Chinese Vice premier Liu He leaves trade talks at the end of the first day

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China MOFCOM urges US to remove Chinese entities from blacklist

The US added Chinese companies to blacklist yesterday

The timing of the US announcement has contributed to the negative tone in markets today. They warned about retaliation earlier today in a press conference.

The statement also urged the US to stop making irresponsible remarks on the Xinjiang issue and to stop interfering in China’s internal affairs.

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Trump says Chinese delegation coming to U.S. next week for trade talks

WASHINGTON (Reuters) – President Donald Trump said on Thursday a delegation from China would come to the United States next week for more trade talks.

“China’s coming in next week. We’re going to have a meeting with them. We’ll see. But we’re doing very well,” Trump said before leaving on a trip to Florida.

“I have a lot of options on China. But if they don’t do what we want, we have tremendous power,” he added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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U.S. Treasury says no plans to block Chinese listings ‘at this time’: Bloomberg

(Reuters) – The United States does not currently plan to stop Chinese companies from listing on U.S. exchanges, Bloomberg reported on Saturday, citing a U.S. Treasury official.

“The administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time,” Bloomberg quoted https://bloom.bg/2obHkDb Treasury spokeswoman Monica Crowley as saying.

Reuters reported on Friday that President Donald Trump’s administration is considering delisting Chinese companies from U.S. stock exchanges in a move that would be part of a broader effort to limit U.S. investment in Chinese companies.

The Treasury did not immediately respond to a Reuters request for comment.

(This story has been refiled to add dropped ‘not’ in first paragraph)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Reminder: A week-long Chinese holiday starts on Tuesday

That could make for a quiet week next week

The US leak about Chinese investment limits is a bit of a dirty trick because of the timing of trading next week.

Chinese markets are open Monday then close until the following week. That will leave traders in a jam and surely scare away some of those on the long side.

The Shanghai Composite made some headway after the drop in early August but last week it formed a double top and it was already headed lower before the latest headlines.

That could make for a quiet week next week

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U.S., Chinese trade deputies face off in Washington amid deep differences

By David Lawder

WASHINGTON (Reuters) – U.S. and Chinese deputy trade negotiators were set to resume face-to-face talks on Thursday for the first time in nearly two months as the world’s two largest economies try to bridge deep policy differences and find a way out of a bitter and protracted trade war.

The negotiations on Thursday and Friday are aimed at laying the groundwork for high-level talks in early October that will determine whether the two countries are working towards a solution or are 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, were set to launch talks on Thursday morning at the U.S. Trade Representative’s (USTR) office near the White House. The U.S. side is expected to be led by Deputy USTR Jeffrey Gerrish.

The discussions are likely to focus 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 texts covering core changes to strengthen China’s intellectual property protections and end 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

Trump is eager to provide export opportunities for U.S. farmers, one of his key political constituencies who have been battered by China’s retaliatory tariffs on U.S. soybeans and other agricultural commodities.

CURRENCY ON TABLE

U.S. Treasury Secretary Steven Mnuchin, who will participate in the October talks along with USTR Robert Lighthizer and Chinese Vice Premier Liu He, 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 slipped below 7 to the dollar, accusing Beijing of pushing its currency lower to gain a trade advantage.

Trump has said that China failed to follow through on agricultural purchase commitments made by its president, Xi Jinping, at a G20 leaders summit in Osaka, Japan as a goodwill gesture to get stalled talks back on track. China has denied that such commitments were made.

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 by previous rounds of tariffs.

But in an easing of tensions last week, Trump delayed a scheduled Oct. 1 tariff increase on $ 250 billion worth of Chinese imports until mid-month, as China postponed tariffs on some U.S. cancer drugs, animal feed ingredients and lubricants.

Beijing also is seeking an easing of U.S. national security sanctions against telecom equipment maker Huawei Technologies [HWT.UL], 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 broadening global economic fallout of the dispute.

The spectre of a global recession has 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, saying the reduction provided “insurance against ongoing risks” including weak world growth and resurgent trade tensions.

IDEOLOGICAL DIVIDE

Trade experts, executives and government officials in both countries say that even if the September and October talks produce an interim deal that includes purchases and a reprieve for Huawei, 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.

Jon Lieber, a principal in PwC’s national tax services practice, said a possible “very narrow agreement” in October would do little to solve fundamental differences between the two countries.

To keep markets steady, the two sides could well “string along the talks for a longer period of time,” he added.

Representative Kevin Brady, the top Republican on the House Ways and Means Committee, told reporters on Wednesday that he was cautiously optimistic about the talks.

While he is no fan of tariffs, Brady said Trump was right to challenge China’s trade actions.

“Zero is always best, but there is a necessity to change the whole trading relationship with China.”

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Trump announces fresh tariffs on Chinese products, ramping up rates by 5%

Trump makes the announcement via Twitter

On October 1, Chinia is going to be hit by fresh tariffs.

Here’s the announcement, which was clearly timed to hit moments after the FX close:

For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30% Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!

One thing that’s a bit unclear is the Dec 15 tariffs. I’m guessing those are still exempted until then.

All told, this isn’t that bad. It could have been worse. He’s ramping up tariffs by 5%. It’s not some kind of apocalyptic announcement but it certainly continues the trend of escalation. 

trade war

 

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Amazon Echo devices made by Chinese teens ‘working through night’ – reports

Amazon has pledged to investigate allegations that hundreds of teenagers are working illegal hours at a Chinese factory producing its Echo devices.

A new report by China Labor Watch claims more than 1,500 “interns” were manufacturing the smart assistants at a factory run by supplier Foxconn.

The teenagers, aged between 16 and 18, were reportedly pressured into work 60 hours a week and night shifts.

Foxconn has blamed local managers and vowed to improve monitoring of staff.

The company, which makes products for a number of technology giants, has allegedly fired two senior staff members at the site in Hengyang, Bloomberg reports.

It is the latest in a string of controversies surrounding working conditions at the manufacturer, which is headquartered in Taiwan.

In 2017, it emerged some students were working illegal overtime at another Foxconn facility making Apple iPhone Xs.

What does the report say?

The latest report into Foxconn, first detailed in the Guardian, alleges hundreds of school students have been drafted in from local vocational schools to help fulfil orders.

The report alleges the so-called interns are paid as little as $ 1.42 (£1.18) an hour, or about $ 248 (£205) a month, for their time. The teenagers were reportedly expected to work 10 hour shifts, including two hours overtime, six times a week.

China Labor Watch say many students sleep in shared dormitories and face pressure from teachers, who are also recruited, to work hours that violate labour regulation.

“If interns were unwilling to work overtime or night shifts, the factory would arrange for teachers to pressure workers,” the report says. “For interns who refuse to work overtime and night shifts, the factory requests teachers from their schools to fire them.”

Activists also make allegations of physical and verbal abuse by teachers at the site. The intern’s schools are compensated financially for their time, the report adds.

One student, a 17-year-old named as Xiao Fang, was quoted by China Labor Watch describing her role putting protective film over about 3,000 Echo Dot devices a day.

The report says she found working in the “very bright” and “hot” factory very tiring and she did not want to work overtime.

“The teacher went to speak to Xiao Fang and said that if she doesn’t work overtime, she can’t intern at Foxconn and this will affect her graduation and scholarship applications at the school etc,” the report says.

“With no choice, Xiao Fang could only endure this.”

What has the response been?

Amazon, owned by the world’s richest man Jeff Bezos, said in a statement to the BBC it does not tolerate violations to its supplier code of conduct.

“We are urgently investigating these allegations and addressing this with Foxconn at the most senior level,” the statement said. “Additional teams of specialists arrived on-site this wee k to investigate, and we’ve initiated weekly audits of this issue.”

The BBC has approached Foxconn for comment. In a statement to the Guardian newspaper, the company said it had “doubled the oversight and monitoring” of its school programme.

“There have been instances in the past where lax oversight on the part of the local management team has allowed this to happen and, while the impacted interns were paid the additional wages associated with these shifts, this is not acceptable and we have taken immediate steps to ensure it will not be repeated,” they said.

Foxconn also reportedly pledged to review salaries and increase regular worker levels.

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The winners and losers in Chinese yuan moves might not be who you think

Asian currencies aren’t particularly sensitive

Deutsche Bank is out with a report looking at which currencies are sensitive to large positive and negative moves in the Chinese yuan.

In the event of extreme positive or negative moves, it’s not nearby countries that would suffer, it’s the South African rand, Turkish lira and Colombian peso.

Negative CNH shocks: ZAR, TRY and COP are most sensitive to ‘extreme’ negative CNH moves, while SGD, KRW and PHP are least sensitive. Broadly, the analysis shows Asian currencies are amongst the least sensitive to negative CNH shocks, which likely reflects lower FX vol in the region. The fact that geographically distant currencies such as ZAR and TRY are most sensitive illustrates the systemic nature of CNH shocks to the market.

Positive CNH shocks: ZAR, COP and CEE3 are the most sensitive to ‘extreme’ CNH rallies, while SGD, KRW, PHP and INR show the lowest sensitivity. We find CEE3’s high sensitivity interesting, potentially reflecting the strong trade linkages between Germany and China.

That’s something to keep in mind when the yuan takes another leg down, or starts a rebound.
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U.S., Chinese officials to discuss trade in Thursday call: Mnuchin

WASHINGTON (Reuters) – U.S. and Chinese officials will hold a telephone call later on Thursday, and further in-person trade talks could be possible depending on how their discussion goes, U.S. Treasury Secretary Steven Mnuchin said.

Mnuchin, speaking in a CNBC interview from a G7 meeting in France, said he and U.S. Trade Representative Robert Lighthizer will participate in the call with their Chinese counterparts.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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