May 08,2018
United States:
Trump to discuss trade with China’s Xi as talks continue
U.S. President Donald Trump said he will discuss trade with Chinese President Xi Jinping on Tuesday, as both sides continue talks after failing to reach a consensus at talks in Beijing last week. Trump announced the planned telephone call in a post on Twitter, just days after a U.S. delegation returned from discussions in Beijing last week with no agreement on a long list of U.S. demands, and ahead of more negotiations next week. Trump, calling Xi “my friend,” pledged in the post that “good things will happen” on trade. Next week, China’s top economic official, Vice Premier Liu He, is scheduled to visit Washington to resume negotiations sparked by the Trump administration’s threat to impose tariffs on up to $150 billion of Chinese imports. Tariff threats have roiled U.S. and other stock markets in recent weeks amid fears a trade war between the world’s two largest economies will impact global markets. Last week, a seven-member U.S. delegation returned to Washington and briefed Trump on their meeting with Chinese counterparts.
U.S. Growth Cools to 2.3% While Compensation Costs Accelerate
U.S. economic growth cooled last quarter as consumers pulled back following outsize spending in the prior period, though solid business investment cushioned some of the weakness and employee-compensation costs accelerated amid a tight job market. Gross domestic product, the value of all goods and services produced in the nation, rose at a 2.3 percent annualized rate after climbing 2.9 percent in the prior quarter, the Commerce Department reported Friday. The median forecast of economists surveyed by Bloomberg called for a 2 percent gain. A separate Labor Department report showed that employment costs rose more than expected in the first quarter and a measure of private wages had the biggest annual gain since 2008.
Europe:
Euro zone investor morale falls on protectionism fears: Sentix
Investor morale in the euro zone deteriorated for the fourth month in a row this month to its lowest level since February 2017, hit by concerns about the possible introduction of U.S. tariffs and a protectionist spiral, a survey showed on Monday. Sentix’s index for the euro zone fell to 19.2 from 19.6 in April. The Reuters consensus forecast was for a rise to 21.0. The fall was due to both lower economic expectations and investors’ slightly weaker assessment of current conditions. “Uncertainties about the introduction of punitive U.S. tariffs and the danger that this could lead to an expansion of protectionist measures are weighing on us,” Manfred Huebner, managing director at Sentix, said in a note. U.S. President Donald Trump has invoked a 1962 trade law to erect protections for U.S. steel and aluminum producers on national security grounds, amid a worldwide glut of both metals that is largely blamed on excess production in China. A week ago, the White House announced that Trump had extended a temporary reprieve from the tariffs for the European Union, Canada and Mexico until June 1, just hours before they were due to come into force. In the run-up to a June 1 deadline, Germany is urging its European partners to show some flexibility and pursue a broad trade deal that benefits both sides. But that puts Germany at odds with European peers such as France. A Sentix survey for Germany also fell for the fourth month in a row, hitting its lowest since September 2016. “The economy in Germany is booming and yet the zenith seems to have passed,” Huebner said. Sentix conducted the survey of 974 investors between May 3 to 5.
Asia:
China April exports bounce back more than expected despite U.S. trade brawl
China’s exports rebounded more strongly than expected in April after a surprise drop the previous month, suggesting global demand remains relatively resilient and providing a cushion to the economy amid a heated trade dispute with the United States. Imports in April also grew more robustly than anticipated, signaling China’s domestic demand is holding up well, good news for policymakers looking to soften the blow from any trade shocks.China’s April exports rose 12.9 percent from a year earlier, beating analysts’ forecasts for a 6.3 percent increase and snapping back from a 2.7 percent drop in March that economists believe was heavily distorted by seasonal factors. Some analysts, however, warned the strong April export showing was mostly seasonal and that a multi-year global trade recovery may have topped out. “Shipments still look healthy but today’s data does point to a softening in external demand recently,” Capital Economics senior China Economist Julian Evans-Pritchard wrote in a note, estimating that exports by volume may have actually slipped on a month-on-month basis. “The backdrop of the ongoing trade negotiations between China and the U.S. is one in which global growth has already peaked and China’s export performance is waning as a result.” Still, China has outperformed other major Asian trade-reliant economies such as Japan and South Korea recently, suggesting its exporters may be ramping up shipments of finished goods and purchases of raw materials and parts in case of supply chain disruptions following both sides’ tariff threats. “We may see some retreat in exports in the following months,” said Betty Wang, senior China Economist at ANZ, referring to the risk of a slowdown after a burst of “front-loading” by shippers eager to beat any punitive measures. Export growth was led by a 20.7 percent increase in shipments of high-tech products, led by mobile phones.
China ramps up checks on U.S. pork imports in potentially costly slowdown
China has ramped up inspections of pork shipped from the United States, importers and industry sources said, the latest American product to be hit by a potentially costly slowdown at Chinese ports in the past couple of weeks. Some trade experts said they believe Beijing is sending a defiant warning to Washington in response to sweeping U.S. trade demands made on China last week. The stepped-up checks have even hit China’s WH Group Ltd (0288.HK), the world’s largest pork company and owner of Smithfield Foods in the U.S., and come amid increasing scrutiny of other U.S. farm goods, including fruit and logs. Ports are opening and inspecting every cargo that arrives, said Luis Chein, a director at WH Group, China’s top importer of U.S. pork. That compares with inspections carried out only “randomly” in the past, he told Reuters, significantly lengthening the time product stays at the port. China’s General Administration of Customs, which oversees food imports, did not respond to a fax seeking comment. Increased checks on U.S. products are “not terribly surprising,” said Even Rogers Pay, an agriculture analyst at China Policy, a Beijing-based consultancy. “In a situation where trade tensions are high, China will enforce every possible regulation on its books. It makes strategic sense to do so at this point,” she said. Late on Monday, China’s customs agency announced it was stepping up quarantine checks on apples and logs from the United States after detecting pests in imports of the products at Chinese ports. U.S. President Donald Trump has threatened tariffs on up to $150 billion of Chinese goods, largely because of U.S. allegations that Beijing misappropriates U.S. technology through joint-venture requirements, unfair licensing practices, outright theft and state-backed acquisitions of U.S. technology firms.