China tensions may put $400 billion investment at risk

So far, U.S. has ordered import tariffs on $50 billion in Chinese goods, to which China responded by ordering tariffs on $3 billion of U.S. imports.

With his promises Tuesday, Xi sought to position China as a defender of free trade and cooperation despite its being the world’s most-closed major economy.

China’s securities regulator said foreign investors would be allowed to trade a greater volume of shares on Chinese stock markets through existing programmes linking Hong Kong’s bourse with mainland exchanges, and also will “strive” to establish a similar link between Shanghai and London this year.

Xi’s speech, which had been expected to set out bold reforms, was instead similar to his remarks in Davos previous year.

Peter Navarro properly observed last Sunday, “What we want from China is very clear”.

“Ultimately US industry will be looking for implementation of long-stalled economic reforms, but actions to date have greatly undermined the optimism of the US business community”, said Jacob Parker, vice president of China operations at the US-China Business Council.

Friday morning, JPMorgan Chase, Wells Fargo and PNC Financial Services will report their first batch of quarterly results since last year’s corporate tax cut went into effect.

The global community should, like China, follow the path of reform, opening-up and innovation, and not take the road of retrogression characterized by seclusion, rigidness, protectionism and unilateralism, they said. Instead, he elaborated on existing plans to open lower-tech manufacturing and financial services sectors, where China sees foreign investment as improving competitiveness and helping develop a more consumer-focused economy.

He noted that neither side had yet called for enforcement of the tariffs. Whenever there is more conciliatory talk about negotiating an agreement, markets rise. That would help assuage market anxieties that have buffeted stocks and have already made it more expensive for some American companies to operate. He didn’t address other thorny topics including requirements for foreign companies to give technology to potential local competitors.

“They have a lot more to lose in any escalation in this matter”.

Tobacco and whisky, for example, are both on Beijing’s list and are produced in states including Kentucky, home of Senate leader Mitch McConnell. Beijing fired back with its own $50 billion list of USA goods for possible retaliation. Trump admitted Monday that Chinese tariffs may hurt farmers, but said: “we’ll make it up to them”. “China dialogue at the WTO to find a deal on intellectual property rights”, said economist Rajiv Biswas of IHS Markit in a report. The oil and gas sector .SXEP gained overall as oil hit $70 a barrel on Tuesday, in its biggest two-day rally in almost a month.

What were the findings of the Section 301 investigation into China’s trade practices?

Investor sentiment has been rocked in recent weeks as the White House has announced a series of tariffs, mostly on Chinese goods, as part of Donald Trump’s America First protectionist agenda, fuelling fears the world’s top two economies could impose measures that would hammer the global economy.

“Xi has succeeded in batting the ball back into the USA court, so we now watch and wait for a response”, said IG analyst Chris Beauchamp.

US companies invested US$14 billion in China previous year, an increase of about US$200,000 from 2016, bringing cumulative investment in the country to US$256 billion, according to one of two studies released yesterday by the National Committee on US-China Relations and Rhodium Group. A commentary in the official People’s Daily after the speech said Beijing would never open at the expense of its interests – a signal that it would continue supporting “Made in China 2025”.