China will impose ‘necessary countermeasures’ as higher U.S. tariffs start Friday – Global News

China will impose ‘necessary countermeasures’ as higher U.S. tariffs start Friday – Global News

By
Paul Wiseman and Kevin Freking

The Associated Press

WATCH: U.S. President Donald Trump followed through on his threat to levy tariffs against China, but the latter is vowing to strike back as a result, as the two sides still attempt to come to a deal on trade.

Trade talks between the U.S. and China broke up Friday with no agreement, hours after U.S. President Donald Trump more than doubled tariffs on $200 billion in Chinese imports.

Trump asserted on Twitter that there was “no need to rush” to get a deal between the world’s two biggest economies and later added that the tariffs “may or may not be removed depending on what happens with respect to future negotiations.”

A White House official, speaking on condition of anonymity because they were not authorized to speak publicly on the matter, confirmed that the talks had concluded for the day but could not say when they would resume.


READ MORE:
Trump claims China will pay for tariffs — but the burden falls on U.S. businesses, consumers

Hours earlier, the Trump administration hiked tariffs on $200 billion worth of Chinese imports to 25 per cent from 10 per cent, escalating tensions between Beijing and Washington. China’s Commerce Ministry vowed to impose “necessary countermeasures” but gave no details.

The tariff increase went ahead even after American and Chinese negotiators briefly met in Washington on Thursday and again on Friday, seeking to end a dispute that has disrupted billions of dollars in trade and shaken global financial markets. After a short session on Friday, the lead Chinese negotiator, Vice Premier Liu He, left the Office of the U.S. Trade Representative about midday. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin shook hands with Liu as he left.

In the afternoon, a motorcade of sport-utility vehicles and a police escort, both with lights flashing, carried the Chinese delegation away from their lodgings at the Willard InterContinental Hotel.

WATCH: Tensions high as China, U.S. begin trade talks






Hu Xijin, editor-in-chief of the Chinese newspaper Global Times, citing “an authoritative source,” tweeted that “talks didn’t break down. Both sides think that the talks are constructive and will continue consultations. The two sides agree to meet again in Beijing in the future.”

Still, the Trump administration escalated the confrontation again after the Chinese delegation left town. Lighthizer announced Friday evening that he was preparing to impose tariffs on the $300 billion in Chinese imports that haven’t already been targeted. The government will have to get public comment before it can target more Chinese goods.

On Wall Street, stocks fell initially Friday but turned positive on optimism over future talks.

Earlier, Trump asserted in a tweet that his tariffs “will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do.”

READ MORE: U.S. to raise tariffs on China to 25% on $200B worth of imports

In fact, tariffs are taxes paid by U.S. importers and often passed along to consumers and companies that rely on imported components.

American officials accuse Beijing of backtracking on commitments made in earlier rounds of negotiations. “China deeply regrets that it will have to take necessary countermeasures,” a Commerce Ministry statement said.

U.S. business groups appealed for a settlement that will resolve chronic complaints about Chinese market barriers, subsidies to state companies and a regulatory system they say is rigged against foreign companies.

WATCH: China backtracked on nearly all aspects of trade deal with U.S., report says

The latest increase extends 25 per cent duties to a total of $250 billion of Chinese imports, including $50 billion worth that were already being taxed at 25 per cent. Trump has said he is planning to expand penalties to all Chinese goods shipped to the United States.

Beijing retaliated for previous tariff hikes by raising duties on $110 billion of American imports. But regulators are running out of U.S. goods for penalties due to the lopsided trade balance.

Ford spokeswoman Rachel McCleery said the carmaker is most concerned about any retaliatory tariffs China might impose.

The Dearborn, Michigan-based company says 80 per cent of the vehicles it assembles in the U.S. are sold domestically, but it does export some vehicles to China.

“While most of the vehicles we sell in China are built in China, Ford does export a number of vehicles to China from the U.S.,” McCleery said. “Our biggest concerns are impacts retaliatory tariffs would have on our exports and our expanding customer base in China.”

Chinese officials have targeted operations of American companies in China by slowing customs clearance for them and stepping up regulatory scrutiny that can hamper operations.

The latest U.S. increase might hit American consumers harder, said Jake Parker, vice president of the U.S.-China Business Council, an industry group. He said the earlier 10 per cent increase was absorbed by companies and offset by a weakening of the Chinese currency’s exchange rate.

A 25 per cent hike “needs to be passed on to the consumer,” Parker said. “It is just too big to dilute with those other factors.”

WATCH: Tensions high as China, U.S. begin trade talks






Despite the public acrimony, local Chinese officials who want to attract American investment have tried to reassure companies there is “minimal retaliation,” he said. “We’ve actually seen an increased sensitivity to U.S. companies at the local level,” he added.

The higher U.S. import taxes don’t apply to Chinese goods shipped before Friday. Shipments take about three weeks to cross the Pacific Ocean by sea, giving negotiators more time to reach a settlement before importers may have to pay the increased charges.

Liu, speaking to Chinese state TV upon his arrival Thursday in Washington, said he “came with sincerity.” He appealed to Washington to avoid more tariff hikes, saying they are “not a solution” and would harm the world.

“We should not hurt innocent people,” Liu told CCTV.

READ MORE: Canadian man sentenced to death in China has appeal hearing

Also Thursday, Trump said he received “a beautiful letter” from Chinese President Xi Jinping and would “probably speak to him by phone.”

The two countries are sparring over U.S. allegations Beijing steals technology and pressures companies to hand over trade secrets in a campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.

This week’s setback was unexpected. Through late last week, Trump administration officials were suggesting that negotiators were making steady progress.

U.S. officials say they got an inkling of China’s second thoughts about prior commitments in talks last week in Beijing but the backsliding became more apparent in exchanges over the weekend. They wouldn’t identify the specific issues involved.

READ MORE: Scheer promises ‘eyes wide open’ approach to dealing with China in foreign policy speech

A sticking point is U.S. insistence on an enforcement mechanism with penalties to ensure Beijing lives up to its commitments. American officials say China has repeatedly broken past promises.

China wants tariffs lifted as soon as an agreement is reached, while U.S. officials want to keep them as leverage to ensure compliance.

“A real enforcement mechanism is critical,” the American Chamber of Commerce in Shanghai said in a statement.

AP Business Writer Joe McDonald and AP videojournalist Dake Kang in Beijing and Alexandra Olson in New York contributed to this report.

© 2019 The Canadian Press

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Explainer: China changes laws in trade war with U.S., enforcement a concern

Explainer: China changes laws in trade war with U.S., enforcement a concern

(Reuters) – China has been changing laws to address U.S. concerns about fair treatment of foreign companies, but with some vague wording and persistent concerns about enforcement, it is unclear if this will leave Washington satisfied.

FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China’s Ministry of Transport in Beijing, China April 27, 2018. Picture taken April 27, 2018. REUTERS/Jason Lee/File Photo

In a sharp deterioration in negotiations between the world’s two largest economies, top U.S. trade officials said on Monday that China had backtracked on substantial commitments it made during trade talks with the United States.

The concerns prompted U.S. President Donald Trump to say he would raise tariffs on $200 billion of Chinese goods imported into the United States. However, trade talks will continue this week.

Washington has demanded China change its economic policies by changing its laws, to better protect U.S. intellectual property, end forced technology transfers from U.S. companies, and stop cyber theft of U.S. trade secrets.

DOES CHINA’S NEW FOREIGN INVESTMENT LAW MATTER?

In March, China fast-tracked legislation for its first foreign investment law, which comes into effect on Jan. 1, 2020.

Premier Li Keqiang pledged that the government would follow through and do what the legislation promised in protecting foreign firms.

The law would ban forced technology transfer and illegal government “interference” in foreign business practices, according to the latest draft.

Previous drafts stipulated criminal punishment for officials who violated the law and a last-minute revision has strengthened those clauses.

Foreign business groups have in principle welcomed the law, but the big concern is about enforcement, especially when the judicial system takes its orders from the ruling Communist Party.

One Beijing-based Western executive told Reuters the law was probably best viewed as a “PR exercise” to try and head off some U.S. accusations of unfair treatment for American companies that, in part, led to the trade war.

“It’s all smoke and mirrors,” the executive said, referring to whether the law will actually make a difference.

WHAT OTHER LAWS HAS CHINA CHANGED?

At a regular law-making session last month, parliament’s standing committee amended three existing laws to try to improve the business environment. These included strengthening trade secret protections, further measures to stop forced technology transfers and increases in the punishment of those who infringe trademarks.

“Bad faith” trademarks, or “trademark squatting”, where an entity registers a brand in anticipation of its entry into China, is a major irritant for foreign investors.

“We believe there needs to be more attention paid to this,” said Nicholas Holt, chairman of the British Chamber of Commerce in China.

“There needs to be more efforts to clamp down on the bad faith trademarks.”

The changes to the Trademark Law take effect on Nov. 1, while amendments to the Administrative Licensing Law, and Law Against Unfair Competition have already come into force.

Getting proper licenses to operate in China has been a lengthy process fraught with uncertainty due to unspecified documentation demanded by various levels of government.

Requiring all administrative licensing criteria to be made public and holding Chinese officials accountable for violating laws have been welcomed by western businesses. But they say implementation would still vary across provinces and cities due to differing interpretations of the law.

WHY DOES WASHINGTON NOT TRUST CHINA TO FOLLOW THROUGH?

The Trump administration says China has repeatedly failed to follow through on pledges to implement reforms sought by the United States.

Washington often cites as an example the difficulties still faced by foreign payment card operators in entering China’s market despite a 2012 World Trade Organization ruling that Beijing was discriminating against them.

Also breeding mistrust was the failure of what would have been the world’s largest-ever semiconductor sector takeover last year in the thick of the Sino-U.S. trade war.

In July last year, China’s antitrust regulator quietly allowed a key approval deadline to lapse, leading to the collapse of Qualcomm Inc’s $44 billion planned takeover of NXP Semiconductors.

Reporting by Ben Blanchard, Ryan Woo and Michael Martina; editing by Neil Fullick

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China’s Tesla wannabe Xpeng starts ride-hailing service

China’s Tesla wannabe Xpeng starts ride-hailing service

There’re a lot of synergies between electric vehicles and ride-hailing. Drivers are able to save more steering an EV compared to a gas vehicle. Environmentally conscious consumers will choose to hire an electric car. And EVs are designed with better compatibility with autonomous driving, which is expected to hit public roads in the coming decades.

Indeed, Tesla is eyeing to launch its first robotaxis in 2020 as part of a broader ride-sharing scheme. Over in China, where Tesla has a few disciples, EV startup Xpeng Motors, also known as Xiaopeng, just started offering a ride-hailing app powered by its own electric fleets.

Screenshot of Xpeng’s ride-hailing app, Youpeng Chuxing

The company is the latest in a clutch of carmakers flocking to introduce their own ride-hailing platforms. Didi Chuxing’s massive loss has not deterred their ambitious plans. Rather, this may be a prime time to crack a market long dominated by Didi, which is prioritizing safety over growth following two high-profile incidents and a series of new government regulations.

Xpeng’s ride-hailing app is currently only available in a limited area within Guangzhou where it’s headquartered, shows a test conducted by TechCrunch on Thursday.

The company’s coffer is probably large enough to fund its newly minted venture. It’s one of the most-backed EV upstarts alongside rival Nio, which raised $1 billion from a New York initial public offering last year.

Xpeng has to date banked $1.3 billion from Alibaba, IDG Capital, Foxconn, UCAR and other big-name investors, according to disclosed funding data collected by Crunchbase. Founder He Xiaopeng, a serial entrepreneur who made a fortune selling his mobile browser company UCWeb to Alibaba, told CNBC in March that Xpeng may also try an IPO down the road, but wants to focus on building the business first.

When it comes to sources of inspiration for the business, Xpeng told local media that it sees Tesla as its “benchmark.” The company has never been shy about its admiration for its American peer. In an interview with Quartz in 2018, He said one of the reasons he founded Xpeng “was because Elon Musk made Tesla’s patents available. It was so exciting.”

But the affection might have gone a little far. In March, Tesla sued an ex-employee for allegedly stealing Autopilot’s proprietary technology before taking a job at Xpeng.

Xpeng, which started shipping to its first owners in March, was founded five years ago against the backdrop of Beijing’s aggressive electric push in the transportation sector. The sprawling city Shenzhen, just north of Hong Kong, has turned all its public buses and almost all of its taxis electric.

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Nintendo Answer Questions About Its Plans For China

Nintendo Answer Questions About Its Plans For China

Illustration for article titled Nintendo Answer Questions About Its Plans For China

Screenshot: Nintendo

Kotaku EastEast is your slice of Asian internet culture, bringing you the latest talking points from Japan, Korea, China and beyond. Tune in every morning from 4am to 8am.  

In the past, Nintendo released its consoles through a subsidiary called iQue. Even Nintendo president Shuntaro Furukawa recently admitted that they “cannot say these releases were a great success.”

In a recent Q&A for investors, Furukawa was asked about Nintendo’s plans for China. Why all the China questions? Because the Switch is finally going on sale there. Below are the most important takeaways from the Nintendo president.

Working with a local Chinese company:

It is true that Tencent Holdings Limited (“Tencent”) has applied for a game console review to launch Nintendo Switch in China, as disclosed on a Chinese government agency website. The reason for our collaboration with Tencent is because they hold one of the largest positions in China’s network communication and game marketplaces, which we think will allow us to maximize the expansion of our business there.

There are big expectations:

China is a huge market, so the expectations for our business there are probably very high. The reality, however, is that the Chinese game market is almost all mobile games and PC games. The market for dedicated video game platforms has not been very large, so we recognize that this will be a new challenge for us.

It’s still going to be difficult:

We recognize that the Chinese market is vast and attractive, but looking forward, we don’t expect our video game business in China to easily expand, given that our primary markets for dedicated video game consoles, Japan, the Americas, and Europe have been built over the course of more than 30 years. The launch timing for Nintendo Switch in China is not yet determined, so nothing in this area has been included in the financial forecast for the current fiscal year (ending March 2020).

What about mobile?

Actively using Nintendo IP includes the expansion of IP through our mobile business, theme parks, and other methods, but we are not currently able to discuss anything specific about our expansion in China. At this time, we are only announcing that a collaboration with Tencent has been underway regarding plans to sell Nintendo Switch in China, and we are not able to discuss any other aspects of that business.

So…is Nintendo going to work with Tencent for mobile in China?

I cannot say anything at this time about the possibility of our mobile business in China.

Discussions inside our company are ongoing, so we will share more information at a later time when we are able.

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Democrats and Republicans are freaked out by Chinese 5G technology — but are they just being paranoid?

Democrats and Republicans are freaked out by Chinese 5G technology — but are they just being paranoid?

Democrats and Republicans rarely agree on anything, but this week, the parties united to condemn one common enemy: China.

The views of President Trump and lawmakers on both sides of the aisle aligned when they determined that allowing the Chinese company Huawei to build a global 5G network constitutes a security threat to the U.S. 

That might not be the whole story, though: Dashing Huawei’s 5G ambitions would give the U.S. an economic advantage, and allies don’t agree with the  threat level of a potential Huawei-run 5G network. However, experts say that fear about the control the Chinese government might exercise over a Huawei 5G network is genuine, and warranted.

On Wednesday, President Trump issued an Executive Order in which he declared a national emergency to safeguard U.S. information and technology networks from “foreign adversaries.”  

Trump did not specifically name China in his order. But his actual nonstop tweets about China show that his order is basically a subtweet of the country and Huawei; where the order gives his agencies the broad authority to cancel transactions with and write policies against “persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” everyone knew who it was really talking about. 

The U.S. Department of Commerce compounded that not-so-oblique reference when it placed Huawei on its “Entity List” shortly after the announcement, meaning that any U.S. company needs government approval to do business with Huawei.

I want 5G, and even 6G, technology in the United States as soon as possible. It is far more powerful, faster, and smarter than the current standard. American companies must step up their efforts, or get left behind. There is no reason that we should be lagging behind on………

— Donald J. Trump (@realDonaldTrump) February 21, 2019

….something that is so obviously the future. I want the United States to win through competition, not by blocking out currently more advanced technologies. We must always be the leader in everything we do, especially when it comes to the very exciting world of technology!

— Donald J. Trump (@realDonaldTrump) February 21, 2019

Just one day earlier, the Senate Judiciary Committee held a hearing to gain understanding about the risks that allowing Huawei to build 5G infrastructure posed to U.S. security. The general idea is that, because Huawei is a Chinese company, it is compelled to follow the orders of the authoritarian Chinese government, which could include espionage or even cyber warfare. 

As Democratic senators like Dianne Feinstein solemnly endorsed this alleged threat alongside her Republican colleagues, Chairman Lindsey Graham blurted out, “I haven’t seen bipartisanship like this in a long time.”

Apparently, if there’s one thing that can unite the U.S. government, it’s alarm about China.

Great hearing in @senjudiciary today about the threats we face from Chinese dominance of the worldwide 5G network which presents economic and national security concerns.

Amazing bipartisanship on the issue. https://t.co/i2Tu79qATb

— Lindsey Graham (@LindseyGrahamSC) May 14, 2019

Huawei & ZTE pose a clear & alarming threat to our national security & the development of 5G, & should be banned. We now have to draw a line: foreign adversaries must be blocked from any involvement with our critical infrastructure & communications networks.

— Richard Blumenthal (@SenBlumenthal) May 16, 2019

The experts brought before Congress strongly argued that if Huawei was allowed to build 5G infrastructure, it would afford the Chinese government a backdoor into U.S. communications, and everything else that will be run on the 5G network, such as Internet of Things objects like autonomous vehicles. 

“With all the critical services relying on 5G networks, the stakes for safeguarding them could not be higher,” Christopher Krebs, director of cybersecurity and infrastructure security agency at the Department of Homeland Security (DHS), said while giving testimony. “This moves from a data confidentiality issue to a life safety issue.”

With all the head-nodding going on in the halls of Congress, and a full blown national emergency order coming from the White House, it would seem that the danger posed by a Chinese company building 5G infrastructure is clear cut. But that’s actually not the case around the world.

“There is significant bipartisan alarm,” Sen. Richard Blumenthal (D-CT) said. “Why do our partners around the world seem less alarmed than we are?”

The UK has already contracted with Huawei to build some communications infrastructure, and the E.U. has not ruled it out. Other countries in Africa and the Middle East also have talks in the works for Huawei to build out 5G. 

Hey DC Twitter friends, I agree that Huawei is a major concern, but let’s talk less about them and more about what the U.S. can and should be doing to increase our own competitiveness in 5G, especially increasing support for research and development pic.twitter.com/26rgRrncqN

— Elsa B. Kania (@EBKania) May 16, 2019

These countries see Huawei as a leader in 5G tech, and think the economic and technological advantages that contracting with Huawei provides outweighs potential risks. 

“We are having a significant disagreement with some of our allies,” Sen. Chris Coons (D-DE) pointed out.

So, what gives? How do Senate Democrats and President Trump manage to see eye to eye on this issue, while some of our closest allies deliver a proverbial shrug to concerns that the Chinese government could use 5G infrastructure to watch, control, manipulate, and wage war against us all?

“The U.S. government has not, at least publicly, pointed to a smoking gun,” Peter Harrell, an adjunct senior fellow in the energy economics and security program at the Center for a New American Security (CNAS), told Mashable. “The technology has vulnerabilities, and Huawei is obliged to cooperate with the Chinese government. So there is strong circumstantial evidence of this, but no smoking gun.”

Harrell also explained that foreign countries have a strong financial interest in building out 5G, and building it fast — and, right now, that means working with Huawei. Huawei is offering governments existing technology at what many authorities consider good prices. So theoretical security concerns aren’t weighing as strongly in their minds.

“It’s not just a cost issue, it’s a pace of deployment issue,” Harrell said.

In the U.S., the big four telecoms companies have agreed to not buy 5G infrastructure from Huawei; they will be working with companies like Samsung and Nokia instead. The experts argued that these arrangements will make the U.S. a leader in 5G deployment by 2025, but allies are being lured by Huawei’s financial incentives. 

The U.S. has taken other action in the past against Huawei, and China by proxy, when it forbade the government to get Huawei-supplied technology, and when it pursued Intellectual Property theft charges against Huawei’s CFO.

It’s hard not to see these actions against Huawei as an extension of the Trump Administration’s larger battle with China over trade, and, ultimately, technological power. Trump and China continue to argue about tariffs. Some have reported that the U.S.’s aggressive trade stance toward China is an effort to weaken their ambitions to become a manufacturing — not just assembly — hub, which could compromise the U.S.’s economic standing. 

Given these U.S. ambitions, and European allies’ difference in opinion on Huawei’s security risks, is there something more to the U.S.’s alarm about Huawei building the 5G internet?

The jury is not entirely out, but many experts do think that China’s authoritarian government constitutes a real threat with regard to awarding Huawei with 5G contracts.

“I think there are genuine security concerns that are out there, and have been out there,” Harrell said. “They’re coming to a head now because of the 5G issue. And I think that these concerns have been simmering for a while.”

According to Harrell, the U.S. has been raising questions and taking action about the security risks of contracting with Huawei for the last decade — well before Trump got in office, and pursued his ambition to stymie China’s technological manufacturing hopes. Harrell acknowledged that there is, of course, an economic upside for the U.S. to preventing a Chinese company’s dominance in 5G, but that he did not think this was the driving force behind the security concerns.

“Clearly, if we are able to lead in the 5G race, we have the potential to gain economically from this as well,” Harrell said. “I think that’s indisputably true. But I don’t think the fact that the U.S. also wants the economic advantages means the security risks are not real.”

Huawei is fighting the perspective that it will be nothing more than a tool of the Chinese government. It issued a statement after the DOC placed it on the entities list, arguing against the categorization.

“This decision is in no one’s interest. It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain.

Huawei will seek remedies immediately and find a resolution to this matter. We will also proactively endeavor to mitigate the impacts of this incident.”

Sorry, Huawei. For an issue that strengthens national security while delivering an economic upside, the strange bedfellows of elected officials uniting on this issue aren’t likely to back down.

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Macy’s CEO warns that the trade war could force the department store to raise prices (M)

Macy’s CEO warns that the trade war could force the department store to raise prices (M)

shopping bags macy's shoppers

Macy’s is bracing itself for a wave of new tariffs.

AP/Bebeto Matthews

  • Macy’s CEO Jeff Gennette said in an earnings call on Wednesday that proposed new tariffs would have a significant impact on the company.
  • “It is hard to do the math to find the path that gets you to a place that doesn’t have a customer impact,” he said, without commenting on exactly what this would mean in terms of price increases.
  • The US-China trade war reached new levels this week. Retailers are now bracing themselves for the prospect of yet more tariffs on $300 billion worth of Chinese goods.
  • Visit Business Insider’s homepage for more stories.

Macy’s is bracing itself for a fresh wave of tariffs.

In a call with analysts on Wednesday, Macy’s CEO Jeff Gennette addressed the ongoing US-China trade war, which reached new levels this week, and whether it would have a meaningful impact on the department store’s business.

Gennette said that tariffs imposed on Chinese imports during 2018 did not have a meaningful impact on the company. However, new tariffs announced this month on $200 billion worth of Chinese imports likely would have an impact, specifically on Macy’s furniture business.

Read more: Experts say these retailers could be worst hit by the trade war with China

Gennette said Macy’s is now bracing itself for another wave of proposed tariffs that would impact $300 billion worth of goods imported from China. Should these be put into action, Macy’s is unlikely to find a way to absorb costs without raising prices.

“It is hard to do the math to find the path that gets you to a place that doesn’t have a customer impact,” he said.

Gennette said he is still hopeful that talks between the US and China will be productive.

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Google’s problems in China are bigger than Huawei – CNET

Google’s problems in China are bigger than Huawei – CNET

google-hq-sede-mountain-view.jpg

Google has long had a complicated relationship with China.


Getty

Google’s troubles in China now include Huawei.

For years, the tech giant has been dogged by its relationship with the world’s biggest country. In 2010, Google pulled out of the search market in China after co-founder Sergey Brin cited the government’s “totalitarian” policies, including censorship of the web.

Since then, Google has tried to tiptoe back into the huge and appealing market, only to draw the ire of lawmakers and human rights advocates. Dragonfly, a censored search product for China, and an AI lab in Beijing have been particularly controversial.

Now Google has to deal with another issue in the country. On May 15, the Trump administration upended the tech world by effectively banning Huawei from doing business with US companies. A host of tech giants — Qualcomm, Broadcom and Intel — reacted quickly, reportedly cutting off business with the world’s second-largest smartphone maker. Microsoft removed Huawei’s MateBook X Pro laptop from its online store, an apparent reaction to the ban.

Google, too, reacted swiftly, saying that it would stop providing Huawei with technical support and that upcoming versions of Huawei’s phones outside China would no longer get access to Google’s Play Store app marketplace and its marquee slate of services, including YouTube and Gmail. The move was temporarily reversed on Tuesday after the US said it would issue a 90-day license for US mobile companies to figure out long-term solutions.






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The ban highlights Google’s unusual position. Unlike other tech companies, such as iPhone maker Apple, Google’s biggest product isn’t available in China. Losing its relationship with Huawei will only make it more difficult for the search giant to eventually enter the lucrative market.

“They are walking more of a political tightrope than the other players are,” said Bob O’Donnell, president of Technalysis Research. “Google’s biggest money maker — search — isn’t there.”

Google declined to comment.

ReadSamsung has the most to gain from Google putting Huawei on ice

The search giant, of course, isn’t the only tech company blocked in China. Facebook’s service is blocked in China though it has advertisers in the country. Twitter can’t be accessed in China. (You can check whether a website is available in China with the Blocked in China tool.)

Still, few tech companies are as obviously eager to be part of the market as Google, said O’Donnell. Dragonfly, the censored search product, would reportedly blacklist search terms disapproved of by the Chinese government, such as “student protest” and “Nobel Prize.” It also may have tied searches to people’s phone numbers.

Human rights advocates protested when news of Dragonfly broke last year. Google called work on the project “exploratory” and said it had “no plans” to launch a search service in China. When Google CEO Sundar Pichai was dragged in front of Congress last December, Dragonfly was a key topic in the grilling.

Google has also been criticized for its artificial intelligence lab in Beijing, which opened in 2017. In March, Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, said the search giant’s work in the country is “indirectly benefiting the Chinese military.” Pichai ended up meeting with both Dunford and President Donald Trump that month to discuss Google’s relationship with China.

Now the search giant’s relationship with Huawei is another source of friction in its overall relations with China. None of those sources of tension is likely to ease anytime soon.

“Google,” says Technalysis’ O’Donnell, “is in a particularly tough spot.”


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China starts working on its own blacklist in response to the Huawei ban

China starts working on its own blacklist in response to the Huawei ban

What you need to know

  • China is planning on blacklisting foreign companies that have been deemed “unreliable.”
  • It could include companies from the U.S. as well as Japan or Britain.
  • China could also restrict rare earth exports to the U.S. in the future.

Tensions are rising in the trade war as China threatens to create its own blacklist. The list would contain foreign companies or organizations which China has deemed unreliable.

China will set up a mechanism listing foreign enterprises, organizations and individuals that don’t obey market rules, violate contracts and block, cut off supply for non-commercial reasons or severely damage the legitimate interests of Chinese companies.

It is clear this is a direct response to the recent U.S. ban on Huawei which has caused many U.S. and foreign companies to cut ties with the Chinese mobile giant. The ban has resulted in Huawei losing direct access to Android, as well as access to patents from ARM that are used to make its Kirin processor.

While Huawei has its own operating system in the works set to launch in China in late 2019, getting around the hardware regulations will be a tougher cookie to crack.

As the trade war continues to heat up between the two countries, it was only a matter of time before China found a way to retaliate.

It’s expected that China will not only target U.S. companies but also other foreign companies who have been dragged into this dispute. For example, Japanese companies Toshiba and Panasonic or Britain’s ARM who have both been forced to shun Huawei after the U.S. ban was handed down.

A Ministry of Commerce spokesman for China, Gao Feng said that China is setting up the list:

to protect international economic and trade rules and the multilateral trading system, to oppose unilateralism and trade protectionism, and to safeguard China’s national security, social and public interests

Another measure China has considered is restricting exports of rare earth minerals to the U.S. That’s a big deal because these minerals are used in high-tech electronics, automobiles, and even for defense. The minerals aren’t called rare for nothing, and China is the largest supplier with around 35% of the world’s reserves and responsible for 70% of the mining done in 2018.

Trump has said in the past that Huawei could be part of a trade deal between the two countries. However, until the U.S. and China can come to a trade agreement, the two will continue to battle it out with tariffs and blacklisting companies. The U.S. still has the potential to add new companies to the entities list such as Zhejiang Dahua Technology Co. and Hangzhou Hikvision Digital Technology Co.

Chinese President Xi Jinping and Trump will next meet at the G-20 Summit at the end of June. Whether or not this next meeting leads to a trade deal is still up in the air, with Trump saying he’s in no hurry to make a deal.

Losing Google support would irreparably damage Huawei’s global smartphone business

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Factbox: Winners and losers in Trump’s trade war with China

Factbox: Winners and losers in Trump’s trade war with China

(Reuters) – U.S. companies in everything from computer chips to tractors have said President Donald Trump’s trade wars, including disputes with Beijing and global steel tariffs, have had an impact on them.

FILE PHOTO: A general view of Hongkong International Terminals (HIT), owned by Hutchison Port Holdings, as part of the Kwai Tsing Container Terminals for transporting shipping containers in Hong Kong, China July 25, 2018. REUTERS/Bobby Yip/File Photo

Even for some of the expected winners, such as steel companies, the benefits of the president’s tariffs are not entirely clear.

Trump said on Sunday he will raise tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent, ratcheting up pressure on Beijing to agree to a deal.

TECHNOLOGY

Apple Inc

Apple Inc cut its fiscal first quarter sales forecast, blaming slowing iPhone sales in China where uncertainty around U.S.-China trade relations has hurt the economy.

Late last month after Apple slashed prices, sales picked up and Apple cited the improved tone of the trade war for a stronger outlook.

Intel Corp

The chipmaker last month cut its revenue forecast for 2019, citing a slowdown in demand from China.

VEHICLES

Fiat Chrysler Automobiles NV forecast higher commodities costs, driven by tariffs, would cost 750 million euros for the year.

General Motors Co projected $1 billion extra costs this year for tariffs and raw materials. Steel and aluminum prices have eased, but prices for other commodities such as palladium have risen, it said.

Ford Motor Co Ford said that in 2018 it incurred “headwinds” of about $750 million in tariff-related effects. Lower sales volume and increased commodity costs including tariff-related effects added $500 million to first-quarter costs over the prior year.

Harley-Davidson

The motorcycle manufacturer said European Union and China tariff-related costs were $23.7 million in 2018 and are expected to range between $100 million and $120 million in 2019.

HEAVY EQUIPMENT

Caterpillar Inc

Caterpillar said tariffs would cost the company $250 million to $350 million in 2019 if there was no relief.

Deere & Co

The manufacturer said in February it expects U.S. tariffs on Chinese imports will cost $100 million in 2019.

AGRICULTURE

Archer Daniels Midland Co

The commodities trader’s adjusted operating profit slumped 30 percent in the fourth quarter to $183 million as the China trade war hit its sorghum and soybean origination business.

Bunge Ltd The company reported a $125 million mark-to-market loss in August on a position in soybeans that bet a China trade war would be averted. Bunge’s profits then plunged in the fourth quarter as a temporary truce with China caused soybean prices to fall and slashed the value of its Brazilian soybean inventory by $125 million.

Cargill Inc

Commodities trader Cargill said in March that U.S.-China trade tensions and other supply chain disruptions continued to drag on earnings in origination and processing, the company’s primary grain-trading unit.

STEEL

Nucor Corp

No.1 U.S. steel producer Nucor Corp posted record earnings and shipped a record amount of steel in 2018, benefiting from the tariffs.

But the company last month forecast first-quarter profit below Wall Street estimates, citing lower average selling prices of steel sheets and delay in shipments to customers in the construction sector.

The tariffs imposed by the Trump administration on steel imports, mainly from China, have increased domestic production, leading to a drop in steel prices.

JBS SA

Brazil’s JBS, the world’s largest meatpacker, has been able to boost meat exports to China as the tensions between the Washington and Beijing escalated. The company’s share of exports to China rose to more than 24 percent last year vs under 21 percent in 2016 and 2017.

Louis Dreyfus Company

The global agricultural commodity merchant said that trading opportunities created by the U.S.-Chinese trade dispute boosted its soybean business last year.

The company posted record soybean export volumes from Brazil , boosting profits 12 percent vs the previous year.

Reporting by Chris Prentice and Timothy Aeppel in New York, Ana Mano in Sao Paulo, Karl Plume and P.J. Huffstutter in Chicago, Ankit Ajmera and Arathy Nair in Bengaluru, Joe White in Detroit and Stephen Nellis in San Francisco; Editing by Cynthia Osterman

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Business this week

Business this week

Fiat Chrysler Automobiles confirmed that it was seeking a merger with Renault, a combination that would create the world’s third-largest car company behind Volkswagen and Toyota. FCA and Renault hope the merger will save cash to bolster investments in electric vehicles and self-driving cars. But Renault is also in a close partnership with Japan’s Nissan and Mitsubishi. That alliance has been strained since the arrest of Carlos Ghosn, its former boss, on charges of financial misconduct at Nissan (which he denies) and its future is now in question. See article.

The Huawei effect

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Alibaba was reportedly considering a second listing of its shares, but in Hong Kong rather than New York, where its $25bn stockmarket debut in 2014 remains the world’s biggest IPO. This time it is seeking to raise $20bn. Its decision to list in Hong Kong comes amid uncertainties over the future treatment of Chinese companies by the American authorities. Alibaba is using its profits from e-commerce to invest in artificial intelligence, quantum computing and other sensitive tech areas where America and China are competing aggressively. See article.

The latest skirmish in the trade war saw China threaten to limit supplies to America of rare earths, a group of 17 metals vital to fast-growing businesses such as electric cars but also widely used in the defence industry. China accounts for the vast bulk of rare-earth production; for some of the metals it is the sole producer. In 2010 it cut exports to Japan during a maritime dispute.

Maersk, the world’s biggest shipping company, gave a downbeat assessment of the effect of global-trade tensions on its industry. It estimates that container trade grew by 1.7% in the first quarter compared with the same period a year earlier. That is less than half the average for 2018.

Boeing’s 737 MAX aircraft is unlikely to return to service until at least August, according to the International Air Transport Association. A recent meeting of global safety-regulators avoided putting a date on a return for the MAX, which has been grounded following two crashes. IATA stressed that it will be regulators who make the final decision. See article.

The Food and Drug Administration approved a gene therapy developed by Novartis for treating spinal muscular atrophy in children. Priced at $2.1m, Zolgensma is the world’s most expensive drug, though it costs half the current treatment for SMA over the first ten years of a child’s life.

The first trial got under way in Oklahoma of a drugmaker facing claims that its marketing of painkillers fuelled the opioid crisis. Johnson & Johnson argues that it followed the law and has decided to fight the case. Its two former co-defendants settled with the state: Purdue Pharma for $270m and Teva, this week, for $85m. See article.

Germany’s unemployment rate rose to 5% in May, the first increase in five years. Most of the rise is explained by a change to the way the government counts the unemployed, but the labour ministry said that Germany’s slowing economy was also a factor.

Global Payments, which focuses on processing transactions, agreed to buy Total System Services, which specialises in clearing them, for $21.5bn. It is the third big merger in the payments industry this year.

Sky broadband

After delays because of bad weather, SpaceX launched the first batch of satellites that will eventually form its Starlink broadband-internet network. Its boss, Elon Musk, lauded the achievement, SpaceX’s heaviest payload yet. Not everyone was happy. Around 12,000 satellites will be deployed by the mid- 2020s. They operate in low orbit and are brighter than expected, prompting concerns from astronomers about obstructed telescope observations. See article.

Arun Jaitley stepped down as India’s finance minister because of ill health. Mr Jaitley oversaw many of the financial reforms introduced under the government of Narendra Modi, including a consumption tax.

Indian authorities stopped the founder of Jet Airways, Naresh Goyal, from flying out of the country. The government has promised to make it harder for the bosses of bankrupt companies to leave India following the case of Vijay Mallya. The boss of Kingfisher Airlines fled to London in 2016 and is fighting extradition.

In the process of finalising her divorce from Jeff Bezos, MacKenzie Bezos promised to give half of the $36bn she is receiving as part of the settlement to charity. Ms Bezos made the commitment to the Giving Pledge, an initiative started by Warren Buffett and Bill and Melinda Gates through which the super-rich can donate some of their fortune to worthy causes. A contemplative Ms Bezos noted that “we each come by the gifts we have to offer by…lucky breaks we can never fully understand.”

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