was not mentioned by name, but Danielle Cave of the Australian Strategic Policy Institute says the company posed a national security risk because of its government links.

She cites an article in Chinese law that makes it impossible for any company to refuse to help the Chinese Communist Party in intelligence gathering.

“Admittedly, what is missing from this debate is the smoking gun,” she says.

“For the average person who has a Huawei smartphone it’s not a big deal. But if you’re a Western government that has key national security to protect – why would you allow this access to a company that is in the political system that China is in?”

For his part, Ren says that Huawei’s resources have never and would never be used to spy for the Chinese government.

“The Chinese government has clearly said that it won’t ask companies to install backdoors,” he says. A “backdoor” is a term used to describe a secret entry point in software or a computer system that gives access to the person or entity who installed it to the inner workings of the system.

“Huawei will not do it either,” he continues. “Our sales revenues are now hundreds of billions of dollars. We are not going to risk the disgust of our country and our customers all over the world because of something like that. We will lose all our business. I’m not going to take that risk.”

Xi’s China

Zhou Daiqi is Huawei’s chief ethics and compliance officer.

He’s been with the company for nearly 25 years, in a number of different positions – chief engineer, director of the hardware department, head of the research centre in Xi’an, according to his biography on the company’s website. He is also understood to combine his high-ranking executive duties with another role – party secretary of Huawei’s Communist Party committee.

All companies in China are required by law to have a Communist Party committee.

Zhou Daiqi's profile on Huawei's website

Zhou Daiqi’s profile on Huawei’s website

The official line is that they exist to ensure that employees uphold the country’s moral and social values. Representatives of the committee are also often tasked with helping workers with financial problems.

But critics of China’s one-party system argue that they allow the state to exert control on corporate China. And they say the level of this control has increased in recent years.

“[President] Xi Jinping is exerting greater control over the business community in China,” says Elliott Zaagman, who regularly advises Chinese companies on their PR strategy. “As these companies gain power and influence overseas, the party doesn’t want to lose control over them.”

Ren, however, argues that the role of Huawei’s Communist Party committee is far less important than many in the West believe.

“[It] serves only to educate its employees,” he says. “It is not involved in any business decisions.”

In China, most chief executives are Communist Party members.

Every year, they dutifully turn up to the National People’s Congress along with local and national party chiefs, officials and chief executives.

It’s where the big economic decisions are voted on – although no proposal is put forward which hasn’t already been agreed upon.

Still, big CEOs come to show their commitment to the party, and to contribute to working papers that are meant to help the government understand the concerns of the business community.

Being a member of the party is very much a networking opportunity – in the way one would join a business association.

Elliott Zaagman argues that this is a system that demands loyalty.

“There is no separation from the party and the state,” he says.

“The system in China encourages the lack of transparency in companies like Huawei.”

The worry is that these close links mean that if the Communist Party asked a company to do something, they would have no choice but to comply.

And if that company is one that is involved in sensitive global telecoms infrastructure projects, it’s easy to see why Western observers would be worried.

There is no evidence to indicate that Huawei is in any way under the orders of the Chinese government, or that Beijing has any plans to dictate business plans and strategy at Huawei – particularly when it comes to spying.

But the way in which the Chinese Communist Party has robustly defended Huawei has raised questions about how independent the company is of its influence.

For example, Beijing stated that Ms Meng’s detention was a rights abuse .

And while her extradition case to the US was moving forward, China detained two Canadian citizens and accused them of stealing state secrets. Critics say the detentions are linked to Ms Meng’s arrest.

December 2018: Chinese police patrol outside Canada's embassy in Beijing

December 2018: Chinese police patrol outside Canada’s embassy in Beijing

While not commenting on the arrest of the Canadians, Ren says China’s defence of Huawei is understandable.

“It is the Chinese government’s duty to protect its people,” he says. “If the US attempts to gain competitive edge by undermining China’s most outstanding hi-tech talent, then it is understandable if the Chinese government, in turn, protects its hi-tech companies.”

Over the past few years, there have been signs of a bigger push by the government to get private companies, and in particular tech firms, to cooperate with party rules – even when they are firmly resistant.

 A Didi Chuxing logo adorns a building in Hangzhou, China

 A Didi Chuxing logo adorns a building in Hangzhou, China

China’s ride-hailing giant Didi Chuxing’s troubles are an example of the struggles Chinese firms face when they try to uphold their independence in the face of government pressure.

Chinese attitudes to data collection and data privacy are different to those in the West – many people don’t care if businesses have access to their data, arguing that it adds to the convenience of life and work.

Government access to data in China is not the free-for-all that many outside of China assume it to be

Samm Sacks, CSIS

So it wasn’t unusual when, after the murders of two of its passengers by Didi drivers, regulators used the scandal to force Didi to share more corporate data with the government. But Didi resisted – citing customer privacy. Under Chinese law, it had no choice but to comply.

When it did, it handed over “three boxes of data printed on paper, including 95 hard copies for authorities to review”.

According to Samm Sacks of the Center for Strategic and International Studies (CSIS), the case demonstrates that “government access to data in China is not the free-for-all that many outside China assume it to be”.

She says this indicates that there appears to be “a kind of tug of war between the government and companies over data”.

How this plays out will determine how Chinese companies are viewed by foreign governments when they do business overseas.

Companies like Huawei have grown up in a system where to survive and thrive they needed strong links to the Chinese government – there was and is no other choice. But these links could harm their reputation abroad.

“It’s two different systems,” says Zaagman. “Think of it like an electrical outlet. China’s plug doesn’t fit in to the outlets we have in the West.”

What’s at stake

“Basically you want to connect to everything that can be connected.”

Zhu Peiying, head of Huawei’s 5G wireless labs, is showing off devices that can connect to the new technology. From a smart toothbrush that collects data about how well you brush your teeth, to a smart cup that reminds you when you should drink some water, this is a world where everything you can think of is being measured and analysed.

At its most sophisticated, everything in entire cities would be connected – driverless cars, the temperature of buildings, the speed of public transport – the list is endless.

Huawei is thought to be a year ahead of its competitors in terms of its technological expertise and what it can offer customers, according to industry sources.

It’s also thought that the company can offer prices that are about 10% cheaper than its competitors, although critics claim this is because of state support.

Ren dismisses this, saying that Huawei doesn’t receive government subsidies.

He says the real reason behind the US resistance to Huawei is its superior technology.

“There’s no way the US can crush us,” he says. “The world needs Huawei because we are more advanced. Even if they persuade more countries not to use us temporarily we could just scale things down a bit.”

Many analysts say that Huawei’s exclusion from US networks could actually cause the US to fall behind in its 5G capabilities.

“It would mean we wouldn’t be able to participate in any blended network [using Huawei] in Europe or Asia,” says Samm Sacks of CSIS. “That would put us at a significant disadvantage.”

What this would mean in reality is a world of two internets – or what analysts are calling a “digital iron curtain” – dividing the world into parts that do business with Chinese companies like Huawei, and those that don’t.

Because of US pressure on its allies, Huawei has been on an aggressive public relations campaign to win over customers and government stakeholders.

In recent days, Vodafone’s boss Nick Read called on the US to share any evidence it has about Huawei, while Andrus Ansip, the European Commission’s vice president for the digital single market, said in a tweet that he had met with Huawei’s rotating CEO to discuss the importance of being open and transparent, as they explored ways of working together.

But suspicions about Huawei remain.

One security firm reports a sharp rise in inquiries by Asian government clients about Huawei.

“Some have asked us how much they should worry about whether Huawei is really a liability,” says an analyst who consults to Asian governments, on condition of anonymity.

Ren is sanguine about such concerns.

“For countries who believe in them [suspicions about Huawei] we will hold off,” he says. “For countries who feel Huawei is trustworthy, we may move a little faster. The world is so big. We can’t walk across every corner of it.”

But this is about more than just one company or one CEO and his family.

Increasingly, this is perceived as a battle between two world orders, and which one is the future.

In the early days of China opening up, US presidents like George HW Bush espoused the merits of engagement.

“No nation on Earth has discovered a way to import the world’s goods and services while stopping foreign ideas at the border,” he said in a 1991 speech. “Just as the democratic idea has transformed nations on every continent, so, too, change will inevitably come to China.”

1989: George HW Bush in Beijing - he encouraged economic engagement with China

1989: George HW Bush in Beijing – he encouraged economic engagement with China

Previous US administrations believed that economic engagement in China would lead to China following a freer, more “liberal” path.

There’s no denying China has made remarkable strides in the past 40 years. The economy grew by an annual average of 10% for three decades, helping to lift 800 million people out of poverty. It is now the second-largest economy in the world, only surpassed by the US.

Some estimates put China’s economy ahead of America’s by 2030.

It achieved this while maintaining one-party rule and the supremacy of the Communist Party.

But its success has raised concerns that it is only possible with a huge amount of government control over the country’s companies. The fear is that control could be used to achieve the Communist Party’s goals – which are at this point unclear.

“It’s a double-edged sword for China,” says Danielle Cave. “[Because of its laws] the Chinese Communist Party has made it virtually impossible for Chinese companies to expand without attracting understandable and legitimate suspicion.”

Added to this, China has become more authoritarian under Xi Jinping’s rule.

President Xi Jinping 

President Xi Jinping 

“Xi is systematically undermining virtually every feature that made China so distinct and helped it work so well in the past,” writes Jonathan Tepperman, editor in chief of Foreign Policy.

“His efforts may boost his own power and prestige in the short term and reduce some forms of corruption. On balance, however, Xi’s campaign will have disastrous long-term consequences for his country and the world.”

But Ren dismisses this, insisting that China is more open than ever before.

“If this meeting took place 30 years ago,” he says of our interview, “it would have been very dangerous for me. Today, I can be straightforward when answering difficult questions. This shows that China has a more open political environment.”

Still, Ren is hopeful of the direction China will take in the future.

“China has more or less tried to close itself off from the outside world for 5,000 years,” he says. “Yet we had found ourselves poor, lagging behind other nations. It was only in the past 30 years since Deng Xiaoping opened China’s doors to the world that China has become more prosperous. Therefore, China must continue to move forward on the path of reform and opening-up.”

In one of Huawei’s vast campus sites across Shenzen, lies a man-made lake. Swimming in these serene waters are two black swans.

There is a story that Ren put the birds here to remind employees of “black swan” events – unpredictable and catastrophic financial eventualities that are impossible to prepare for. He dismisses this as an urban myth, but it’s hard not to read something into it.

For Huawei, and Ren, these are highly uncertain times with no way of telling what lies ahead.

Source: The BBC

06/03/2019

China’s February exports seen falling most in 2 years, imports down again – Reuters Poll

BEIJING (Reuters) – China’s exports likely contracted in February after a surprise bounce in January, while imports fell for a third straight month, a Reuters poll showed, heightening anxiety over whether Washington and Beijing can resolve deep differences over trade.

China’s exports in February are expected to have fallen 4.8 percent from a year earlier, according to the median estimate of 32 economists in a Reuters poll, following a 9.1 percent rise in January.

Such a drop would be the biggest since December 2016, and suggest a further weakening in global demand.

Imports in February are expected to have fallen 1.4 percent from a year earlier, compared with the previous month’s 1.5 percent decline.Stronger-than-expected imports could prompt some China watchers to say the economy is showing signs of bottoming out in response to a string of stimulus measures in 2018.

But most analysts typically caution that China’s data early in the year can be highly distorted by the timing of the Lunar New Year holidays, when some business rush out shipments or scale back output before shutting for a extended break. As such, analysts’ estimates for February varied widely.

TRADE DEAL NOT A SILVER BULLET

In recent weeks, the United States and China appear to have moved closer to a trade deal that would roll back tit-for-tat tariffs on each others’ goods, with Beijing making pledges on structural economic changes, a source briefed on negotiations said on Sunday.

But President Donald Trump will reject any pact that is not perfect, Secretary of State Mike Pompeo said this week.
Even if concrete steps such as dismantling tariffs are agreed, it would not be a panacea for all of China’s economic woes. Its exporters would have to piece supply chains back together, win back market share and contend with slowing demand globally.
Factory surveys have suggested exports and imports will remain weak in coming months, with February’s official gauge showing export orders fell to their weakest level since the global financial crisis.
China’s overall trade surplus is seen to have shrunk sharply to $26.38 billion in February from $39.16 billion the previous month, according to the Reuters poll.
In response to growing domestic and global pressure, China’s government this week unveiled a 2019 economic growth target of 6.0-6.5 percent, down from an actual 6.6 percent in 2018, the slowest pace in nearly 30 years.
China to slash taxes, boost lending to prop up slowing economy
Premier Li Keqiang told parliament on Tuesday that China will shore up the economy through billions of dollars in additional tax cuts and infrastructure spending, and will lower real interest rates.
“A set of pro-growth measures are planned despite positive progress in U.S.-China trade talks, which makes us think that either China doesn’t have full confidence in a trade truce or that the damages from the trade conflict cannot easily be undone,” said Iris Pang, Greater China economist at ING.
Source: Reuters
02/03/2019

Trump asks China to lift tariffs on U.S. farm products

WASHINGTON (Reuters) – U.S. President Donald Trump said he had asked China to immediately remove all tariffs on U.S. agricultural products because trade talks were progressing well.

He also delayed plans to impose 25 percent tariffs on Chinese goods on Friday, as previously scheduled.
“I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions,” Trump said on Twitter, pointing out that he had not raised tariffs on Chinese goods to 25 percent from 10 percent on March 1 as planned.
“This is very important for our great farmers – and me!” Trump said.
Farmers are a key constituency for Trump’s Republican Party, and the U.S. president’s trade war with China has had a heavy impact on them. Beijing imposed tariffs last year on imports of soybeans, grain sorghum, pork and other items, slashing shipments of American farm products to China.
U.S. Agriculture Secretary Sonny Perdue said this week that U.S. trade negotiators had asked China to reduce tariffs on U.S. ethanol, but it was not immediately clear whether Beijing was willing to oblige.
Trump’s post on Twitter came several hours after the U.S. Trade Representative’s office said that it would delay the scheduled hike in tariffs on $200 billion worth of Chinese goods.

The notice, due to be published in the Federal Register next Tuesday, says it is “no longer appropriate” to raise the rates because of progress in negotiations since December 2018. The tariff would remain “at 10 percent until further notice.”

In a statement on Saturday, China said it welcomed the delay.

Speaking at a separate briefing in Beijing, a Chinese government official said both countries were working on the next steps, though he gave no details.

“China and the United States reaching a mutually-beneficial, win-win agreement as soon as possible is not only good for the two countries, but is also good news for the world economy,” said Guo Weimin, spokesman for the high profile but largely ceremonial advisory body to China’s parliament.

A tariff increase to 25 percent from 10 percent was initially scheduled for Jan. 1, but after productive conversations with Chinese President Xi Jinping, the Trump administration issued a 90-day extension of that deadline.

Trump had said on Sunday he would again delay the increase because of progress in the talks.

Source: Reuters

26/02/2019

Trump: US and China ‘very very close’ on deal

US President Donald Trump addresses US governors at the White HouseImage copyrightAFP

President Donald Trump has said that the US and China are “very very close” to signing a trade agreement, potentially ending the long-running feud between the two countries.

Mr Trump told US governors on Monday that both nations “are going to have a signing summit”.

“Hopefully, we can get that completed. But we’re getting very, very close,” he said.

It follows a decision to delay imposing further trade tariffs on Chinese goods.

At the weekend, Mr Trump said both sides had made “substantial progress” in trade talks following a summit in Washington last week.

The rise in import duties on Chinese goods from 10% to 25% was due to come into effect on 1 March.

Instead, Mr Trump said the US is now planning a summit with Chinese Premier Xi Jinping at the US President’s Mar-a-Lago resort in Florida.

US shares rose on the decision to delay tariffs, with the Dow Jones Industrial Average closing 0.23% higher at 26,091.9.

The S&P 500 and the Nasdaq also finished trading in positive territory.

As he prepared to meet North Korean leader Kim Jong-un in Vietnam, Mr Trump also tweeted that a China trade deal was in “advanced stages”.

Mr Trump’s decision to delay tariff increases on $200bn (£153bn) worth of Chinese goods was seen as a sign that the two sides were moving ahead in settling their damaging trade war.

Last week, Mr Trump noted progress in the latest round of negotiations in Washington, including an agreement on currency manipulation, though no details were disclosed.

Sources told CNBC on Friday that China had committed to buying up to $1.2 trillion in US goods, but there had been no progress on the intellectual property issues.

Donald Trump and China's Vice Premier Liu He in the Oval OfficeImage copyrightAFP
Image captionPresident Trump met China’s Vice Premier Liu He on Friday

Gregory Daco, chief US economist at Oxford Economics, said: “We had anticipated such a delay and believe a handshake agreement in which China will promise to import more agricultural products, work towards a stable currency and reinforce intellectual property rights protection will be achieved in the coming weeks.

“However, we don’t foresee a significant rollback of existing tariffs, and see underlying tensions regarding China’s strategic ambitions, its industrial policy, technological transfers and ‘verification and enforcement’ mechanisms remaining in place.”

What has happened in the trade war so far?

Mr Trump initiated the trade war over complaints of unfair Chinese trading practices.

That included accusing China of stealing intellectual property from American firms, forcing them to transfer technology to China.

The US has imposed tariffs on $250bn worth of Chinese goods, and China has retaliated by imposing duties on $110bn of US products.

Mr Trump has also threatened further tariffs on an additional $267bn worth of Chinese products – which would see virtually all of Chinese imports into the US become subject to duties.

US and China's tariffs against each other

The trade dispute has unnerved financial markets, risks raising costs for American companies and is adding pressure to a Chinese economy that is already showing signs of strain.

It has also stoked fears about the impact on the global economy.

Last year, the International Monetary Fund warned the trade war between the US and China risked making the world a “poorer and more dangerous place”.

Source: The BBC

25/02/2019

Trump to delay further tariffs on Chinese goods

Donald Trump and China's Vice Premier Liu He in the Oval OfficeImage copyrightAFP
Image captionPresident Trump met China’s Vice Premier Liu He on Friday

President Donald Trump has announced that the US will delay imposing further trade tariffs on Chinese goods.

The rise in import duties on Chinese goods from 10% to 25% was due to come into effect on 1 March.

Mr Trump said both sides had made “substantial progress” in trade talks, which sent Chinese stocks up nearly 5%.

He added that he was planning a summit with Chinese President Xi Jinping in Florida to cement the trade deal if more progress was made.

A report from China’s official news agency Xinhua also noted “substantial progress” on specific issues such as technology transfer, intellectual property protection and agriculture.

Mr Trump’s decision to delay tariff increases on $200bn (£153bn) worth of Chinese goods was seen as a sign that the two sides are making progress on settling their damaging trade war.

Last week, Mr Trump noted progress in the latest round of negotiations in Washington, including an agreement on currency manipulation, though no details were disclosed.

Sources told CNBC on Friday that China had committed to buying up to $1.2 trillion in US goods, but there had been no progress on the intellectual property issues.

What has happened in the trade war so far?

Mr Trump initiated the trade war over complaints of unfair Chinese trading practices.

That included accusing China of stealing intellectual property from American firms, forcing them to transfer technology to China.

The US has imposed tariffs on $250bn worth of Chinese goods, and China has retaliated by imposing duties on $110bn of US products.

Mr Trump has also threatened further tariffs on an additional $267bn worth of Chinese products – which would see virtually all of Chinese imports into the US become subject to duties.

US and China's tariffs against each other

The trade dispute has unnerved financial markets, risks raising costs for American companies and is adding pressure to a Chinese economy that is already showing signs of strain.

It has also stoked fears about the impact on the global economy.

Last year, the International Monetary Fund warned the trade war between the US and China risked making the world a “poorer and more dangerous place”.

Source: The BBC

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