1. US, China get to work on trade deal outline
The two sides have begun to hash out a trade agreement addressing the most sensitive issues that have hampered progress so far, sources told Reuters, as the March 1 deadline fast approaches.
Last week’s meetings in Beijing were celebrated by representatives from both countries, one of the people said, saying that the process has “become a real trade negotiation”. Up till now, however, details over exactly what has been agreed have remained fuzzy.
Officials are reportedly drawing up six MoUs on key structural issues: forced tech transfer and cyber theft, intellectual property rights, services, currency, agriculture, and non-tariff barriers to trade, according to two of sources who are involved with the negotiations.
Pressure is on both teams to strike a deal before the end of the month, when the US has pledged to raise tariffs on $200 billion of Chinese imports to 25% from 10%. For the Americans, the goal is concrete commitments and enforcement mechanisms for the above issues. The Chinese, meanwhile, want to avert further damage to the already-flagging economy.
2. Trump softens stance on Huawei ahead of trade talk climax
The US President took a reconciliatory tone with Huawei on Thursday, expressing little appetite to sign in a ban on the Chinese telecoms company as Washington gears up for the final leg of trade negotiations with China, the Financial Times reports.
“I want the US to win through competition, not by blocking out currently more advanced technologies,” Trump wrote on Twitter. This goes against the grain of many of his closest advisers, who are pushing for the President to pen an executive order effectively banning all Huawei participation in US markets.
Experts believe that Trump will look to use Huawei as leverage in upcoming talks with Beijing, much as he appeared to do with ZTE in Spring of last year, when he lifted sanctions on the phonemaker at the China’s behest.
“Huawei would make a good bargaining chip – [Trump] can’t dismiss the indictments against the company, but he can control an executive order,” James Lewis, senior vice-president at the Center for Strategic and International Studies, told the FT.
ECONOMICS & POLICY
3. China plays down expectations of rate cuts
The People’s Bank of China said it considers interest rate cuts as a last resort in stimulating the economy, given its relatively low existing level and rising financing costs overseas, Caixin reports.
Central bank researchers published a report urging China to take caution when contemplating lower interest rates in its monetary policy.
“China’s current interest rates are higher than those of developed countries but lower than those of developing countries and other BRICS nations,” the report said. China’s rates are “generally compatible with financial and economic development, or even low,” it added.
“Because China’s interest rates are at a relatively low level, along with concerns about stability of the yuan and foreign exchange reserves, (China) should avoid excessive monetary easing,” the researchers wrote.
ENERGY & TRADE
4. Dalian halts Australian coal imports
The northern port of Dalian has stopped accepting imports of coal from Australia as part of a wider overall cutback on coal shipments, Dalian customs authorities told Reuters.
The length of the ban has not been specified, but Australian coal has also been substantially delayed at other Chinese ports to a minimum 40-day-processing period.
Dalian customs officials said that by the end of the year the port is looking to cap overall coal imports at 12 million tonnes.
Suspicions linger as to whether the ban stems from worsening ties between Canberra and Beijing in recent years since Australia leveled accusations against China of interfering in its domestic affairs. Foreign ministry spokesman Geng Shuang denied that there were political motives.
“The goals are to better safeguard the legal rights and interests of Chinese importers and to protect the environment,” Geng said.
Australian treasurer Josh Frydenburg played down the developments at Dalian, saying that there would be no large effect on the economy and that this will not influence Australia’s “exceptionally strong” relationship with China.
TECHNOLOGY & MEDIA
5. Baidu profits halve as iQiyi bleeds cash
Profits of Chinese internet giant Baidu took a plunge towards the end of 2018, as the company stated that growth was offset by heavy spending on new products and services, reported Caixin.
iQiyi, the company’s online video unit, revealed continued losses which sapped at Baidu’s bottom line despite how it saw strong growth in revenue. Baidu’s shares were up 3.7% in after-hours trading shortly after the results came out, while separately listed iQiyi shares were down nearly 1%.
“The diversification of Baidu’s business from mobile internet into the smart home, smart transportation, cloud and autonomous driving markets will require heavy investments,” said Baidu CFO Herman Yu. “Nevertheless, these investments taken together give Baidu a balanced portfolio for short-term, medium-term and long-term returns, and we hope to see these investments bear fruit and accelerate Baidu’s revenue growth in coming years.”
The company’s revenue rose 22% in the fourth quarter last year to RMB 27.2 billion ($4 billion), but total net revenue from its search engine, grew at a much slower 14%. Operating income tumbled 77%, while net profit fell 50% to RMB 2.1 billion.
British finance minister says Chinese ties “complicated” after warship threat [SCMP]
Philip Hammond acknowledged that China-UK bilateral ties had been damaged by remarks last week from Defence Secretary Gavin Williamson, threatening to send an aircraft carrier to the South China Sea.
Tencent gives world first glimpse of investment portfolio [TechNode]
The Chinese tech behemoth released information of its investment holdings during a private event earlier this week, showing that the company has clocked up some 700 companies around the world in the past 11 years.
China offers to buy $30 billion more US farm goods [Bloomberg]
As part of the trade deal in the works, China is proposing to buy an extra $30 billion a year worth of US agricultural products including soybeans, corn and wheat.
Tesla’s sales in China fall as it feels effects of trade war [Caixin]
Tesla made $1.76 billion in revenue in China last year, down 13% from the year before despite how international revenue almost doubled, according to Tesla’s filing with the U.S. Securities and Exchange Commission.