MARKETWATCH
"Global chip sales fall for a seventh straight month"
By Wallace Witkowski
Published: Sept 3, 2019 4:58 p.m. ET
Global chip sales fell year-over-year for a seventh straight month in July, according to the Semiconductor Industry Association late Tuesday.
For July, global sales fell 15.5% to $33.4 billion from the year-ago period.
"While global semiconductor sales in July were once again down on a year-to-year basis, month-to-month sales were up slightly," said John Neuffer, SIA president and CEO, in a statement.
July sales were worst in the Americas with a 27.8% drop, followed by China, where sales fell 14.1% from a year ago.
In June, SIA reported global sales had dropped for the third straight quarter and for the sixth straight month.
The PHLX Semiconductor Index is up 5.5% over the past 12 months, compared with a 0.2% rise in the S&P 500 index and a 2.9% decline in the tech-heavy Nasdaq Composite Index.
https://www.marketwatch.com/story/globa ... latestnews
CHINA
Re: CHINA
MARKETWATCH
"U.S. trade deficit dips 2.7% in July, but the overall gap is still huge and growing amid China trade war"
By Jeffry Bartash
Published: Sept 4, 2019 10:28 a.m. ET
The numbers:
The U.S. trade deficit fell almost 3% in July owing to higher exports of drugs, oil and autos, but the nation’s gap was still running ahead of last year’s pace even as the Trump administration adopted tough tactics to reverse the tide.
The deficit slipped to $54 billion from a revised $55.5 billion in the prior month, the government said Wednesday.
Economists polled by MarketWatch had forecast a $53.4 billion deficit.
Although the deficit with China has fallen after the imposition of U.S. tariffs, the gap has increased with Mexico, the European Union and South Korea.
The U.S. trade gap through the first seven months of 2019 totaled $374 billion vs. $346 billion in the same span in 2018.
What happened:
U.S. exports rose 0.6% to $207.4 billion.
The U.S. shipped more pharmaceutical drugs, new autos, oil, drilling equipment and soybeans.
Soy exports are still running ahead of last year’s pace despite disruptions from the trade war with China, a huge customer for the Midwest crop.
Farmers have suffered from price swings and interruptions in sales, however.
Imports slipped 0.1 to $261.4 billion.
The U.S. saw a big drop in imports of computers and crude oil, offsetting increases in petroleum products, cell phones and furniture.
Imports and exports of many goods have gyrated due the trade war with China.
In some cases companies have stocked up on products likely to face higher tariffs, reducing orders later in the year.
The trade gap in goods with China, meanwhile, fell to $29.6 billion from $30.2 billion and it’s running below last year’s level.
Stiff U.S. tariffs have reduce Chinese imports more than the decline in U.S. exports to the Asian nation.
President Trump is raising tariffs again this month.
The declining but still high deficit with China, however, has not reduced the overall U.S. deficit.
Trade gaps with other large partners such as Mexico, Germany, South Korea and Canada have all grown.
The trade deficit in goods with the European Union, for instance, hit an all-time high in July.
Big picture:
The trade deficit isn’t getting any smaller despite the president’s effort to rein it in — and part of the reason is a relatively strong economy.
The U.S. is growing faster than most other countries, so Americans can afford to buy more foreign goods.
The stronger value of the dollar and a weaker global economy, on the other hand, have reduced demand for U.S. goods and services.
U.S. exports in July were about $7 billion below the record high set in early 2018 before the fight with China intensified.
And the surplus in service exports — tourism, travel, financial advice and the like — was the lowest in three and a half years.
That’s hurting manufacturers in particular and weighing on the U.S. economy more broadly.
Higher trade deficits are a drag on GDP.
What they are saying?:
“Services exports may be an unintended casualty of the trade war if tourism or foreign student numbers come under pressure,” said Michael Pearce, senior U.S. economist at Capital Economics.
“[Trade] flows likely got more volatile again in August, as exporters and importers were undoubtedly scrambling to avoid the imposition of new tariffs on September 1," said chief economist Stephen Stanley of Amherst Pierpont Securities.
“As a result, I would look for large swings in the monthly data over the next several months.”
Market reaction:
The Dow Jones Industrial Average and S&P 500 index rose in Wednesday trades.
The 10-year Treasury yield slipped to 1.48%.
The yield has sunk from a seven-year high of 3.23% last October.
https://www.marketwatch.com/story/trade ... 2019-09-04
"U.S. trade deficit dips 2.7% in July, but the overall gap is still huge and growing amid China trade war"
By Jeffry Bartash
Published: Sept 4, 2019 10:28 a.m. ET
The numbers:
The U.S. trade deficit fell almost 3% in July owing to higher exports of drugs, oil and autos, but the nation’s gap was still running ahead of last year’s pace even as the Trump administration adopted tough tactics to reverse the tide.
The deficit slipped to $54 billion from a revised $55.5 billion in the prior month, the government said Wednesday.
Economists polled by MarketWatch had forecast a $53.4 billion deficit.
Although the deficit with China has fallen after the imposition of U.S. tariffs, the gap has increased with Mexico, the European Union and South Korea.
The U.S. trade gap through the first seven months of 2019 totaled $374 billion vs. $346 billion in the same span in 2018.
What happened:
U.S. exports rose 0.6% to $207.4 billion.
The U.S. shipped more pharmaceutical drugs, new autos, oil, drilling equipment and soybeans.
Soy exports are still running ahead of last year’s pace despite disruptions from the trade war with China, a huge customer for the Midwest crop.
Farmers have suffered from price swings and interruptions in sales, however.
Imports slipped 0.1 to $261.4 billion.
The U.S. saw a big drop in imports of computers and crude oil, offsetting increases in petroleum products, cell phones and furniture.
Imports and exports of many goods have gyrated due the trade war with China.
In some cases companies have stocked up on products likely to face higher tariffs, reducing orders later in the year.
The trade gap in goods with China, meanwhile, fell to $29.6 billion from $30.2 billion and it’s running below last year’s level.
Stiff U.S. tariffs have reduce Chinese imports more than the decline in U.S. exports to the Asian nation.
President Trump is raising tariffs again this month.
The declining but still high deficit with China, however, has not reduced the overall U.S. deficit.
Trade gaps with other large partners such as Mexico, Germany, South Korea and Canada have all grown.
The trade deficit in goods with the European Union, for instance, hit an all-time high in July.
Big picture:
The trade deficit isn’t getting any smaller despite the president’s effort to rein it in — and part of the reason is a relatively strong economy.
The U.S. is growing faster than most other countries, so Americans can afford to buy more foreign goods.
The stronger value of the dollar and a weaker global economy, on the other hand, have reduced demand for U.S. goods and services.
U.S. exports in July were about $7 billion below the record high set in early 2018 before the fight with China intensified.
And the surplus in service exports — tourism, travel, financial advice and the like — was the lowest in three and a half years.
That’s hurting manufacturers in particular and weighing on the U.S. economy more broadly.
Higher trade deficits are a drag on GDP.
What they are saying?:
“Services exports may be an unintended casualty of the trade war if tourism or foreign student numbers come under pressure,” said Michael Pearce, senior U.S. economist at Capital Economics.
“[Trade] flows likely got more volatile again in August, as exporters and importers were undoubtedly scrambling to avoid the imposition of new tariffs on September 1," said chief economist Stephen Stanley of Amherst Pierpont Securities.
“As a result, I would look for large swings in the monthly data over the next several months.”
Market reaction:
The Dow Jones Industrial Average and S&P 500 index rose in Wednesday trades.
The 10-year Treasury yield slipped to 1.48%.
The yield has sunk from a seven-year high of 3.23% last October.
https://www.marketwatch.com/story/trade ... 2019-09-04
Re: CHINA
CNBC
"Senior White House official denies report US considering interim China trade deal"
Yun Li@YunLi626, Eamon Javers@EamonJavers
Published Thu, Sep 12 2019 • 10:50 AM EDT
* The U.S. is "absolutely not" considering an interim trade deal with China, a senior White House official told CNBC.
* Bloomberg News reported earlier Thursday the Trump administration has discussed putting together a limited trade deal that would delay and remove some China tariffs, citing five people familiar with the matter.
A senior White House official said the U.S. is "absolutely not" considering an interim trade deal with China.
Bloomberg News reported earlier Thursday that the Trump administration discussed putting together a limited trade deal that would delay and remove some China tariffs, citing five people familiar with the matter.
The news had driven stocks to session highs.
Stocks pared gains after the unnamed senior White House official denied the report of such an interim deal.
Trump on Wednesday announced he would delay the tariffs on $250 billion worth of Chinese goods from Oct. 1 to Oct. 15 as a "gesture of good will" to China.
The postponement was at the request of Chinese Vice Premier Liu He, the nation's top trade negotiator, Trump said.
China said Thursday that domestic companies have reached out to inquire about prices of U.S. agricultural products.
Trump tweeted that it is expected China will be buying "large amounts" of U.S. farm goods.
The two countries agreed to meet in early October in Washington and hold deputy-level discussions leading up to the meeting to lay the groundwork for a possible deal.
Liu said Thursday that the talks next week will focus on trade balance, market access and investor protection.
https://www.cnbc.com/2019/09/12/senior- ... -deal.html
"Senior White House official denies report US considering interim China trade deal"
Yun Li@YunLi626, Eamon Javers@EamonJavers
Published Thu, Sep 12 2019 • 10:50 AM EDT
* The U.S. is "absolutely not" considering an interim trade deal with China, a senior White House official told CNBC.
* Bloomberg News reported earlier Thursday the Trump administration has discussed putting together a limited trade deal that would delay and remove some China tariffs, citing five people familiar with the matter.
A senior White House official said the U.S. is "absolutely not" considering an interim trade deal with China.
Bloomberg News reported earlier Thursday that the Trump administration discussed putting together a limited trade deal that would delay and remove some China tariffs, citing five people familiar with the matter.
The news had driven stocks to session highs.
Stocks pared gains after the unnamed senior White House official denied the report of such an interim deal.
Trump on Wednesday announced he would delay the tariffs on $250 billion worth of Chinese goods from Oct. 1 to Oct. 15 as a "gesture of good will" to China.
The postponement was at the request of Chinese Vice Premier Liu He, the nation's top trade negotiator, Trump said.
China said Thursday that domestic companies have reached out to inquire about prices of U.S. agricultural products.
Trump tweeted that it is expected China will be buying "large amounts" of U.S. farm goods.
The two countries agreed to meet in early October in Washington and hold deputy-level discussions leading up to the meeting to lay the groundwork for a possible deal.
Liu said Thursday that the talks next week will focus on trade balance, market access and investor protection.
https://www.cnbc.com/2019/09/12/senior- ... -deal.html
Re: CHINA
REUTERS
"U.S., Chinese trade deputies face off in Washington amid deep differences"
David Lawder
September 19, 2019 / 1:08 AM
WASHINGTON (Reuters) - U.S. and Chinese deputy trade negotiators resumed face-to-face talks for the first time in nearly two months on Thursday, as the world’s two largest economies try to bridge deep policy differences and find a way out of their protracted trade war.
The negotiations, which will extend into Friday, are aimed at laying the groundwork for high-level talks in early October that will determine whether the two countries are working toward a solution or headed for new and higher tariffs on each other’s goods.
A delegation of about 30 Chinese officials, led by Vice Finance Minister Liao Min, met counterparts at the U.S. Trade Representative’s (USTR) office near the White House.
Deputy USTR Jeffrey Gerrish led the U.S. delegation.
The discussions are seen focusing heavily on agriculture, including U.S. demands that China substantially increase purchases of American soybeans and other farm commodities, a person with knowledge of the planned discussions told Reuters.
Two negotiating sessions over the two days will cover agricultural issues, while just one will be devoted to the strengthening of China’s intellectual property protections and the forced transfer of U.S. technology to Chinese firms.
“Sessions on agriculture will get a disproportionate amount of air time,” the source said, adding that one of these sessions also will include a focus on U.S. President Donald Trump’s demand that China cut off shipments of the synthetic opioid fentanyl to the United States.
The president is eager to provide export opportunities for U.S. farmers, a key Trump political constituency that has been battered by China’s retaliatory tariffs on U.S. soybeans and other agricultural commodities.
U.S. Commerce Secretary Wilbur Ross, in an interview on Fox Business Network on Thursday, said it remained unclear what China wanted and that “we will find out very, very shortly in the next couple of weeks.”
“What we need is to correct the big imbalances, not just the current trade deficit,” Ross said.
“It’s more complicated than just buying a few more soybeans.”
In an unexpected twist, some members of the Chinese delegation will stay in the United States to visit U.S. farming regions next week, Agriculture Secretary Sonny Perdue told reporters.
“They want to see the production of agriculture."
"I think they want to build goodwill,” Perdue said.
CNBC earlier reported that the group will visit Bozeman, Montana, and Omaha, Nebraska.
A USTR spokesman did not immediately respond to queries.
CURRENCY ON TABLE
Treasury Secretary Steven Mnuchin, who along with USTR Robert Lighthizer and Chinese Vice Premier Liu He will participate in the October discussions, has said that currency issues will be a focus of the new rounds of talks.
Mnuchin formally declared China a currency manipulator last month after the yuan weakened against the dollar, accusing Beijing of trying to gain a trade advantage.
Trump has said that China failed to follow through on agricultural purchase commitments made by President Xi Jinping at a G20 summit in Japan as a goodwill gesture to get stalled talks back on track.
China has denied making such commitments.
When such purchases failed to materialize during U.S.-China trade talks in late July, Trump quickly moved to impose 10% tariffs on virtually all remaining Chinese imports, untouched in previous rounds.
Last week, however, Trump delayed a scheduled Oct. 1 tariff increase on $250 billion worth of Chinese imports until mid-month, and China postponed tariffs on some U.S. cancer drugs, animal feed ingredients and lubricants.
On Thursday, USTR said dozens more Chinese products would be excluded from existing tariffs, including dog collars, some printed circuit boards used in computers, certain auto parts and Christmas tree lights.
TOUGH STANCES
“There’s a little softening in the air,” White House adviser Larry Kudlow told Fox Business Network as negotiators met on Thursday morning.
The editor of China’s state-run Global Times newspaper cautioned that Beijing will maintain its tough stance, however.
“Many U.S. officials easily misread China’s goodwill, think it shows Beijing’s weakness,” Hu Xijin said on Twitter.
“China doesn’t like talking tough before the negotiations, but I know China is not as anxious to reach a deal as the U.S. side thought.”
Beijing also seeks an easing of U.S. national security sanctions against telecom equipment maker Huawei Technologies, which has been largely cut off from buying sensitive U.S. technology products.
The trade war, which has dragged on for 14 months, has rattled financial markets as policymakers and investors worry about the global economic fallout.
Concerns about a recession have prompted central banks around the world to loosen policy in recent months.
The Federal Reserve on Wednesday cut rates for the second time this year to provide “insurance against ongoing risks.”
Trade experts, executives and government officials in both countries say that even if the September and October talks produce an interim deal, the U.S.-China trade war has hardened into a political and ideological battle that runs far deeper than tariffs and could take years to resolve.
Additional reporting by Andrea Shalal, Susan Heavey and Humeyra Pamuk; Editing by Shri Navaratnam, Steve Orlofsky and Alex Richardson
https://www.reuters.com/article/us-usa- ... SKBN1W40E1
"U.S., Chinese trade deputies face off in Washington amid deep differences"
David Lawder
September 19, 2019 / 1:08 AM
WASHINGTON (Reuters) - U.S. and Chinese deputy trade negotiators resumed face-to-face talks for the first time in nearly two months on Thursday, as the world’s two largest economies try to bridge deep policy differences and find a way out of their protracted trade war.
The negotiations, which will extend into Friday, are aimed at laying the groundwork for high-level talks in early October that will determine whether the two countries are working toward a solution or headed for new and higher tariffs on each other’s goods.
A delegation of about 30 Chinese officials, led by Vice Finance Minister Liao Min, met counterparts at the U.S. Trade Representative’s (USTR) office near the White House.
Deputy USTR Jeffrey Gerrish led the U.S. delegation.
The discussions are seen focusing heavily on agriculture, including U.S. demands that China substantially increase purchases of American soybeans and other farm commodities, a person with knowledge of the planned discussions told Reuters.
Two negotiating sessions over the two days will cover agricultural issues, while just one will be devoted to the strengthening of China’s intellectual property protections and the forced transfer of U.S. technology to Chinese firms.
“Sessions on agriculture will get a disproportionate amount of air time,” the source said, adding that one of these sessions also will include a focus on U.S. President Donald Trump’s demand that China cut off shipments of the synthetic opioid fentanyl to the United States.
The president is eager to provide export opportunities for U.S. farmers, a key Trump political constituency that has been battered by China’s retaliatory tariffs on U.S. soybeans and other agricultural commodities.
U.S. Commerce Secretary Wilbur Ross, in an interview on Fox Business Network on Thursday, said it remained unclear what China wanted and that “we will find out very, very shortly in the next couple of weeks.”
“What we need is to correct the big imbalances, not just the current trade deficit,” Ross said.
“It’s more complicated than just buying a few more soybeans.”
In an unexpected twist, some members of the Chinese delegation will stay in the United States to visit U.S. farming regions next week, Agriculture Secretary Sonny Perdue told reporters.
“They want to see the production of agriculture."
"I think they want to build goodwill,” Perdue said.
CNBC earlier reported that the group will visit Bozeman, Montana, and Omaha, Nebraska.
A USTR spokesman did not immediately respond to queries.
CURRENCY ON TABLE
Treasury Secretary Steven Mnuchin, who along with USTR Robert Lighthizer and Chinese Vice Premier Liu He will participate in the October discussions, has said that currency issues will be a focus of the new rounds of talks.
Mnuchin formally declared China a currency manipulator last month after the yuan weakened against the dollar, accusing Beijing of trying to gain a trade advantage.
Trump has said that China failed to follow through on agricultural purchase commitments made by President Xi Jinping at a G20 summit in Japan as a goodwill gesture to get stalled talks back on track.
China has denied making such commitments.
When such purchases failed to materialize during U.S.-China trade talks in late July, Trump quickly moved to impose 10% tariffs on virtually all remaining Chinese imports, untouched in previous rounds.
Last week, however, Trump delayed a scheduled Oct. 1 tariff increase on $250 billion worth of Chinese imports until mid-month, and China postponed tariffs on some U.S. cancer drugs, animal feed ingredients and lubricants.
On Thursday, USTR said dozens more Chinese products would be excluded from existing tariffs, including dog collars, some printed circuit boards used in computers, certain auto parts and Christmas tree lights.
TOUGH STANCES
“There’s a little softening in the air,” White House adviser Larry Kudlow told Fox Business Network as negotiators met on Thursday morning.
The editor of China’s state-run Global Times newspaper cautioned that Beijing will maintain its tough stance, however.
“Many U.S. officials easily misread China’s goodwill, think it shows Beijing’s weakness,” Hu Xijin said on Twitter.
“China doesn’t like talking tough before the negotiations, but I know China is not as anxious to reach a deal as the U.S. side thought.”
Beijing also seeks an easing of U.S. national security sanctions against telecom equipment maker Huawei Technologies, which has been largely cut off from buying sensitive U.S. technology products.
The trade war, which has dragged on for 14 months, has rattled financial markets as policymakers and investors worry about the global economic fallout.
Concerns about a recession have prompted central banks around the world to loosen policy in recent months.
The Federal Reserve on Wednesday cut rates for the second time this year to provide “insurance against ongoing risks.”
Trade experts, executives and government officials in both countries say that even if the September and October talks produce an interim deal, the U.S.-China trade war has hardened into a political and ideological battle that runs far deeper than tariffs and could take years to resolve.
Additional reporting by Andrea Shalal, Susan Heavey and Humeyra Pamuk; Editing by Shri Navaratnam, Steve Orlofsky and Alex Richardson
https://www.reuters.com/article/us-usa- ... SKBN1W40E1
Re: CHINA
BLOOMBERG
"White House Focuses on China Stock Limits in Retirement Fund"
By Jenny Leonard
October 8, 2019 7:00 AM Updated on October 8, 2019 10:51 AM
* Deputy talks last week focused on safeguarding government fund
* Officials seeking to protect against opaque China oversight
The Trump administration is moving ahead with discussions around possible restrictions on portfolio flows into China, with a particular focus on investments made by U.S. government retirement funds, people familiar with the internal deliberations said.
The efforts are advancing even after American officials pushed back strongly against a Bloomberg News report late last month that a range of such limits was under review.
Trump officials last week held meetings on the issue just hours after White House adviser Peter Navarro dismissed the report as “fake news,” and zeroed in on how to prevent U.S. government retirement funds from financing China’s economic rise, the people said.
The office of Larry Kudlow, director of the White House’s National Economic Council, convened a policy-coordination committee meeting last Tuesday, which also included officials from the National Security Council and the Treasury Department, the people added.
An NEC spokesman declined to comment.
The news cast another cloud over trade talks expected to resume later this week between the world’s two largest economies.
The yen strengthened against the dollar, U.S. stocks slumped for a second day and the yield on 10-year Treasuries touched the lowest level in about a month.
According to people familiar with the meeting, the administration’s focus is now on ways to further scrutinize index providers’ decision to add Chinese firms they consider a material risk for American investors.
It’s still unclear what legal authority the White House would rely on to force major indexes to drop certain Chinese companies.
Pension Fund
At least one of the issues under consideration is time-sensitive.
The Federal Retirement Thrift Investment Board in 2017 made a decision that by mid-2020 the international fund offered to workers in the government’s retirement savings plan would mirror the MSCI All Country World Index, which captures emerging markets, including China.
The board is scheduled to meet Oct. 21.
Some U.S. lawmakers and China hawks outside the government have pushed the board to reverse that decision and, if necessary, have the administration use executive power to protect U.S. government workers.
They argue that Americans are harmed by channeling money into Chinese firms that are allegedly involved in human-rights violations and at the center of U.S. national security concerns.
The change would expose almost $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on the index, opponents argue.
Blacklist
The Commerce Department on Monday put a number of Chinese entities -- including surveillance technology company Hikvision -- on an export blacklist that prohibits American firms from doing business with them unless they have a U.S. government license to do so.
Hikvision, which is listed on the MSCI All Country World index, has been cited by Trump’s advisers as one of several Chinese companies that presents a threat to American investors.
In response on Tuesday, a Chinese official warned it would retaliate.
As with most policy discussions in the Trump administration, the president’s advisers have a range of opinions on the matter and haven’t agreed on a path forward yet, people close to the deliberations said.
The officials do seem to agree, however, that there’s a political upside to engaging on the issue, the people added.
The White House is citing investor protection as the main reason for taking action and is carefully working to keep the matter separate from the ongoing trade negotiations that are set to resume in Washington this week.
“What we’re looking at is U.S. investor protections, transparency and compliance with a number of laws," Kudlow told reporters Monday.
“There’s been complaints by the stock exchanges about this, the SEC has heard complaints, so we’ve opened up a study group to take a look at it, but we’re very early in our deliberations.”
Trade Talks
Any action on capital flows could undoubtedly be seen as a negotiating chip by President Donald Trump, who has in the past put other issues on the table in the talks with Beijing.
The Office of U.S. Trade Representative Robert Lighthizer isn’t playing a key role in the discussions around capital flows because they are separate from the trade talks, two of the people said.
A spokesman for Lighthizer didn’t respond to a request for comment.
Lighthizer, however, is Trump’s point person in talks for a trade deal and any Chinese reaction to the investment limit plans would likely be taken to him in the context of the negotiations.
The options for investment limits that were initially discussed included forcing a delisting of Chinese companies from U.S. exchanges, imposing limits on investments in Chinese markets by U.S. government pension funds and putting caps on the value of Chinese companies included in indexes managed by U.S. firms, according to people familiar with and involved in the discussions.
Capital Controls
Since the deliberations first became public, administration efforts around delisting Chinese companies have been put on hold for now, the people said.
A Treasury Department spokeswoman said Sept. 28 that option was not being contemplated “at this time.’’
She didn’t address any of the other possibilities being examined and declined to offer any further details.
Kudlow on Monday also told reporters delisting plans were “not on the table.”
While the value of the pension fund and the money it would funnel into China’s market next year is relatively small compared with the overall market and the value of Chinese companies listed on U.S. exchanges, the action has symbolic importance and could be interpreted as the first step in the U.S. government moving toward capital controls.
It’s also a domestic winner for the White House, which would be able to claim that it stopped American armed forces and government workers’ dollars from funding the rise of Chinese companies that Washington alleges have stolen intellectual property from U.S. firms to advance their technological lead over America.
That fight is at the heart of Trump’s trade war with Beijing.
Some Trump officials are still pushing for limits on the Chinese companies included in stock indexes managed by U.S. firms, though it’s still an open question how that goal could be achieved.
The hard-line advisers are concerned about indexes loading up on Chinese shares of companies that are subject to U.S. sanctions and therefore prohibited from doing business with the government.
Those advisers consider it troubling that Americans aren’t made aware of that material risk, people briefed on the talks said.
— With assistance by Shawn Donnan, Zoe Schneeweiss, Liz McCormick, and Lucy Meakin
https://www.bloomberg.com/news/articles ... aign=trade
"White House Focuses on China Stock Limits in Retirement Fund"
By Jenny Leonard
October 8, 2019 7:00 AM Updated on October 8, 2019 10:51 AM
* Deputy talks last week focused on safeguarding government fund
* Officials seeking to protect against opaque China oversight
The Trump administration is moving ahead with discussions around possible restrictions on portfolio flows into China, with a particular focus on investments made by U.S. government retirement funds, people familiar with the internal deliberations said.
The efforts are advancing even after American officials pushed back strongly against a Bloomberg News report late last month that a range of such limits was under review.
Trump officials last week held meetings on the issue just hours after White House adviser Peter Navarro dismissed the report as “fake news,” and zeroed in on how to prevent U.S. government retirement funds from financing China’s economic rise, the people said.
The office of Larry Kudlow, director of the White House’s National Economic Council, convened a policy-coordination committee meeting last Tuesday, which also included officials from the National Security Council and the Treasury Department, the people added.
An NEC spokesman declined to comment.
The news cast another cloud over trade talks expected to resume later this week between the world’s two largest economies.
The yen strengthened against the dollar, U.S. stocks slumped for a second day and the yield on 10-year Treasuries touched the lowest level in about a month.
According to people familiar with the meeting, the administration’s focus is now on ways to further scrutinize index providers’ decision to add Chinese firms they consider a material risk for American investors.
It’s still unclear what legal authority the White House would rely on to force major indexes to drop certain Chinese companies.
Pension Fund
At least one of the issues under consideration is time-sensitive.
The Federal Retirement Thrift Investment Board in 2017 made a decision that by mid-2020 the international fund offered to workers in the government’s retirement savings plan would mirror the MSCI All Country World Index, which captures emerging markets, including China.
The board is scheduled to meet Oct. 21.
Some U.S. lawmakers and China hawks outside the government have pushed the board to reverse that decision and, if necessary, have the administration use executive power to protect U.S. government workers.
They argue that Americans are harmed by channeling money into Chinese firms that are allegedly involved in human-rights violations and at the center of U.S. national security concerns.
The change would expose almost $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on the index, opponents argue.
Blacklist
The Commerce Department on Monday put a number of Chinese entities -- including surveillance technology company Hikvision -- on an export blacklist that prohibits American firms from doing business with them unless they have a U.S. government license to do so.
Hikvision, which is listed on the MSCI All Country World index, has been cited by Trump’s advisers as one of several Chinese companies that presents a threat to American investors.
In response on Tuesday, a Chinese official warned it would retaliate.
As with most policy discussions in the Trump administration, the president’s advisers have a range of opinions on the matter and haven’t agreed on a path forward yet, people close to the deliberations said.
The officials do seem to agree, however, that there’s a political upside to engaging on the issue, the people added.
The White House is citing investor protection as the main reason for taking action and is carefully working to keep the matter separate from the ongoing trade negotiations that are set to resume in Washington this week.
“What we’re looking at is U.S. investor protections, transparency and compliance with a number of laws," Kudlow told reporters Monday.
“There’s been complaints by the stock exchanges about this, the SEC has heard complaints, so we’ve opened up a study group to take a look at it, but we’re very early in our deliberations.”
Trade Talks
Any action on capital flows could undoubtedly be seen as a negotiating chip by President Donald Trump, who has in the past put other issues on the table in the talks with Beijing.
The Office of U.S. Trade Representative Robert Lighthizer isn’t playing a key role in the discussions around capital flows because they are separate from the trade talks, two of the people said.
A spokesman for Lighthizer didn’t respond to a request for comment.
Lighthizer, however, is Trump’s point person in talks for a trade deal and any Chinese reaction to the investment limit plans would likely be taken to him in the context of the negotiations.
The options for investment limits that were initially discussed included forcing a delisting of Chinese companies from U.S. exchanges, imposing limits on investments in Chinese markets by U.S. government pension funds and putting caps on the value of Chinese companies included in indexes managed by U.S. firms, according to people familiar with and involved in the discussions.
Capital Controls
Since the deliberations first became public, administration efforts around delisting Chinese companies have been put on hold for now, the people said.
A Treasury Department spokeswoman said Sept. 28 that option was not being contemplated “at this time.’’
She didn’t address any of the other possibilities being examined and declined to offer any further details.
Kudlow on Monday also told reporters delisting plans were “not on the table.”
While the value of the pension fund and the money it would funnel into China’s market next year is relatively small compared with the overall market and the value of Chinese companies listed on U.S. exchanges, the action has symbolic importance and could be interpreted as the first step in the U.S. government moving toward capital controls.
It’s also a domestic winner for the White House, which would be able to claim that it stopped American armed forces and government workers’ dollars from funding the rise of Chinese companies that Washington alleges have stolen intellectual property from U.S. firms to advance their technological lead over America.
That fight is at the heart of Trump’s trade war with Beijing.
Some Trump officials are still pushing for limits on the Chinese companies included in stock indexes managed by U.S. firms, though it’s still an open question how that goal could be achieved.
The hard-line advisers are concerned about indexes loading up on Chinese shares of companies that are subject to U.S. sanctions and therefore prohibited from doing business with the government.
Those advisers consider it troubling that Americans aren’t made aware of that material risk, people briefed on the talks said.
— With assistance by Shawn Donnan, Zoe Schneeweiss, Liz McCormick, and Lucy Meakin
https://www.bloomberg.com/news/articles ... aign=trade
Re: CHINA
MARKETWATCH
"China vows ‘strong countermeasures’ in wake of U.S. bill supporting Hong Kong protesters"
By Barbara Kollmeyer
Published: Oct 16, 2019 3:25 a.m. ET
Fresh tensions between the U.S. and China emerged Wednesday, after Beijing threatened to retaliate over the passage of measures in Washington aimed at supporting Hong Kong protesters.
Three bills were approved in the House of Representatives Wednesday evening, one supporting the right of individuals to protest, another allowing for the U.S. to check on Beijing’s influence over the territory and a third aimed at preventing U.S. weapons from being used by police against protesters.
“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website.
“China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”
The three bills, which House Speaker Nancy Pelosi said are reminders of how the U.S. must support human rights despite significant commercial interests in China, will now head to the Senate.
Another piece of nonbinding legislation commended Canada for its response to a U.S. request to extradite Meng Wanzhou, chief financial officer of Chinese telecom giant Huawei Technologies, who was arrested in Vancouver over a year ago.
U.S. stock futures pulled back slightly on Wednesday, with Dow Jones Industrial Average down 45 points to 26,958, and the yield on the 10-year U.S. Treasury bond dropping 3 basis points to 1.7423%.
Geng said while China was working to restore law and order in Hong Kong, U.S. lawmakers were “disregarding and distorting facts,” by turning criminal acts and violence against police into issues of “human rights or democracy.”
“That is a stark double standard."
"It fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development,” said Geng, who urged the U.S. to “stop meddling.”
The comments come as the U.S. and China continue to work toward a trade agreement, with a partial deal announced last week — though caution emerged amid reports Beijing wants further meetings before moving forward.
Protests in Hong Kong have intensified and turned violent at times in the past months, amid objections by demonstrators to an extradition bill proposed by the territory’s government.
The movement has ensnared U.S. businesses and even, more recently, the National Basketball Association after Houston Rockets general manager Daryl Morey tweeted support for the Hong Kong protesters.
Meanwhile, Los Angeles Laker’s NBA star LeBron James has attracted ire from Hong Kong protesters, who reportedly stamped on and burned a jersey with his name on it Tuesday after he suggested that free speech had consequences.
https://www.marketwatch.com/story/china ... 2019-10-16
"China vows ‘strong countermeasures’ in wake of U.S. bill supporting Hong Kong protesters"
By Barbara Kollmeyer
Published: Oct 16, 2019 3:25 a.m. ET
Fresh tensions between the U.S. and China emerged Wednesday, after Beijing threatened to retaliate over the passage of measures in Washington aimed at supporting Hong Kong protesters.
Three bills were approved in the House of Representatives Wednesday evening, one supporting the right of individuals to protest, another allowing for the U.S. to check on Beijing’s influence over the territory and a third aimed at preventing U.S. weapons from being used by police against protesters.
“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website.
“China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”
The three bills, which House Speaker Nancy Pelosi said are reminders of how the U.S. must support human rights despite significant commercial interests in China, will now head to the Senate.
Another piece of nonbinding legislation commended Canada for its response to a U.S. request to extradite Meng Wanzhou, chief financial officer of Chinese telecom giant Huawei Technologies, who was arrested in Vancouver over a year ago.
U.S. stock futures pulled back slightly on Wednesday, with Dow Jones Industrial Average down 45 points to 26,958, and the yield on the 10-year U.S. Treasury bond dropping 3 basis points to 1.7423%.
Geng said while China was working to restore law and order in Hong Kong, U.S. lawmakers were “disregarding and distorting facts,” by turning criminal acts and violence against police into issues of “human rights or democracy.”
“That is a stark double standard."
"It fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development,” said Geng, who urged the U.S. to “stop meddling.”
The comments come as the U.S. and China continue to work toward a trade agreement, with a partial deal announced last week — though caution emerged amid reports Beijing wants further meetings before moving forward.
Protests in Hong Kong have intensified and turned violent at times in the past months, amid objections by demonstrators to an extradition bill proposed by the territory’s government.
The movement has ensnared U.S. businesses and even, more recently, the National Basketball Association after Houston Rockets general manager Daryl Morey tweeted support for the Hong Kong protesters.
Meanwhile, Los Angeles Laker’s NBA star LeBron James has attracted ire from Hong Kong protesters, who reportedly stamped on and burned a jersey with his name on it Tuesday after he suggested that free speech had consequences.
https://www.marketwatch.com/story/china ... 2019-10-16
Re: CHINA
MARKETWATCH
"IMF says global economy to grow at slowest pace since 2008 financial crisis"
By Greg Robb
Published: Oct 15, 2019 5:13 p.m. ET
The International Monetary Fund is growing even more pessimistic about the global economy, as higher import tariffs are strangling manufacturing activity and international trade.
Global economic growth is expected to fall to 3% rate this year, the slowest pace since the 2008 financial crisis and down from a 3.8% pace seen in 2017.
If global growth slows below a 2.5% rate, that would mean a recession.
“At 3% growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions,” said Gita Gopinath, the IMF’s chief economist, at a press briefing
The IMF’s latest World Economic Outlook shaved global growth this year by 0.2 percentage points and 0.1 percentage point next year, compared with the organization’s view from July.
The IMF’s pessimism didn’t deter a rally in risk assets, with the Dow industrials surging on Tuesday.
Growth was projected to be slower in 2019 in almost every major country except Brazil.
World trade volume growth in the first half of 2019 was 1%, the weakest level since 2012.
If all possible U.S. and China’s trade tariffs are put in place, it will reduce global growth by 0.8% by 2020, the IMF said.
The decline in trade activity is stark
The pessimism was stark for China with output forecast down by 0.3 percentage points this year and 0.2 percentage points next year to a 5.8% growth rate.
China has been hit by higher U.S. import tariffs but also slowing domestic demand following needed measures to rein in debt, the IMF said.
The misery is spreading through Asia, with downward revisions for growth for Hong Kong, South Korea, and Singapore.
Projected growth in Saudi Arabia was cut by 1.7 percentage points this year and output growth in India was cut by 0.9 percentage points.
For 2020, global growth is projected to improve modestly to 3.4% rate, but this optimism looks “precarious,” Gopinath said.
The upturn in 2020 is based on projected improvement in a number of stressed emerging market economies like Turkey, Iran and Argentina.
“With uncertainty about prospects for several of these countries, a projected slowdown in China and the U.S. and prominent downside risks, a much more subdued pace of global activity could well materialize,” the IMF said.
Risks of a sharp slowdown are growing.
Gopinath raised the possibility of the need for emergency action in the form of “an internationally coordinated fiscal response” if economic growth were to deteriorate further.
U.S. stocks were immune to pessimism with both the Dow Jones Industrial Average and the S&P 500 Index rising closer to record highs on Tuesday.
The yield on the 10-year U.S. Treasury note inched higher to 1.774%.
Germany should boost fiscal spending, the agency said.
“A country like Germany should take advantage of negative borrowing rates to invest in social and infrastructure capital, even from a pure cost-benefit perspective,” the IMF said.
While manufacturing has suffered globally, the service sector has held up, at least so far, but there is a concern this can’t last.
“The divergence between manufacturing and services has persisted for an atypically long duration, which raises concerns of whether and when weakness in manufacturing may spill over into the services sector,” she said.
The IMF said monetary policy easing by the Federal Reserve and other central banks has helped support growth and reduce downside risks.
Without this monetary stimulus, global growth would be lower by 0.5 percentage points in both 2019 and 2020.
The world economy is projected to grow slightly faster in 2021-24 thanks to growth in emerging market economies.
Yet growth in key economies, the U.S., China, euro area and Japan, the so-called “Gang of Four,” is expected to moderate “into 2020 and beyond.”
https://www.marketwatch.com/story/imf-s ... 2019-10-15
"IMF says global economy to grow at slowest pace since 2008 financial crisis"
By Greg Robb
Published: Oct 15, 2019 5:13 p.m. ET
The International Monetary Fund is growing even more pessimistic about the global economy, as higher import tariffs are strangling manufacturing activity and international trade.
Global economic growth is expected to fall to 3% rate this year, the slowest pace since the 2008 financial crisis and down from a 3.8% pace seen in 2017.
If global growth slows below a 2.5% rate, that would mean a recession.
“At 3% growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions,” said Gita Gopinath, the IMF’s chief economist, at a press briefing
The IMF’s latest World Economic Outlook shaved global growth this year by 0.2 percentage points and 0.1 percentage point next year, compared with the organization’s view from July.
The IMF’s pessimism didn’t deter a rally in risk assets, with the Dow industrials surging on Tuesday.
Growth was projected to be slower in 2019 in almost every major country except Brazil.
World trade volume growth in the first half of 2019 was 1%, the weakest level since 2012.
If all possible U.S. and China’s trade tariffs are put in place, it will reduce global growth by 0.8% by 2020, the IMF said.
The decline in trade activity is stark
The pessimism was stark for China with output forecast down by 0.3 percentage points this year and 0.2 percentage points next year to a 5.8% growth rate.
China has been hit by higher U.S. import tariffs but also slowing domestic demand following needed measures to rein in debt, the IMF said.
The misery is spreading through Asia, with downward revisions for growth for Hong Kong, South Korea, and Singapore.
Projected growth in Saudi Arabia was cut by 1.7 percentage points this year and output growth in India was cut by 0.9 percentage points.
For 2020, global growth is projected to improve modestly to 3.4% rate, but this optimism looks “precarious,” Gopinath said.
The upturn in 2020 is based on projected improvement in a number of stressed emerging market economies like Turkey, Iran and Argentina.
“With uncertainty about prospects for several of these countries, a projected slowdown in China and the U.S. and prominent downside risks, a much more subdued pace of global activity could well materialize,” the IMF said.
Risks of a sharp slowdown are growing.
Gopinath raised the possibility of the need for emergency action in the form of “an internationally coordinated fiscal response” if economic growth were to deteriorate further.
U.S. stocks were immune to pessimism with both the Dow Jones Industrial Average and the S&P 500 Index rising closer to record highs on Tuesday.
The yield on the 10-year U.S. Treasury note inched higher to 1.774%.
Germany should boost fiscal spending, the agency said.
“A country like Germany should take advantage of negative borrowing rates to invest in social and infrastructure capital, even from a pure cost-benefit perspective,” the IMF said.
While manufacturing has suffered globally, the service sector has held up, at least so far, but there is a concern this can’t last.
“The divergence between manufacturing and services has persisted for an atypically long duration, which raises concerns of whether and when weakness in manufacturing may spill over into the services sector,” she said.
The IMF said monetary policy easing by the Federal Reserve and other central banks has helped support growth and reduce downside risks.
Without this monetary stimulus, global growth would be lower by 0.5 percentage points in both 2019 and 2020.
The world economy is projected to grow slightly faster in 2021-24 thanks to growth in emerging market economies.
Yet growth in key economies, the U.S., China, euro area and Japan, the so-called “Gang of Four,” is expected to moderate “into 2020 and beyond.”
https://www.marketwatch.com/story/imf-s ... 2019-10-15
Re: CHINA
MARKETWATCH
"Doubts emerge about US.-China trade deal"
By Barbara Kollmeyer
Published: Oct 14, 2019 10:34 a.m. ET
Wariness over the strength of an agreement hammered out between the U.S. and China last week was growing on Monday after reports that Beijing wants more talks before signing any such deal, though U.S. Treasury Secretary Steven Mnuchin remained confident a deal would be concluded.
While a rise in U.S. tariffs on Chinese imports due Tuesday will not now go into effect after President Trump announced at least a partial deal late Friday, no White House decision has been made yet on planned on a new 15% tariff set to go into effect on Dec. 15 on about $160 billion in annual Chinese imports.
U.S. Treasury Secretary Steven Mnuchin told reporters on Monday that if a deal isn’t in place by December, those tariffs will go ahead, but he also said, “I expect we will have a deal."
After Mnuchin spoke, Hu Xijin, the influential editor-in-chief of China’s state-controlled Global Times, tweeted that China’s attitude about a deal remains “positive”:
Meanwhile, the China-owned English newspaper China Daily said in an article Monday while the forward steps in trade talks were “encouraging,” a “partial deal, if inked doesn’t mean the trade row has been settled once and for all.”
As part of the deal, the U.S. postponed a planned tariff increase on $250 billion in Chinese imports from 25% to 30%, originally set to take effect Tuesday, in exchange for Chinese promises to buy $40 to $50 billion in American agricultural products annually though that would be double the $24 billion China bought in 2017.
A bigger trade deal will come over time in three stages, according to Trump, with more divisive issues to be addressed later.
These include Chinese practices that the U.S. alleges but Beijing denies, such as forced transfers of U.S. technology to its economic rival.
Earlier citing sources, Bloomberg reported Monday that China wants further discussions as soon as the end of October, to smooth out details of the so-called “Phase 1” trade deal announced by President Donald Trump that will delay a tariff hike, boost Chinese agricultural purchases and address foreign currency levels.
The agreement was not set out in writing, and only in principle.
One of the sources told Bloomberg that Beijing could send a delegation led by top negotiator Vice Premier Liu He to put the final touches on a written deal in time for a signing at next month’s Asia-Pacific Economic Cooperation presidents meeting in Chile.
U.S. stocks traded mostly lower Monday morning as investors re-evaluated the“phase-one” trade deal between the U.S. and China, announced in the final minutes of trade Friday, with growing concern that the agreement will not lead to significantly lower trade barriers or greater certainty over Sino-American trade relations.
The Dow Jones Industrial Average rose 2 points, or less than 0.1% to 26,818, while the S&P 500 index lost 4 points, or 0.1%, to 2,967.
The Nasdaq Composite index, meanwhile, fell 14 points, or 0.2%, to 8,043.
On Friday, in the wake of the trade deal news, the Dow rose 319.92 points, or 1.2%, to 26,816.59, the S&P 500 advanced 32.14 points, or 1.1%, to 2,970.27, while Nasdaq gained 106.26 points, or 1.3%, to 8,057.04
Morgan Stanley analysts advised investors to remain cautious over any big breakthrough deal.
“There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk,” they wrote in the note to clients.
“Thus, we do not yet expect a meaningful rebound in corporate behavior that would drive global growth expectations higher.”
https://www.marketwatch.com/story/china ... 2019-10-14
"Doubts emerge about US.-China trade deal"
By Barbara Kollmeyer
Published: Oct 14, 2019 10:34 a.m. ET
Wariness over the strength of an agreement hammered out between the U.S. and China last week was growing on Monday after reports that Beijing wants more talks before signing any such deal, though U.S. Treasury Secretary Steven Mnuchin remained confident a deal would be concluded.
While a rise in U.S. tariffs on Chinese imports due Tuesday will not now go into effect after President Trump announced at least a partial deal late Friday, no White House decision has been made yet on planned on a new 15% tariff set to go into effect on Dec. 15 on about $160 billion in annual Chinese imports.
U.S. Treasury Secretary Steven Mnuchin told reporters on Monday that if a deal isn’t in place by December, those tariffs will go ahead, but he also said, “I expect we will have a deal."
After Mnuchin spoke, Hu Xijin, the influential editor-in-chief of China’s state-controlled Global Times, tweeted that China’s attitude about a deal remains “positive”:
Meanwhile, the China-owned English newspaper China Daily said in an article Monday while the forward steps in trade talks were “encouraging,” a “partial deal, if inked doesn’t mean the trade row has been settled once and for all.”
As part of the deal, the U.S. postponed a planned tariff increase on $250 billion in Chinese imports from 25% to 30%, originally set to take effect Tuesday, in exchange for Chinese promises to buy $40 to $50 billion in American agricultural products annually though that would be double the $24 billion China bought in 2017.
A bigger trade deal will come over time in three stages, according to Trump, with more divisive issues to be addressed later.
These include Chinese practices that the U.S. alleges but Beijing denies, such as forced transfers of U.S. technology to its economic rival.
Earlier citing sources, Bloomberg reported Monday that China wants further discussions as soon as the end of October, to smooth out details of the so-called “Phase 1” trade deal announced by President Donald Trump that will delay a tariff hike, boost Chinese agricultural purchases and address foreign currency levels.
The agreement was not set out in writing, and only in principle.
One of the sources told Bloomberg that Beijing could send a delegation led by top negotiator Vice Premier Liu He to put the final touches on a written deal in time for a signing at next month’s Asia-Pacific Economic Cooperation presidents meeting in Chile.
U.S. stocks traded mostly lower Monday morning as investors re-evaluated the“phase-one” trade deal between the U.S. and China, announced in the final minutes of trade Friday, with growing concern that the agreement will not lead to significantly lower trade barriers or greater certainty over Sino-American trade relations.
The Dow Jones Industrial Average rose 2 points, or less than 0.1% to 26,818, while the S&P 500 index lost 4 points, or 0.1%, to 2,967.
The Nasdaq Composite index, meanwhile, fell 14 points, or 0.2%, to 8,043.
On Friday, in the wake of the trade deal news, the Dow rose 319.92 points, or 1.2%, to 26,816.59, the S&P 500 advanced 32.14 points, or 1.1%, to 2,970.27, while Nasdaq gained 106.26 points, or 1.3%, to 8,057.04
Morgan Stanley analysts advised investors to remain cautious over any big breakthrough deal.
“There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk,” they wrote in the note to clients.
“Thus, we do not yet expect a meaningful rebound in corporate behavior that would drive global growth expectations higher.”
https://www.marketwatch.com/story/china ... 2019-10-14
Re: CHINA
MARKETWATCH
"China's economic growth continues to cool off"
By James T. Areddy
Published: Oct 17, 2019 11:51 p.m. ET
SHANGHAI--China's economy grew 6% in the third quarter, landing right on the central government's full-year baseline target for gross domestic product, as business activity continues to deteriorate in the world's No. 2 economy.
Growth across the board cooled in the third quarter, despite some recoveries in industrial production and retail sales at the end of the quarter, according to data published Friday by the National Bureau of Statistics.
But investment in fixed assets, a measure of construction activity that has long been a major economic driver but is becoming less so, was weaker in the first nine months, with a 5.4% rise from a year earlier.
That compared with a 5.5% pace in the first eight months and was down from 5.8% growth announced after the first half.
Investment in the agricultural, manufacturing and industrial sectors retreated in September while infrastructure investment accelerated ahead of the Communist Party's celebration of its 70th year in power on Oct. 1.
Ding Shuang, an economist with Standard Chartered, said the pickup in infrastructure investment was attributable to greater bond issuances to finance projects launched by local governments, though he said the acceleration in September's industrial production was probably due to the inclusion by the statistics bureau of previously missed data.
Chinese growth has been on a downward trajectory for the past several years.
Each quarterly slowdown in growth pulls the economic performance to new lows not seen since the current measure of GDP was adopted in 1992.
The economy performed worse in 1990, when China was reeling from the 1989 crackdown on students in Tiananmen Square, which crippled investment.
The deceleration reported Friday compares with a 6.2% rate of growth posted in the second quarter -- which economists said was driven by more lending -- and a 6.4% figure in the first quarter, which was helped by a March tax cut worth 2 trillion yuan ($283 billion).
"Despite increased downward pressure on economic growth, major economic indicators remained in a reasonable range," a spokesman for the Statistics Bureau, Mao Shengyong, said, citing steady employment and inflation, aside from energy and food prices.
The fourth quarter, Mr. Mao forecast, would feature "conditions and supports" for the economy, including a less-steep drop in auto sales and industrial production, as well as stabilizing infrastructure investment.
Mr. Mao also cited apparent progress between U.S. and Chinese trade negotiators as a positive factor, describing it as "a good thing for the markets and the global economy, including the Chinese economy."
Capital Economics's China economist, Julian Evans-Pritchard, wrote in a note that despite the stronger September figures, downward economic pressure is building.
"We expect monetary policy to be loosened before long in response, but it will take time for this to put a floor beneath economic growth," Mr. Evans-Pritchard wrote.
The quarterly figure was slightly lower than a median forecast for 6.1% growth in a poll of 13 economists by The Wall Street Journal.
Beijing's target range for GDP growth of between 6.0% and 6.5% this year has anticipated a weakening performance.
The average for the first nine months is 6.2%.
Last year, the Chinese economy expanded 6.6%.
Friday's report showed value-added industrial output in China rose 5.8% in September from a year earlier, accelerating from a 4.4% figure in August and better than a median 4.9% forecast of 15 economists surveyed by the Journal.
Retail sales climbed 7.8% in September from a year earlier, matching economist expectations.
That was a touch better than August's 7.5% rise.
The 5.4% growth in construction activity matched economists' median forecast.
Home sales by value for the January-to-September period rose 10.3% from a year earlier, versus a 9.9% gain in the first eight months of the year.
Investment in commercial and residential real estate gained 10.5% in the first nine months of the year, unchanged from the first eight months.
Construction starts were somewhat weaker, increasing 8.6% from January to September from a year earlier, compared with 8.9% in the first eight months of the year.
The government put the final consumption expenditure at 60.5% of the GDP in the first nine months of the year, with investment at 19.8% and net exports at 19.6%.
Liyan Qi and Grace Zhu contributed to this article.
Write to James T. Areddy at james.areddy@wsj.com
https://www.marketwatch.com/story/china ... 2019-10-17
"China's economic growth continues to cool off"
By James T. Areddy
Published: Oct 17, 2019 11:51 p.m. ET
SHANGHAI--China's economy grew 6% in the third quarter, landing right on the central government's full-year baseline target for gross domestic product, as business activity continues to deteriorate in the world's No. 2 economy.
Growth across the board cooled in the third quarter, despite some recoveries in industrial production and retail sales at the end of the quarter, according to data published Friday by the National Bureau of Statistics.
But investment in fixed assets, a measure of construction activity that has long been a major economic driver but is becoming less so, was weaker in the first nine months, with a 5.4% rise from a year earlier.
That compared with a 5.5% pace in the first eight months and was down from 5.8% growth announced after the first half.
Investment in the agricultural, manufacturing and industrial sectors retreated in September while infrastructure investment accelerated ahead of the Communist Party's celebration of its 70th year in power on Oct. 1.
Ding Shuang, an economist with Standard Chartered, said the pickup in infrastructure investment was attributable to greater bond issuances to finance projects launched by local governments, though he said the acceleration in September's industrial production was probably due to the inclusion by the statistics bureau of previously missed data.
Chinese growth has been on a downward trajectory for the past several years.
Each quarterly slowdown in growth pulls the economic performance to new lows not seen since the current measure of GDP was adopted in 1992.
The economy performed worse in 1990, when China was reeling from the 1989 crackdown on students in Tiananmen Square, which crippled investment.
The deceleration reported Friday compares with a 6.2% rate of growth posted in the second quarter -- which economists said was driven by more lending -- and a 6.4% figure in the first quarter, which was helped by a March tax cut worth 2 trillion yuan ($283 billion).
"Despite increased downward pressure on economic growth, major economic indicators remained in a reasonable range," a spokesman for the Statistics Bureau, Mao Shengyong, said, citing steady employment and inflation, aside from energy and food prices.
The fourth quarter, Mr. Mao forecast, would feature "conditions and supports" for the economy, including a less-steep drop in auto sales and industrial production, as well as stabilizing infrastructure investment.
Mr. Mao also cited apparent progress between U.S. and Chinese trade negotiators as a positive factor, describing it as "a good thing for the markets and the global economy, including the Chinese economy."
Capital Economics's China economist, Julian Evans-Pritchard, wrote in a note that despite the stronger September figures, downward economic pressure is building.
"We expect monetary policy to be loosened before long in response, but it will take time for this to put a floor beneath economic growth," Mr. Evans-Pritchard wrote.
The quarterly figure was slightly lower than a median forecast for 6.1% growth in a poll of 13 economists by The Wall Street Journal.
Beijing's target range for GDP growth of between 6.0% and 6.5% this year has anticipated a weakening performance.
The average for the first nine months is 6.2%.
Last year, the Chinese economy expanded 6.6%.
Friday's report showed value-added industrial output in China rose 5.8% in September from a year earlier, accelerating from a 4.4% figure in August and better than a median 4.9% forecast of 15 economists surveyed by the Journal.
Retail sales climbed 7.8% in September from a year earlier, matching economist expectations.
That was a touch better than August's 7.5% rise.
The 5.4% growth in construction activity matched economists' median forecast.
Home sales by value for the January-to-September period rose 10.3% from a year earlier, versus a 9.9% gain in the first eight months of the year.
Investment in commercial and residential real estate gained 10.5% in the first nine months of the year, unchanged from the first eight months.
Construction starts were somewhat weaker, increasing 8.6% from January to September from a year earlier, compared with 8.9% in the first eight months of the year.
The government put the final consumption expenditure at 60.5% of the GDP in the first nine months of the year, with investment at 19.8% and net exports at 19.6%.
Liyan Qi and Grace Zhu contributed to this article.
Write to James T. Areddy at james.areddy@wsj.com
https://www.marketwatch.com/story/china ... 2019-10-17
Re: CHINA
BLOOMBERG
"L.A.’s $1 Billion Trophy Tower Halted as China Pulls Back Cash"
Edvard Pettersson
30 OCTOBER 2019
(Bloomberg) -- It’s meant to be one of the crown jewels of downtown Los Angeles’ urban renaissance but now it’s in limbo -- plagued by lawsuits from subcontractors, and victim of an ongoing trade dispute between China and the U.S. and a Beijing crackdown on credit and capital flight.
Construction has largely stalled at the three towers of Oceanwide Plaza across from Staples Center where the NBA’s Lakers and Clippers and the NHL’s Kings play their home games.
On a recent Friday afternoon, no workers or vehicles entered the construction site, which takes up a city block and towers over Figueroa Street.
A few security guards manning an entrance insisted that work was going on, yet no activity was visible from the outside.
The developer, Beijing-based Oceanwide Holdings Co., offered few details on the future of the $1 billion-plus project -- other than to insist that it has financing and work is continuing.
The lawsuits by unpaid subcontractors, on the other hand, give a glimpse of the developer’s struggle to come up with needed money to finish the project.
As a trade war between the U.S. and China approaches its second anniversary in January, Beijing is making it tougher to shift money abroad, having imposed capital controls last year to help stabilize its currency.
Those restrictions have meant that Chinese direct investment in the U.S. real estate and hospitality sectors plummeted to $377 million last year from a high of $17.3 billion in 2016, according to data from Rhodium Group LLC.
“It appears they wanted to self-fund the entire project,” Dale Ortmann, an attorney representing two of the Oceanwide subcontractors, said of the China-based company.
“Now, with the changes in Chinese government policy, the owner is trying to find a traditional construction loan while in the middle of construction.”
Subcontractor Claims
And that’s tough.
Under California law, all subcontractors’ claims over unpaid invoices, no matter when they performed work on the project, will have priority over any liens a subsequent lender may have, according to Adam Salis, a lawyer in Mission Viejo, California, who specializes in real estate.
That’s why construction lenders usually will only get involved before work has started on a project.
With economic growth slowing last year, China tightened restrictions on capital outflows after Chinese companies had gone on a years-long global buying and building spree.
Over-leveraged conglomerates such as Dalian Wanda Group Co. and Anbang Insurance Group Co. were forced to liquidate overseas real-estate worth billions of dollars, and developers were no longer able to finance their projects abroad with money from home.
“The capital outflow control has been strictly enforced by the Chinese government so far this year due to the intensifying U.S.-China trade war,” said Patrick Wong, a Bloomberg Intelligence analyst based in Hong Kong.
Oceanwide Plaza is part of a building boom that has been transforming downtown Los Angeles in recent years.
Whereas for decades the city’s historic core had been a ghost town at night -- home to mostly destitute transients and a few artists and urban pioneers, the 21st Century has brought in an influx of young professionals seeking an alternative to the suburban, car-dependent Southern California lifestyle.
The number of market-rate apartments has increased by more than 10-fold, from 2,426 before 1999 to 27,616 as of the second quarter of this year, with another 3,296 under construction, according to data from the Downtown Center Business Improvement District.
The number of condos during this period rose from 829 to 6,760, with 1,839 under construction.
In the South Park area of downtown, around the Staples Center, developers including Philip Anschutz’s AEG, Shanghai-based Greenland Holding Group Co. and Hankey Investment Co. have gone to town to transform the skyline with gleaming towers -- hotels, luxury condominiums and apartments.
Oceanwide Plaza’s contribution to this new hub of high-end living is to include the first Park Hyatt on the West Coast.
The project’s tallest tower at 604 feet is to include the 184-room hotel and 164 hotel-serviced residences.
Two adjacent towers hold another 340 condominiums.
The development is also to feature a 700-foot LED ribbon wrapping around the building, 153,000 square foot of retail space and a two-acre sky park.
San Francisco Shutdown
In downtown San Francisco, Oceanwide halted construction this month on one of the two towers of a mixed-use development.
The 54-story tower is to house a Waldorf Astoria hotel, a Hilton Worldwide Holdings Inc. property.
Hilton’s Chief Executive Officer Christopher Nassetta said on an Oct. 22 earnings call that the company had been aware of Oceanwide’s liquidity problems.
“It became public this week, but we’ve known about that for the better part of a year,” Nassetta said.
In April of last year, the company announced that it had topped off the three L.A. towers and that the development would be completed this year.
But in January, work was suspended.
Since then, construction has proceeded at a reduced pace and at least half a dozen subcontractors have gone to court over unpaid work.
Development Loans
An Oceanwide spokesman in Beijing said that the L.A. project is still under construction, and that the company still has access to development loans.
The company said that in light of local market changes and economic uncertainties, a “realignment of the work” on the San Francisco project, known as Oceanwide Center, was necessary to keep the project sustainable.
Oceanwide offered no further detail.
Buyers’ Market
While L.A.’s Oceanwide Plaza remains in limbo, the downtown market for high-end condominiums is becoming a buyers’ market, said Christiano Sampaio, founder of real estate brokerage Loftway.
There’s still strong demand for unique properties, according to Sampaio, particularly in the Arts District, the old industrial neighborhood on the side of downtown where Warner Music Group this year moved into a former Ford factory.
But the influx of Chinese investment that helped inflate real estate assets from Vancouver to Sydney is abating.
“A few years back we had a lot of Chinese buyers but that has slowed down,” Sampaio said.
“There’s more inventory now and buyers are postponing making a decision.”
Contractors’ Lawsuit
In court, the company failed to have the first lawsuit, by Webcor Construction over a $60 million claim, sent to arbitration or to get an order reducing the subcontractor’s lien.
At a hearing scheduled for Wednesday in state court in Los Angeles, Webcor and Oceanwide are set to argue whether the developer needs to start providing documents to the subcontractor while it appeals the denial of its arbitration demand.
Oceanwide said in an April court filing that Webcor’s lien was impeding its efforts to secure money to finish the project.
The company said at the time that it had already spent about $860 million and that it was trying to get a loan in two phases: a $275 million bridge loan and a construction loan for the remaining costs.
An unidentified lender, according to the company, wouldn’t close on the loans with liens on the project’s title.
“Even if you have a really strong developer, it will be difficult to get a loan after construction has started,” Salis said.
--With assistance from Emma Dong.
To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, ;Rob Urban at robprag@bloomberg.net, Joe Schneider, Peter Vercoe
http://www.msn.com/en-us/money/markets/ ... li=BBnb7Kz
"L.A.’s $1 Billion Trophy Tower Halted as China Pulls Back Cash"
Edvard Pettersson
30 OCTOBER 2019
(Bloomberg) -- It’s meant to be one of the crown jewels of downtown Los Angeles’ urban renaissance but now it’s in limbo -- plagued by lawsuits from subcontractors, and victim of an ongoing trade dispute between China and the U.S. and a Beijing crackdown on credit and capital flight.
Construction has largely stalled at the three towers of Oceanwide Plaza across from Staples Center where the NBA’s Lakers and Clippers and the NHL’s Kings play their home games.
On a recent Friday afternoon, no workers or vehicles entered the construction site, which takes up a city block and towers over Figueroa Street.
A few security guards manning an entrance insisted that work was going on, yet no activity was visible from the outside.
The developer, Beijing-based Oceanwide Holdings Co., offered few details on the future of the $1 billion-plus project -- other than to insist that it has financing and work is continuing.
The lawsuits by unpaid subcontractors, on the other hand, give a glimpse of the developer’s struggle to come up with needed money to finish the project.
As a trade war between the U.S. and China approaches its second anniversary in January, Beijing is making it tougher to shift money abroad, having imposed capital controls last year to help stabilize its currency.
Those restrictions have meant that Chinese direct investment in the U.S. real estate and hospitality sectors plummeted to $377 million last year from a high of $17.3 billion in 2016, according to data from Rhodium Group LLC.
“It appears they wanted to self-fund the entire project,” Dale Ortmann, an attorney representing two of the Oceanwide subcontractors, said of the China-based company.
“Now, with the changes in Chinese government policy, the owner is trying to find a traditional construction loan while in the middle of construction.”
Subcontractor Claims
And that’s tough.
Under California law, all subcontractors’ claims over unpaid invoices, no matter when they performed work on the project, will have priority over any liens a subsequent lender may have, according to Adam Salis, a lawyer in Mission Viejo, California, who specializes in real estate.
That’s why construction lenders usually will only get involved before work has started on a project.
With economic growth slowing last year, China tightened restrictions on capital outflows after Chinese companies had gone on a years-long global buying and building spree.
Over-leveraged conglomerates such as Dalian Wanda Group Co. and Anbang Insurance Group Co. were forced to liquidate overseas real-estate worth billions of dollars, and developers were no longer able to finance their projects abroad with money from home.
“The capital outflow control has been strictly enforced by the Chinese government so far this year due to the intensifying U.S.-China trade war,” said Patrick Wong, a Bloomberg Intelligence analyst based in Hong Kong.
Oceanwide Plaza is part of a building boom that has been transforming downtown Los Angeles in recent years.
Whereas for decades the city’s historic core had been a ghost town at night -- home to mostly destitute transients and a few artists and urban pioneers, the 21st Century has brought in an influx of young professionals seeking an alternative to the suburban, car-dependent Southern California lifestyle.
The number of market-rate apartments has increased by more than 10-fold, from 2,426 before 1999 to 27,616 as of the second quarter of this year, with another 3,296 under construction, according to data from the Downtown Center Business Improvement District.
The number of condos during this period rose from 829 to 6,760, with 1,839 under construction.
In the South Park area of downtown, around the Staples Center, developers including Philip Anschutz’s AEG, Shanghai-based Greenland Holding Group Co. and Hankey Investment Co. have gone to town to transform the skyline with gleaming towers -- hotels, luxury condominiums and apartments.
Oceanwide Plaza’s contribution to this new hub of high-end living is to include the first Park Hyatt on the West Coast.
The project’s tallest tower at 604 feet is to include the 184-room hotel and 164 hotel-serviced residences.
Two adjacent towers hold another 340 condominiums.
The development is also to feature a 700-foot LED ribbon wrapping around the building, 153,000 square foot of retail space and a two-acre sky park.
San Francisco Shutdown
In downtown San Francisco, Oceanwide halted construction this month on one of the two towers of a mixed-use development.
The 54-story tower is to house a Waldorf Astoria hotel, a Hilton Worldwide Holdings Inc. property.
Hilton’s Chief Executive Officer Christopher Nassetta said on an Oct. 22 earnings call that the company had been aware of Oceanwide’s liquidity problems.
“It became public this week, but we’ve known about that for the better part of a year,” Nassetta said.
In April of last year, the company announced that it had topped off the three L.A. towers and that the development would be completed this year.
But in January, work was suspended.
Since then, construction has proceeded at a reduced pace and at least half a dozen subcontractors have gone to court over unpaid work.
Development Loans
An Oceanwide spokesman in Beijing said that the L.A. project is still under construction, and that the company still has access to development loans.
The company said that in light of local market changes and economic uncertainties, a “realignment of the work” on the San Francisco project, known as Oceanwide Center, was necessary to keep the project sustainable.
Oceanwide offered no further detail.
Buyers’ Market
While L.A.’s Oceanwide Plaza remains in limbo, the downtown market for high-end condominiums is becoming a buyers’ market, said Christiano Sampaio, founder of real estate brokerage Loftway.
There’s still strong demand for unique properties, according to Sampaio, particularly in the Arts District, the old industrial neighborhood on the side of downtown where Warner Music Group this year moved into a former Ford factory.
But the influx of Chinese investment that helped inflate real estate assets from Vancouver to Sydney is abating.
“A few years back we had a lot of Chinese buyers but that has slowed down,” Sampaio said.
“There’s more inventory now and buyers are postponing making a decision.”
Contractors’ Lawsuit
In court, the company failed to have the first lawsuit, by Webcor Construction over a $60 million claim, sent to arbitration or to get an order reducing the subcontractor’s lien.
At a hearing scheduled for Wednesday in state court in Los Angeles, Webcor and Oceanwide are set to argue whether the developer needs to start providing documents to the subcontractor while it appeals the denial of its arbitration demand.
Oceanwide said in an April court filing that Webcor’s lien was impeding its efforts to secure money to finish the project.
The company said at the time that it had already spent about $860 million and that it was trying to get a loan in two phases: a $275 million bridge loan and a construction loan for the remaining costs.
An unidentified lender, according to the company, wouldn’t close on the loans with liens on the project’s title.
“Even if you have a really strong developer, it will be difficult to get a loan after construction has started,” Salis said.
--With assistance from Emma Dong.
To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, ;Rob Urban at robprag@bloomberg.net, Joe Schneider, Peter Vercoe
http://www.msn.com/en-us/money/markets/ ... li=BBnb7Kz