Archive for ‘trade war’


Trade wars cost U.S., China billions of dollars each in 2018

CHICAGO (Reuters) – The U.S.-China trade war resulted in billions of dollars of losses for both sides in 2018, hitting industries including autos, technology – and above all, agriculture.

Broad pain from trade tariffs outlined by several economists shows that, while specialized industries including U.S. soybean crushing benefited from the dispute, it had an overall detrimental impact on both of the world’s two largest economies.

The losses may give U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, motivation to resolve their trade differences before a March 2 deadline, although talks between the economic superpowers could still devolve.

The U.S. and Chinese economies each lose about $2.9 billion annually due to Beijing’s tariffs on soybeans, corn, wheat and sorghum alone, said Purdue University agricultural economist Wally Tyner.

Disrupted agricultural trade hurt both sides particularly hard because China is the world’s biggest soybean importer and last year relied on the United States for $12 billion worth of the oilseed.

China has mostly been buying soy from Brazil since imposing a 25 percent tariff on American soybeans in July in retaliation for U.S. tariffs on Chinese goods. The surge in demand pushed Brazilian soy premiums to a record over U.S. soy futures in Chicago, in an example of the trade war reducing sales for U.S. exporters and raising costs for Chinese importers.

“It’s something that’s crying for a resolution,” Tyner said. “It’s a lose-lose for both the United States and China.”

Total U.S. agricultural export shipments to China for the first 10 months of 2018 fell by 42 percent from a year earlier to about $8.3 billion, according to the U.S. Department of Agriculture.

The most actively traded soybean futures contract averaged $8.75 per bushel from July to December 2018, down from an average of $9.76 during the same period a year earlier.

As of Dec. 28, futures in the last month of the year were averaging $8.95-1/2 a bushel. That was down from $9.61-3/4 for all of December last year.

To compensate suffering farmers, the U.S. government has allocated about $11 billion to direct payments and buying agricultural goods for government food programs, after consulting economists, including Tyner.

In North Dakota, which exports crops to China through ports in the Pacific Northwest, soy farmers face at least $280 million in losses because of Beijing’s tariffs, said Mark Watne, president of the North Dakota Farmers Union.

“You could almost put another $100 million on top of this because all commodity prices are down and that affects North Dakota farmers indirectly,” Watne said.

FILE PHOTO: Shipping containers are seen at a port in Shanghai, China July 10, 2018. REUTERS/Aly Song

China’s tariffs improved margins for U.S. soy crushers such as Archer Daniels Midland Co (ADM.N) by leaving plentiful supplies of cheap soybeans on the domestic market.

Chinese soybean mills, on the other hand, front-loaded soy purchases ahead of the tariffs. This led to an oversupply that reduced Chinese processing margins and led factories this summer to make the biggest cuts in years to the production of soymeal used to feed livestock.

China resumed purchases of U.S. soybeans in early December following a trade truce agreed to by leaders from the two countries during G20 summit in Argentina. But Beijing kept its 25 percent tariffs on the oilseed from America, which effectively curbed commercial Chinese buying.

“With the tariffs, the beans can’t go into the commercial system,” said a manager at a major Chinese feed producer, speaking on condition of anonymity. “The buying will have a very limited impact on the market.”

China also suffered as products such as phone batteries were hit by U.S. tariffs, and customers began looking to buy from other countries.

A study commissioned by the Consumer Technology Association showed U.S. tariffs on imported Chinese products cost the technology industry an additional $1 billion per month.

The conflict also squeezed U.S. retail, manufacturing and construction companies that had to pay more for metal and other goods.

“Input price pressures remained elevated in part due to tariffs, particularly in manufacturing and construction, and firms were struggling to pass these higher costs onto customers,” the Dallas Federal Reserve said.

The Big Three Detroit automakers – General Motors, Ford and Fiat Chrysler Automobiles – have each said higher tariff costs will result in a hit to profits of about $1 billion this year.

The pain is ongoing, economists say: Ford and Fiat expect a similar hit in 2019.


Crude refusal: China shuns U.S. oil despite trade war truce

SINGAPORE (Reuters) – China, the world’s top oil importer, is set to start 2019 buying little or no crude from the United States despite a three-month truce in a trade scrap between the two nations, with relatively high freight costs and political uncertainty choking demand.

That muted appetite means the United States, which became the world’s top oil producer this year as its shale output hit record levels, will continue to hold only a sliver of China’s market even as a wave of new refining capacity starts up there.

It also suggests that China is unlikely to use crude purchases to help plug a widening trade gap with the United States, which remains a core source of tensions between the world’s top two economies.

The U.S. trade deficit with Beijing hit a record $43 billion in October as its firms stockpiled inventory from China to avoid higher tariffs that may kick in next year.

“Chinese companies have little incentive to buy U.S. crude due to the wide availability of crude supplies today from Iran and Russia,” said Seng Yick Tee, an analyst at Beijing-based consultancy SIA Energy.

“Even though the trade tension between China and the U.S. had been defused recently, the executives from the national oil companies hesitate to procure U.S. crude unless they are told to do so.”

China stopped U.S. oil imports in October and November after the trade war intensified. It resumed some imports in December, but purchased just 1 million barrels, a minute portion of the more than 300 million barrels of total imports, Refinitiv data showed.

Chinese refineries that used to purchase U.S. oil regularly said they had not resumed buying due to uncertainty over the outlook for trade relations between Washington and Beijing, as well as rising freight costs and poor profit-margins for refining in the region.

Costs for shipping U.S. crude to Asia on a supertanker are triple those for Middle eastern oil, data on Refinitiv Eikon showed.

(GRAPHIC: China’s appetite for U.S. crude muted by high freight costs, competitive Mid East supplies –

A senior official with a state oil refinery said his plant had stopped buying U.S. oil from October and had not booked any cargoes for delivery in the first quarter.

“Because of the great policy uncertainty earlier on, plants have actually readjusted back to using alternatives to U.S. oil … they just widened our supply options,” he said.

He added that his plant had shifted to replacements such as North Sea Forties crude, Australian condensate and oil from Russia.

“Maybe teapots will take some cargoes, but the volume will be very limited,” said a second Chinese oil executive, referring to independent refiners. The sources declined to be named because of company policy.

A sharp souring in Asian benchmark refining margins has also curbed overall demand for crude in recent months, sources said.

(GRAPHIC: Singapore refining margins slump 50 pct in 3 ths amid demand growth concerns –

Despite the impasse on U.S. crude purchases, China’s crude imports could top a record 45 million tonnes (10.6 million barrels per day) in December from all regions, said Refinitiv senior oil analyst Mark Tay.

Russia is set to remain the biggest supplier at 7 million tonnes in December, with Saudi Arabia second at 5.7-6.7 million tonnes, he said.

China’s Iranian oil imports are set to rebound in December after two state-owned refiners began using the nation’s waiver from U.S. sanctions on Tehran.


Boeing opens first 737 plant in China amid U.S.-Sino trade war

ZHOUSHAN, China (Reuters) – Boeing Co (BA.N) opened its first 737 completion plant in China on Saturday, a strategic investment aimed at building a sales lead over arch-rival Airbus (AIR.PA) in one of the world’s top travel markets that has been overshadowed by the U.S-China trade war.

The world’s largest planemaker also delivered the first of its top-selling 737s completed at the facility in Zhoushan, about 290 km (180 miles) southeast of Shanghai, to state carrier Air China (601111.SS)(0753.HK) during a ceremony on Saturday with top executives from both companies.

The executives, alongside representatives from China’s state planner and aviation regulator, unveiled the plane at an event attended by hundreds of people.

Boeing and Airbus have been expanding their footprint in China as they vie for orders in the fast-growing aviation market, which is expected to overtake the United States as the world’s largest in the next decade.

Boeing invested $33 million last year to take a majority stake in a joint venture with state-owned Commercial Aircraft Corp of China (COMAC) to build the completion center, which installs interiors and paints liveries.

Chicago-based Boeing calls itself the top U.S. exporter and delivered more than one out of every four jetliners it made last year to customers in China, where it forecasts demand for 7,700 new airplanes over the next 20 years valued at $1.2 trillion.

However, the plant’s inaugural ceremony was overshadowed by tensions between the United States and China as they engage in a bruising tit-for-tat tariff war. The world’s two largest economies are in a 90-day detente to negotiate a trade deal.

“Am I nervous about the situation? Yeah, of course. It’s a challenging environment,” John Bruns, President of Boeing China, told reporters on a conference call earlier on Saturday.

“We have to keep our eye on the long game in China. Long term, I’m optimistic we will work our way through this,” he said.

While the trade frictions have hurt businesses such as U.S. soy bean farmers and Chinese manufacturers, their impact on Boeing has been unclear. U.S.-made aircraft have so far escaped Beijing’s tariffs.

Bruns said he remained optimistic about the outcome of trade talks between the United States and China and described aviation as a “bright spot” amid tensions between the two countries.

Asked about the possibility of technology transfer agreements between Boeing and COMAC, Bruns stressed that the purpose of the plant was for installing seats, painting vehicles, and completing the planes’ final delivery.

“That’s only a part of what we do in the production of airplanes,” he said.

Officials and executives made no direct reference to the trade tensions in public remarks at the planemaker’s Zhoushan facility.

Boeing aims eventually to hit a delivery target of 100 planes a year at Zhoushan, although Bruns deflected a question on how quickly it would reach that level and said Boeing had no plans to expand work to other aircraft types.

Boeing also hopes the plant will relieve pressure at the Seattle-area facility where it plans to boost production next year of its best-selling 737 narrowbody aircraft but has struggled with production delays.


China buys US soybeans for first time since trade war

Soybeans coming thru siloImage copyrightREUTERS
Image captionChina’s purchase of 1.13 million tonnes of US soybeans has been hailed as a wonderful, great step by US officials.

China has bought US soybeans for the first time since the trade war between the two countries started in July – a move hailed as a “great step” by US officials.

One of the biggest casualties of the US-China trade war has been the US soybean sector.

China is by far the world’s biggest importer of soybeans.

And Beijing’s high tariffs placed on US soybeans this year has been severely hurting US farmers.

A trade truce between China and the US was reached earlier this month however, and there had been much anticipation that China would soon return to the US soybean market.

But while China’s purchase of 1.13 million tonnes of US soybeans on Thursday was met with much applause from some, others said the purchase was too small, and not a sign that the trade war was cooling.

“Having a million, million-and-a-half tonnes is great, it’s wonderful, it’s a great step,” said Steve Censky deputy secretary of the US Department of Agriculture.

“But there needs to be a lot more as well, especially if you consider it in a normal, typical year, we’ll be selling 30 to 35 million metric tonnes to China.”

The sale also failed to excite traders, who said the numbers fell short of estimates, which saw a sell-off in soybean futures.

“It’s a start, but it’s not nearly enough to fix our problems in regards to soybeans and a soybean oversupply in this country,” said Joe Vaclavik, president of Standard Grain, a Tennessee-based brokerage.

Why do soybeans matter?

In 2017, soybeans were the single biggest US agricultural export to China, which accounts for some 60% of the global trade in the commodity.

And soybeans are vitally important to China because they use the product to feed livestock.

The key supplier globally is Brazil, but China has also relied heavily on the US for soybeans supplies – in part due to seasonality.

Bar chart for major soybean exporters

Chief economist Robert Carnell from ING Bank told the BBC that China’s purchase on Thursday was more about convenience than anything else.

“The simple fact is China needs a lot of soybeans and it’s been buying them from Brazil, not the US,” he said.

“But Brazil could never supply all the soybeans China needed, so ultimately [China has] been driven back to US soybeans. And I think it’s just convenient for them to do that right now.”

Mr Carnell said that the recent arrest of Meng Wanzhou, Huawei’s chief financial officer and deputy chair, was far more indicative of where the trade war between the US and China was really up to.

“[It’s] a battle for technology, a battle for 5G,” he said. “In particular, Huawei has become one of the world’s biggest suppliers of telecoms technology – and the US doesn’t really like that.

“[So that arrest] is giving you a much better, a much clearer message on where the trade war lines in the sand are really being drawn.”


Lowest retail sales growth for 15 years dash China’s hopes that consumption will offset trade war

Beijing had high hopes that tax cuts for individuals would lift consumer spending and boost an economy which is showing the effects of the trade war, but overall retail sales in November proved disappointing.

Even record spend on Singles’ Day’ on November 11 could not prevent retail sales from posting their weakest growth rate in 15 years.

November’s retail sales, which covers both corporate and consumer spending, stood at 3.52 trillion yuan, down from 3.55 trillion yuan in October, according to data released by the National Bureau of Statistics on Friday.

The growth rate fell to 8.1 per cent compared to November 2017, below the 8.6 per cent rate in October. The figure was also below the 8.8 per cent growth forecast by a Bloomberg poll of economists. Adjusted for inflation, the growth was even lower, at 5.8 per cent.

As the US-China trade war continues to weigh on exports, Beijing is counting on households and companies to spend more to stabilise growth.

However, weak consumption underscores the difficulties the Chinese leadership is having in its efforts to keep the economy stable.

The government expected that its October move to raising the threshold for taxable personal income to 5,000 yuan per month would release unlock spending power equivalent to hundreds of billions of yuan.

It appears likely that some consumers saved their extra income for the November 11 shopping festival, when they can benefit from large discounts.

Shen Li, a physical therapist from Beijing, said his monthly after-tax income increased by 1,000 yuan due to the tax cut, which he used to purchase items such as household appliances on Singles’ Day.

Singles’ Day, China’s version of the US’ Black Friday, is often seen as a gauge of Chinese consumers’ spending power, but in the past it has not been able to drive up total retail sales figures.

This year’s Singles’ Day sales across Alibaba’s e-commerce platforms totalled US$30.8 billion, dwarfing the online sale numbers for Black Friday and Cyber Monday combined. But the growth rate of total transactions fell to 27 per cent, from last year’s 39 per cent.

The late October launch of Apple’s new iPhone XR, which is cheaper than the earlier iPhone XS series, did not boost telecom sales in China, which dropped 5.9 per cent in November year on year, to 48.5 billion yuan.

However, a plunge in car sales was the main culprit for weak consumption. Auto sales were down 10 per cent on a year earlier, to 345.9 billion yuan, according to the statistics bureau figures, as auto dealers struggled to clear their inventories.

This matched industry surveys from the China Passenger Car Association (CPCA), which reported this week that retail sales of sedans, multi-purpose vehicles and sport utility vehicles plunged 18 per cent to 2.05 million units last month, which makes a full-year decline very likely in the world’s largest auto markets.

Ding Shuang, chief China economist from Standard Chartered Bank, said weak auto sales were caused by the expiration of tax rebates for smaller cars, a slowdown in consumer loans partly due to the crackdown in online peer-to-peer lending platforms, and subdued property investment, since new homes are often sold together with garages.

Local commentators worried about ‘downgrading’ of consumption in 2018 as spending on premium goods slowed.

The growth of real estate investment from January to November remained stable at the 9.7 per cent rate seen in the January to October period.

“The decline of consumers’ abilities and willingness to spend is going to first cut down on big ticket items like cars,” said Jiang Chao, chief economist from Haitong Securities. “Auto accounts for two-thirds of China’s consumption of consumer durables.”

Rising household debt has given Chinese policymakers few options to boost spending other than cutting taxes. China’s household debt-to-GDP rose to 49.3 per cent in the first quarter, which was lower than in advanced economies but higher than the average 40 per cent among emerging economies, according to the Bank of International Settlements.

“Household debt will continue to rise and so debt service costs will remain a drag on consumption. But the debt service burden on households should not get much worse unless there is a big acceleration in credit growth (which we do not expect),” Ernan Cui, an analyst from research firm Gavekal Dragonomics, wrote in a report.

“Local commentators worried about ‘downgrading’ of consumption in 2018 as spending on premium goods slowed,” Cui said. “The biggest boom in products favoured by affluent households is probably over, but consumption upgrading will continue as long as income growth does.”

NBS spokesman Mao Shengyong said at a press conference on Friday that China still had the potential to maintain a stable and fast rate of consumption growth next year, given the rise in the number of middle class citizens.

Economists are eyeing new individual tax deductions that will go into effect next year and more tax relief for private companies to prevent the economy from slowing further.

A more complex tax deduction policy which takes in six types of expenses – from elderly care to medical costs- could inject an additional 80 billion yuan in consumers spend, according to Cui’s estimate.

Beijing has also indicated that it will tighten the collection of social insurance contributions that employers are required to pay, but analysts fear that this could negate the benefits of the tax deductions for employees.


Deflation threat returns to haunt Chinese economy as risks from US trade war linger

  • Both consumer price index and producer price index fell on a monthly basis due to weak demand and a steep drop in oil prices
  • Bad news follows slower than expected drop in imports and exports
  • China suffered another economic blow on Sunday with the return of the deflation threat, a day after it reported slower than expected growth in exports and imports.

    A fall in both consumer and producer price indexes was a result of weakness in demand from both Chinese consumers and investors and reflected their reluctance to spend as confidence in future growth is undermined by the trade war with the US.

    The figures add the challenge faced by the Chinese leadership in keeping economic growth on track ahead of the annual central economic work conference, where policies for next year will be determined.

    Last month the consumer price index fell 0.3 per cent from October while the producer price index dropped 0.2 per cent – the first month-on-month fall in seven months – due to the steep fall in the price of crude oil and coal, according to data released by the National Bureau of Statistics on Sunday.

    On a yearly basis, China’s PPI rose only 2.7 per cent in November, the lowest reading in two years, while China’s CPI in November rose 2.2 per cent from a year earlier, the lowest in four months, the official statistics showed.

    Analysts said deflationary pressure was set to continue as economic activities to weaken.

    Jiang Chao, an analyst with Haitong Securities, wrote in a note before the Sunday data was released that China’s PPI would drop to zero in December and fall further into negative territory in 2019, officially putting China in a deflationary zone.

    The return of deflation risks, which often associated with a contraction in economic activities, provides fresh evidence that China’s US$12 trillion economy is heading into trouble, even though China and US have agreed a 90-day truce in the trade war during which they will try to resolve their differences.

    The official purchasing managers index, a leading indicator of economic growth, showed activity in China’s vast manufacturing sector stalled in November for the first time in over two years as new orders shrank.

    The country’s exports decelerated rapidly last month, although China’s trade surplus with the US widened to a record level, the Chinese customs administration said on Saturday.

    The Chinese government has been trying to shore up confidence in the country’s economic prospects since the summer and shifted its policy priority from cutting debt to bolstering growth.

    However, signs of stress continue to mushroom in the economy.

    Economic data from the first three quarters of the year has suggested that as many as 19 provinces have fallen behind their annual GDP targets and many local governments are scrambling to spur investment so that they can meet their growth targets for 2018.

    The Chinese government has expressed its concerns about unemployment and promised to give cash subsidies – in the form of a partial refund of unemployment insurance payments – to employers if they do not cut their labour force.

    China’s economic growth also slowed to 6.5 per cent in the third quarter of this year from 6.7 per cent in the second quarter of this year


China takes steps to support jobs as trade war starts to hit employment

  • Cabinet unveils measures including unemployment insurance refunds for firms that do not lay off staff and subsidies for all jobless young people aged 16 to 24
PUBLISHED : Wednesday, 05 December, 2018, 4:15pm
UPDATED : Wednesday, 05 December, 2018, 4:17pm


Beijing is now officially worried about unemployment, as the US-China trade war continues to weigh on the world’s second largest economy.

On Wednesday, the State Council unveiled policies ranging from refunding unemployment insurance payments to companies that do not lay off staff to giving subsidies to jobless young people aged 16 to 24 rather than only to college graduates without jobs, according to a document on the government’s website.

The cabinet’s policy paper, which was drafted on November 16 but only made public this week, had already been passed down to local governments last month. The local governments were told to draft their own versions, taking account of local conditions, within 30 days.

Beijing has prioritised employment stability over other economic targets in various meetings, but the document offers the first sign of unease within the central government leadership over whether it can fight off unemployment pressure, as the trade war continues to reduce corporate hiring demand, particularly from export manufacturers.

While the official survey-based unemployment rate remained stable at 4.9 per cent in October compared to September, other indicators point to a weakening jobs market. The employment sub-index in both the official and Caixin purchasing managers’ index for the manufacturing sector showed factories have started to cut their workforces during the past few months because of weak overseas demand.

In the export sector, hiring demand fell by more than half in the third quarter, according to the China Institute for Employment Research, with the supply of new jobs declining even more in coastal cities such as Ningbo and Suzhou that rely heavily on international trade.

“Employment is facing new challenges this year, particularly since the start of the trade conflict,” Zhang Yizhen, vice-minister of human resources and social security, said at a press conference on Wednesday. “These [firms] operating mainly in import and export trade, particularly those exposed to and concentrating on US trade, are facing greater pressure [on employment].”

According the State Council policy paper, companies that do not lay off staff or only scale down their workforce mildly can get a 50 per cent refund of unemployment insurance payments made on behalf of their employees last year. And for firms that face temporary operational difficulties but have had few lay-offs, the refunds could be higher.

Companies in China are required to pay 2 per cent of their total payroll in unemployment insurance every month.

Beijing also called for local governments to increase their financial support for individual entrepreneurs and small private-sector enterprises, which are the main driver of urban employment in China. These entrepreneurs and firms should be offered government-guaranteed loans of between 150,000 yuan (US$21,900) and 3 million yuan (US$438,200).

Southern Guangdong province, a major hub of China’s export economy, is one of the first regions to heed Beijing’s call to lay out a detailed subsidy plan to stabilise employment, based on a notice dated last Friday but published on the government’s website on Monday this week.

In the Guangdong plan, third-party recruitment agencies will get a subsidy of up to 800 yuan from the provincial government for each rural worker they help find a job, through which the worker contributes to the social security fund for more than six months.

A small company that was registered within the last three years can get up to 30,000 yuan in total subsidies depending on the number of workers they hire. The government also offered subsidies – from hundreds to thousands of yuan – to encourage people who start new business in rural areas, college graduates who go to work for rural governments, and small enterprises that hire workers living below the poverty line.

At least for now, Beijing remains confident it can keep the job market under control.

“Even though key indicators have shown that employment remains stable, of course, we are concerned about the uncertainty surrounding the domestic economy and external markets,” Zhang said. “These new measures from the State Council will further stabilise and stimulate employment. We are confident [that they will do that].”


The US-China trade war: from first shots to a truce

  • Washington has agreed to hold off on new tariffs but the core conflicts have yet to be resolved
PUBLISHED : Sunday, 02 December, 2018, 5:44pm
UPDATED : Sunday, 02 December, 2018, 5:44pm
Sarah Zheng

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China and the United States agreed to a 90-day ceasefire on new tariffs in their trade war at the G20 summit in Buenos Aires, allowing a reprieve after months of threats and stalled talks.

The decision for the US to hold off on planned tariff increases on US$200 billion in Chinese goods from 10 to 25 per cent on January 1 came over a grilled steak dinner in Argentina, the first face-to-face meeting between US President Donald Trump and his Chinese counterpart Xi Jinping since the start of the conflict.

Here is a look back at how it all began.

The first shots

The truce comes almost a year after the two countries began sparring over trade. Trump first slapped 30 per cent tariffs on solar panels and washing machines in February, prompting a complaint to the World Trade Organisation from Beijing. Then in March, the Trump administration imposed steel and aluminium tariffs across the board, including on China, which the Chinese government responded to with tariffs on 128 US products such as wine, fruit, and pork.

But the trade war began in earnest in July with the US levying its first round of punitive tariffs, triggered by an investigation under Section 301 of the Trade Act into Chinese trade and intellectual property practices.

Washington’s duties on US$34 billion in Chinese products was quickly matched by Beijing. The US imposed tariffs on another US$16 billion in August – again matched by China – and then US$200 billion in September. Beijing responded to the third round by targeting US$60 billion in US goods.

Beijing’s US$110 billion total targeted industries that analysts said were aimed at Trump’s political base, including a particularly stinging 25 per cent duty on American soybeans.

While business leaders in both countries called for a resolution, a series of trade talks – including low-level discussions in Washington in late August – failed to yield a breakthrough.

After the Chinese side reportedly cancelled scheduled talks in September, US officials signalled that they would not return to the negotiating table without a concrete proposal from Beijing.

Then just before the G20 summit, Chinese Vice-Premier Liu He, Xi’s top economic aide, called off a planned meeting in Washington at the last minute and pinned everything on talks in Buenos Aires.

Just how bad has it been?

The trade war cast a long shadow over the Asia-Pacific Economic Cooperation forum in Papua New Guinea in November, resulting in the leaders failing for the first time to issue a joint communique. And as the China-US conflict has rolled on, it has spilled over into a broader strategic concern, one some analysts have described as the start of a new cold war.

In October, US Vice-President Mike Pence slammed Beijing not only for unfair trade practices, but for militarisation of the energy-rich South China Sea, domestic repression including massive state imprisonment of ethnic Uygurs in Xinjiang, and expanded global influence through “debt diplomacy”. Without offering evidence, Trump also accused China of meddling in US elections ahead of the November midterms.

As tensions escalated, Washington tightened export restrictions on strategic industries, sanctioned a key department of the Chinese military for purchases from Russia, and increased visa scrutiny for Chinese academics in the US.

Meanwhile, American companies in China have reported increased scrutiny from regulators and delayed approvals for licences.

What’s next?

Xi and Trump initially appeared to hit things off with reciprocal lavish state visits in Mar-a-Lago in Florida and Beijing, but their apparent honeymoon was short-lived. A 100-day plan that outlined ways for China to open its economy failed to address the Trump administration’s fundamental concerns.

Those concerns include US complaints about Chinese intellectual property theft and industrial subsidies, centred on Beijing’s state-backed “Made in China 2025” initiative, a programme to turn China into a leader in a range of advanced technologies.

Despite the ceasefire, analysts are sceptical that a deal can be reached on the wide range of prickly trade issues. Only days before the G20 summit, Trump told The Wall Street Journal that it was “highly unlikely” he would delay the January 1 tariff increases, insisting that the brunt of the existing tariffs were being borne by China.

He also said the US was ready to levy tariffs on the remaining US$267 billion in Chinese imports, including consumer goods such as Apple products.

The White House is insisting on structural reforms to China’s economy, beyond window-dressing measures to close the trade imbalance, but Xi is unlikely to make major concessions given the inevitable domestic political backlash, analysts say.

“Both sides got the time out they wanted, to recalibrate their strategies and figur

e out what to do next,” Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management, said on Twitter.

“But the underlying issues – some due to China’s protectionist ideology, some due to Trump’s – remain unresolved.”

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