International

Companies welcome US-China trade truce, warn disputes remain

BEIJING (AP) — Companies have welcomed a U.S.-Chinese trade truce as a possible step toward breaking a deadlock in a 15-month-old tariff war, while economists caution there was little progress toward settling core disputes including technology that threaten global growth.

President Donald Trump said Washington will suspend a tariff hike planned for Tuesday on $250 billion of Chinese goods. In exchange, Trump said China agreed to buy as much as $50 billion of American farm goods. Details of other possible agreements weren’t immediately released.

The bruising battle over China’s trade surplus and technology ambitions has disrupted global trade. Economists warn a final settlement might take years to negotiate. Despite that, financial markets rise ahead of each round of talks and fall back when no progress is reported.

Companies acknowledged Friday’s agreement was a modest step and appealed to both governments to step up efforts to end the fight that is battering manufacturers and farmers.

Washington still is planning a Dec. 15 tariff hike on $160 billion of smartphones and other imports. Before then, Trump and Chinese President Xi Jinping are due to attend an economic conference in Chile in mid-November. That is raising hopes a face-to-face meeting might produce progress.

“Taking tariffs out of the equation for at last the next two months will give space for substantive negotiations,” said Jake Parker, senior vice president of the U.S.-China Business Council, an industry group.

Trump said Friday’s deal has yet to be put down on paper but said, “We should be able to get that done over the next four weeks.”

China’s government welcomed “substantial progress” but gave no details of possible agreements.

“I don’t think it’s a victory, but it eases the situation,” said economist Yu Chunhai at Renmin University in Beijing. He said both sides want to restore business and consumer confidence.

There was no word of agreements on the core issues that sparked the dispute. Those include U.S. pressure on Beijing to roll back plans for government-led creation of global competitors in robotics, electric cars and other technologies.

“There remains significant work ahead to address many of the most important U.S. trade and investment priorities,” Myron Brilliant, executive vice president of the U.S. Chamber of Commerce, said in a statement. Still, he called Friday’s announcement a “ray of hope.”

Washington, Europe, Japan and other trading partners say China’s plans violate its market-opening obligations and are based on stealing or pressuring companies to hand over technology. Chinese leaders see those tactics as the surest path to prosperity and global influence.

“With the key structural issues no closer to being resolved, we suspect that a mini deal would, at best, simply delay a breakdown in the negotiations,” said Julian Evans-Pritchard and Martin Lynge Rasmussen of Capital Economics.

Friday’s announcement also made no mention of commitments by Beijing in sensitive areas including subsidies to industry and cyber security, or the status of telecom equipment giant Huawei, which faces damaging U.S. sanctions.

Trump imposed curbs in May on sales of American components and technology to Huawei Technologies Ltd., China’s first global tech brand. Trump has said he is willing to use Huawei, one of the biggest global makers of smartphones and network switching gear, as a bargaining chip in the trade talks.

“The two sides will now return to a ‘muddle through’ strategy that avoids further tariff escalation but may not substantially reduce tensions,” Michael Hirson and Kelsey Broderick of Eurasia Group wrote in a report. “Both the U.S. and China are likely to continue targeting each other through non-tariff measures, such as investment restrictions and regulatory barriers, which will be highly disruptive.”

Tit-for-tat tariff hikes by both sides have raised costs for producers and consumers. Some companies are shifting production and supply lines out of China to avoid the U.S. tariffs, suggesting they expect the sanctions to stay in place for an extended period.

China’s exports to the United States, its biggest foreign market, have plunged, adding to pressure on Xi’s government to shore up cooling economic growth and avoid politically dangerous job losses.

The looming Dec. 15 tariff hike leaves a “black cloud” over Apple Inc. and other tech companies with factories or customers in China, said Dan Ives of Wedbush Securities in a report. He said it would be a “gut punch” if it goes ahead.

U.S. complaints about Chinese technology policies, cyber spying and protection of patents and other intellectual property “will be the focus of tech investors,” said Ives.

Another potential stumbling block is how to enforce any agreement.

Talks broke down in May over Beijing’s insistence that Trump’s punitive tariffs had to be lifted once a deal took effect. Washington says some must remain in place to ensure Chinese compliance. Trump and Xi agreed in June to resume negotiations but there have been no breakthroughs.

Despite that, Beijing has gone ahead with other industry-opening initiatives aimed at making China’s economy more competitive and productive. None, however, addresses Trump’s complaints and business groups say they have had little impact on foreign companies.

On Friday, regulators announced a timetable for an initiative announced in 2017 to abolish limits on foreign ownership of some financial businesses. That starts with futures traders Jan. 1 and extends to securities firms and mutual fund managers later in the year.

“Even if it is not a new liberalization or something that hasn’t been announced before, it is still positive to have a date on the horizon for when companies can apply,” said Parker of the USCBC.

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Official casts doubt on postponing or moving Tokyo Games

TOKYO (AP) — A senior member of the International Olympic Committee said Tuesday that if it proves too dangerous to hold the Olympics in Tokyo this summer because of the coronavirus outbreak, organizers are more likely to cancel it altogether than to postpone or move it.

Dick Pound, a former Canadian swimming champion who has been on the IOC since 1978, making him its longest-serving member, estimated there is a three-month window — perhaps a two-month one — to decide the fate of the Tokyo Olympics, meaning a decision could be put off until late May.

“In and around that time, I’d say folks are going to have to ask: ‘Is this under sufficient control that we can be confident about going to Tokyo or not?’” he said in an exclusive interview with The Associated Press.

As the games draw near, he said, “a lot of things have to start happening. You’ve got to start ramping up your security, your food, the Olympic Village, the hotels. The media folks will be in there building their studios.”

If the IOC decides the games cannot go forward as scheduled in Tokyo, “you’re probably looking at a cancellation,” he said.

The viral outbreak that began in China two months ago has infected more than 80,000 people globally and killed over 2,700, the vast majority of them in China. But the virus has gained a foothold in South Korea, the Middle East and Europe, raising fears of a pandemic. Japan itself has reported four deaths.

Pound encouraged athletes to keep training. About 11,000 are expected for the Olympics, which open July 24, and 4,400 are bound for the Paralympics, which open Aug. 25.

“As far as we all know, you’re going to be in Tokyo,” Pound said. “All indications are at this stage that it will be business as usual. So keep focused on your sport and be sure that the IOC is not going to send you into a pandemic situation.”

The modern Olympics, which date to 1896, have been canceled only during wartime. The Olympics in 1940 were supposed to be in Tokyo but were called off because of Japan’s war with China and World War II. The Rio Games in Brazil went on as scheduled in 2016 despite the outbreak of the Zika virus.

Pound repeated the IOC’s stance — that it is relying on consultations with the World Health Organization, a United Nations body, to make any move.

As for the possibility of postponement, he said: “You just don’t postpone something on the size and scale of the Olympics. There’s so many moving parts, so many countries and different seasons, and competitive seasons, and television seasons. You can’t just say, `We’ll do it in October.’”

Pound said moving to another city also seems unlikely “because there are few places in the world that could think of gearing up facilities in that short time to put something on.”

London mayoral candidate Shaun Bailey has suggested the British capital as an alternative. Tokyo Gov. Yuriko Koike suggested the offer was an attempt to use the virus for political purposes.

Pound said he would not favor a scattering of Olympic events to other places around the world because that wouldn’t “constitute an Olympic Games. You’d end up with a series of world championships.” He also said it would be extremely difficult to spread around the various sports over a 17-day period with only a few months’ notice.

Holding the Olympics in Tokyo but postponing them by a few months would be unlikely to satisfy North American broadcasters, whose schedules are full in the fall with American pro football, college football, European soccer, basketball, baseball and ice hockey. Other world broadcasters also have jammed schedules.

“It would be tough to get the kind of blanket coverage that people expect around the Olympic Games,” Pound said.

He also cast doubt on the possibility of a one-year delay. Japan is officially spending $12.6 billion to organize the Olympics, although a national audit board says the country is spending twice that much.

“You have to ask if you can hold the bubble together for an extra year,” Pound said. “Then, of course, you have to fit all of this into the entire international sports schedule.”

Pound said the IOC has been building up an emergency fund, reported to be about $1 billion, for unforeseen circumstances to help the IOC and the international sports federations that depend on income from the IOC. About 73% of the IOC’s $5.7 billion income in a four-year Olympic cycle comes from broadcast rights.

“It’s not an insurable risk, and it’s not one that can be attributed to one or the other of the parties,” he said. “So everybody takes their lumps. There would be a lack of revenue on the Olympic movement side.”

Pound said the future of the Tokyo Games is largely out of the IOC’s hands and depends on the course the virus takes.

“If it gets to be something like the Spanish flu,” Pound said, referring to the deadly pandemic early in the 20th century that killed millions, “at that level of lethality, then everybody’s got to take their medicine.”

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