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China Agrees To Cut Tariffs on US Cars: Donald Trump

"Given the complexity of interactions between the two economies, the rest of the world will still be holding its collective breath," said the official China Daily in an editorial

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China has agreed to cut tariffs on cars it imports from the US, President Donald Trump has said, after he negotiated a truce in the trade war with Beijing. The announcement boosted the financial markets.
“China has agreed to reduce and remove tariffs on cars coming into China from the US. Currently the tariff is 40 per cent,” Trump tweeted on Sunday.

The outcome of the Trump-Xi meeting boosted financial markets in Asia Pacific on Monday. The benchmark Shanghai Composite index led the way with a rise of 2.57 per cent while Hong Kong was up 2.45 per cent and Tokyo closed 1 per cent better off. Australia’s benchmark ASX200 index finished the day up 1.84 per cent.

The increases paved the way for sharp rises on European and US exchanges later in the day with futures trade seeing the FTSE100 opening up by 1.6 per cent and the Dow Jones industrial average on Wall Street expected to leap 2 per cent.

But Donald Trump didn’t give details about the car tariffs or when the change would happen and what the new tariff level would be, CNN reported. There was no immediate response from the Chinese government on cutting car tariffs.

Trump’s announcement came shortly after he and his Chinese counterpart Xi Jinping announced a breakthrough during the G-20 summit in Buenos Aires on Saturday, temporarily pausing the trade row between the world’s two largest economies that saw tit-for-tat tariffs imposed on each other’s products.

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Trump says China to cut tariffs on US cars; markets rise. VOA

Neither country had mentioned the car tariff issue in their official read-outs of the Trump-Xi weekend meeting in which Washington agreed to hold off on his threat to impose 25 per cent tariffs on $200 billion worth of Chinese goods from January 1, leaving them at the current 10 per cent rate.

In return, Beijing agreed to purchase more agricultural products from US farmers immediately.

Earlier this year, China lowered its tariffs on foreign car imports from 25 per cent to 15 per cent. However, it later imposed new additional tariffs of 25 per cent on American-made passenger vehicles after Trump raised the tariff on Chinese autos from 2.5 to 27.5 per cent.

Also Read- To Help Poor Countries Adapt To Global Warming, World Bank Doubles Its Funding

The US leader called his deal with Xi “incredible”. “It goes down, certainly – if it happens, it goes down as one of the largest deals ever made,” he told reporters.

Meanwhile, the Chinese state media warned that while the new “consensus” was a welcome development and gave both sides “breathing space” to resolve their differences, there was no “magic wand” that would allow the grievances to disappear immediately.

“Given the complexity of interactions between the two economies, the rest of the world will still be holding its collective breath,” said the official China Daily in an editorial. (IANS)

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China’s Economy Slows As It Tries to Diffuse Trade War With U.S.A.

The impact on China’s economy from the Sino-U.S. trade frictions are not apparent yet, Mao cautioned, adding that the nation will face more “external” uncertainties in 2019.

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A woman cleans the window at a Aston Martin luxury car dealership in Beijing, Dec. 12, 2018. Auto sales have fallen sharply in China. VOA

China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further, underlining rising risks to the economy as China works to defuse a trade dispute with the United States.

The world’s second-largest economy has been loosing momentum in recent quarters as a multi-year government campaign to curb shadow lending put increasing financial strains on companies in a blow to production and investment.

The slowdown in Chinese industries has started to weigh on consumer sentiment this year, tapping the brakes on retail sales. Big-ticket items have been the first to be hit, with auto sales declining since May.

Pace of retail sales slows

Retail sales rose 8.1 percent in November from a year earlier, data from the National Bureau of Statistics showed Friday, below expectations for an 8.8 percent rise and the slowest since May 2003. In October, sales increased 8.6 percent. Auto sales fell a sharp 10.0 percent from a year earlier.

 

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People try garments at a retail and wholesale clothing mall in Beijing, July 16, 2018. China’s economic growth slowed in the quarter ending in June, adding to challenges for Beijing amid a mounting tariff battle with Washington. VOA

 

The slump was in line with data released by China’s top auto industry association, which showed sales dived 14 percent in November, the steepest drop in nearly seven years.

The stresses on broad activity have been compounded by a sharp escalation in China’s trade dispute with the United States, which has threatened to fracture global supply chains, chill investment, exports and growth.

Pace of industrial output slows

Industrial output rose 5.4 percent in November, missing analysts’ estimates and matching the rate of growth seen in January-February 2016. Factory output had been expected to grow 5.9 percent, unchanged from October’s pace.

Over the weekend, China reported far weaker than expected November exports and imports, reflecting slower global demand and waning domestic factory activity as profit margins narrow.

With economic growth at its weakest since the global financial crisis, Chinese policymakers are ramping up spending, pushing banks to increase lending and cutting taxes to shore up businesses and ward off a more damaging slump.

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Plastic bags of fentanyl are displayed at the U.S. Customs and Border Protection area at the International Mail Facility at O’Hare International Airport in Chicago. VOA

The weaker November industrial output and retail sales growth numbers showed that downward pressure on the economy is increasing, said Mao Shengyong, spokesman at the statistics bureau.

Still on track to hit growth target

But China is on track to hit its 2018 economic growth target of around 6.5 percent, Mao told reporters.

“On balance, the latest data show an economy that is under pressure on both the external and domestic front, with policy efforts to shore up growth still falling short,” Julian Evans-Pritchard, senior China economists at Capital Economics, wrote in a note.

A temporary 90-day trade war truce agreed by the United States and China early this month may have removed some of the immediate pressure on the economy.

Also Read: The Escalating Trade War Between China And U.S. Calls A Truce

The impact on China’s economy from the Sino-U.S. trade frictions are not apparent yet, Mao cautioned, adding that the nation will face more “external” uncertainties in 2019.

Indeed, even in the unlikely event the world’s top two economies reach a durable resolution in their dispute, ebbing domestic demand, mounting household debt and a cooling real estate sector point to a further slowdown in growth next year. (VOA)