US, China to meet (again) in Washington
beijing/washington — Talks between China and the United States to resolve their bruising trade war will continue next week in Washington, with both sides saying this week’s negotiations in Beijing made good progress.
Still, Washington appeared committed to a March 1 deadline to reach a deal or raise tariffs on certain Chinese goods, despite US President Donald Trump’s recent statements that he was reluctantly willing to let the target date “slide”.
White House Press Secretary Sarah Sanders said in a statement on Friday the two economic superpowers “will continue working on all outstanding issues in advance of the March 1, 2019, deadline”.
“These detailed and intensive discussions led to progress between the two parties. Much work remains, however,” Sanders said about the Beijing round of talks.
The countries focused this week on the US trade priorities involving technology, intellectual property rights, agriculture, services, nontariff barriers, and currency, and discussed potential Chinese purchases of US goods and services to reduce a “large and persistent bilateral trade deficit”, Sanders said.
Chinese President Xi Jinping met on Friday with US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin after a full week of talks at senior and deputy levels, and called for a deal both sides could accept, Chinese state media said. US duties on $200 billion worth of imports from China are set to rise to 25 per cent from 10 per cent if no deal is reached by March.
After the conclusion of talks, Mnuchin said on Twitter that he and Lighthizer had held “productive meetings” with Xi’s top economic adviser, Vice-Premier Liu He.
“The consultations between the two sides’ teams achieved important step-by-step progress,” Xi said, according to state television.
“Next week, both sides will meet again in Washington. I hope you will continue efforts to advance reaching a mutually beneficial, win-win agreement,” Xi said at Beijing’s Great Hall of the People.
He added that China was willing to take a “cooperative approach” to settling bilateral trade frictions.
Lighthizer told Xi the senior officials had “two very good days” of talks. “We feel that we have made headway on very, very important, and very difficult issues. We have additional work to do but we are hopeful,” Lighthizer said, according to a foreign media pool video.
Neither country has offered new details on how they might de-escalate the tariff war that has roiled financial markets and disrupted manufacturing supply chains. Although Trump said this week that an extension of the tariff deadline was possible if a “real deal” was close, National Economic Council director Larry Kudlow has said the White House had made no such decision.
But several sources informed about the meetings told Reuters there was little indication negotiators had made major progress on sticking points to pave the way for a potential meeting between Xi and Trump in coming weeks to hammer out a deal.
“Stalemate on the important stuff,” said one source. —
$200b Worth of Chinese imports’ duties set to rise to 25% on March 1
washington — US retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.
The shockingly weak report from the Commerce Department led to growth estimates for the fourthquarter being cut to below a 2 per cent annualised rate.
December’s collapse in retail sales and other data showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week and a second straight monthly decline in producer prices in January support the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.
“Until this morning, Fed official hesitance to hike further was based on risks emanating from global growth and from financial markets, despite a strong domestic outlook,” said Andrew Hollenhorst, an economist at Citigroup in New York. “The decline in retail sales calls into question the domestic growth assumption.”
Retail sales tumbled 1.2 per cent, the largest decline since September 2009 when the economy was emerging from recession. Sales edged up 0.1 per cent in November. Economists polled by Reuters had forecast retail sales gaining 0.2 per cent in December. Sales in December rose 2.3 per cent from a year ago.
The December retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on January 25. No date has been set for the release of the January retail sales report, which was scheduled for publication on Friday.
With online retail giant Amazon reporting strong December sales and independent data on chainstore sales robust, some economists joined White House economic adviser Larry Kudlow in questioning the credibility of the report.
They argued that the longest government shutdown in history could have impacted the collection of data.
But the Commerce Department said the “processing and data quality were monitored throughout and response rates were at or above normal levels for this release.”
Others were reluctant to dismiss the retail sales report, noting that the plunge in sales came as consumer
confidence dropped and the US stock market suffered its worst December. The weak report was corroborated by another report on Thursday from the National Retail Federation showing holiday spending in 2018 grew 2.9 per cent to $707.5 billion, with sales in December falling 1.5 per cent from November.
“The most plausible economic explanation is that long-dormant wealth effects came back with a vengeance, and consumers slashed their holiday purchases
when they saw their 401(k)s going down the drain,” said Michael Feroli, an economist at JPMorgan in New York, referring to the retirement savings plans held by millions of Americans.
Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.7 per cent last month, the biggest fall since September 2001. These socalled core retail sales correspond most closely with the consumer spending component of gross domestic product. —
The most plausible economic explanation is that long-dormant wealth effects came back with a vengeance, and consumers slashed holiday purchases when they saw their 401(k)s going down the drain
Michael Feroli,
Economist at JPMorgan