U.S. and China at impasse over trade, Kudlow says new tariffs will remain

U.S. and China at impasse over trade, Kudlow says new tariffs will remain

WASHINGTON/BEIJING (Reuters) – The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

U.S. President Donald Trump, U.S. Secretary of State Mike Pompeo, U.S. President Donald Trump’s national security adviser John Bolton and Chinese President Xi Jinping attend a working dinner after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018. REUTERS/Kevin Lamarque

The trade war between the world’s top two economies escalated on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods after President Donald Trump said Beijing ‘broke the deal’ by reneging on earlier commitments made during months of negotiations.

White House economic adviser Larry Kudlow told Fox News on Sunday that the United States needs to see China agree to “very strong” enforcement provisions for an eventual deal and said the sticking point was Beijing’s reluctance to put agreed changes into law.

He vowed the tariffs would remain in place while negotiations continue.

Beijing remained defiant, however. “At no time will China forfeit the country’s respect, and no one should expect China to swallow bitter fruit that harms its core interests,” said a commentary, due for Monday publication, in the ruling Communist Party’s People’s Daily.

It said Beijing’s doors were open to talks but it would not yield on important issues of principle.

Kudlow said there was a “strong possibility” that Trump will meet with Chinese President Xi Jinping at a G20 summit in Japan in late June. Until last week, there were expectations Trump and Xi would sign a trade deal at the summit.

However, the trade talks suffered a major setback last week when China proposed extensive revisions to a draft agreement. It wanted to delete prior commitments that Chinese laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers.

‘SOMETHING MUCH CLEARER’

Vice Premier Liu He, China’s top economic adviser, sought to defend the changes in talks with senior U.S. officials in Washington on Thursday and Friday, arguing that China could accomplish the policy changes through decrees issued by its State Council, or cabinet, sources familiar with the talks said.

But U.S. Trade Representative Robert Lighthizer rejected that, telling Liu that the United States was insisting on restoration of the previous text.

“We would like to see these corrections in an agreement which is codified by law in China, not just a State Council announcement. We need to see something much clearer. And until we do we have to keep our tariffs on,” Kudlow said.

China strongly opposes the latest U.S. tariff hike, and has to respond to that, Liu told reporters on Saturday.

Kudlow said on Sunday he expected retaliatory tariffs to kick in but that it had not happened yet.

Trump has ordered Lighthizer to begin the process of imposing tariffs on all remaining imports from China, a move that would affect about an additional $300 billion worth of goods.

Lighthizer said a final decision on that has not yet been made but it would come on top of the Friday tariff rate increase to 25% from 10% on $200 billion worth of Chinese imports.

Trump has claimed that China is paying for the tariffs but it is importers – usually U.S. companies or the U.S.-registered units of foreign companies – that have to pay. And U.S. farmers, a key constituency of Trump, have been among the hardest hit in the trade war, with soybean shipments to China dropping to a 16-year low in 2018.

Asked who was paying, Kudlow said on Sunday that “both sides will suffer on this,” although he added that the U.S. economy should be able to cope.

“We’re in terrific shape in order to correct 20 years plus of unfair trading practices with China … I think this is a risk we should and can take without damaging our economy in any appreciable way,” he said.

Reporting by Humeyra Pamuk and Ben Blanchard, additional reporting by Brenda Goh in Shanghai; Writing by Humeyra Pamuk; Editing by Lisa Shumaker and Rosalba O’Brien

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DoubleLine’s Gundlach says new U.S. tariffs on China likely

DoubleLine's Gundlach says new U.S. tariffs on China likely

FILE PHOTO: Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital LP., speaks at the Sohn Investment Conference in New York City, U.S. May 4, 2016. REUTERS/Brendan McDermid

(Reuters) – Jeffrey Gundlach, chief executive officer at DoubleLine Capital, said on CNBC on Tuesday that he sees a better than 50% chance that new tariffs will happen.

Wall Street’s main indexes tumbled more than 1 percent on Tuesday, as the latest turn in trade negotiations with China stoked global growth worries and kept investors away from risky assets.

“I think we are going to keep seeing more tension,” said Gundlach. “I think the 25% tariff bump is better than 50% chance. The market obviously does not want to see increased tariffs, so it’s been kind of reacting to that.”

Asked if he believes U.S. stocks are in a bear market: “Of course we are,” Gundlach said. The U.S. stock market “has gone nowhere in 15 months.”

DoubleLine Capital oversees more than $130 billion in assets under management.

Reporting by Jennifer Ablan; Editing by David Gregorio

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Morgan Stanley to become top shareholder in China funds venture with stake increase

Morgan Stanley to become top shareholder in China funds venture with stake increase

A sign is displayed on the Morgan Stanley building in New York U.S., July 16, 2018. REUTERS/Lucas Jackson

SHANGHAI/HONG KONG (Reuters) – Morgan Stanley has won an auction to buy an additional 5.5 percent stake in its China mutual funds joint venture, in a deal that will make it the top shareholder of Morgan Stanley Huaxin Fund Management Co.

The Wall Street bank, which currently owns 37.4 percent in Shenzhen-based Morgan Stanley Huaxin, won the bid on March 30 to buy the additional stake for 25.04 million yuan ($3.73 million), according to the auction notice on Taobao.com.

Morgan Stanley is buying the stake from a private shareholder in a court-appointed auction, which will see its stake surpass that of Huaxin Securities, which owns 39.56 percent of the joint venture. The purchase needs to be approved by China’s securities regulators.

Morgan Stanley declined to comment.

Moves by Morgan Stanley to boost ownership in the fund venture comes as China is opening up its financial sector worth trillions of dollars – from insurance to asset management and brokerage – for bigger foreign participation.

    China has in recent months allowed many foreign financial institutions to either set up new businesses onshore or expand their presence through majority ownership in domestic joint ventures.

    Under new rules announced in late 2017, Beijing has also paved the way for foreigners to own up to 51 percent in their local mutual fund ventures.

    Besides the fund management business, Morgan Stanley also has a securities joint venture with Huaxin, in which the Wall Street bank raised its stake to 49 percent in 2017. The bank has previously expressed an interest in raising the stake further.

($1 = 6.7169 Chinese yuan renminbi)

Reporting by Samuel Shen and Sumeet Chatterjee; Editing by Muralikumar Anantharaman

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China refuses to concede on U.S. demands to ease curbs on tech firms: FT

China refuses to concede on U.S. demands to ease curbs on tech firms: FT

FILE PHOTO: Chinese staffers adjust U.S. and Chinese flags before the opening session of trade negotiations between U.S. and Chinese trade representatives at the Diaoyutai State Guesthouse in Beijing, Thursday, Feb. 14, 2019. Mark Schiefelbein/Pool via REUTERS

(Reuters) – Ahead of fresh high-level trade talks this week, China is not conceding to U.S. demands to ease curbs on technology companies, the Financial Times reported on Sunday, citing three people briefed on the discussions.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are scheduled to travel to Beijing for talks starting on March 28, the White House said on Saturday.

The FT report said Beijing had yet to offer “meaningful concessions” to U.S. requests for China to stop discriminating against foreign cloud computing providers, to reduce limits on overseas data transfers and to relax a requirement for companies to store data locally.

China made an initial offer on digital trade that the United States judged as insufficient, the report said, citing a source.

China then retracted the offer after the United States demanded stronger pledges, the report said, without giving further details.

The White House and China’s Commerce Ministry did not respond to requests from Reuters for comment on Sunday.

U.S. President Donald Trump said on Friday that the talks aimed at resolving the trade dispute were progressing and a final agreement seemed probable.

Reporting by Kanishka Singh in Bengaluru; Editing by Neil Fullick

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