JK Rowling wants happy ending for orphans

A mission to take children out of poorly-run orphanages could be something from a Harry Potter plot.

But that is the goal of a charity founded by JK Rowling.

The charity, Lumos, works with governments in countries like Moldova and Ukraine to reform their education and child protection systems.

But it is a tale of steady bureaucratic reform rather than daring adventure.

Lumos, which the Potter author founded after reading an article about children being kept in caged beds in an orphanage, is on a mission to end the placing of children in poor-quality institutions by 2050.

Potter fans will notice that the charity is named after the spell used by witches and wizards to bring light to dark places.

And Lumos wants to challenge some perceptions.

Poor quality care

It wants people in Europe and the US to think twice about sponsoring or supporting orphanages in other countries, unless they can be sure of what is being provided.

It wants to make a distinction between “high-quality residential care” and institutions where children are “arbitrarily separated from their parents” and where they might be isolated from other schoolchildren and the wider community.

The charity warns that in some orphanages many of the children will not be orphans, but separated from their families because of poverty and discrimination.

There are concerns about children being exposed to risks of abuse and trafficking – and there are warnings that children can have worse education and life outcomes than if they attended inclusive schools in their communities.

“A lot of people do not know there are millions of children in these institutions, and most of these children have parents who want them,” says Lumos chief executive Georgette Mulheir.

“Most people think they are orphans who need looking after, they do not know the serious harm that institutionalisation does to children’s development.”

Inclusive classes

At least eight million children live in orphanages and residential institutions, yet more than 80% are not actually orphans, says the charity.

One of Lumos’s first successes was to help to take children out of institutions in Moldova by reforming the country’s education system to make it more inclusive.

It is currently working in Ukraine, which has more than 100,000 children in institutions, to develop an inclusive education system and reform the child protection system.

This involves training teachers, adapting the curriculum, and changing existing rules which hold back some children – for example, adapting exams so that children with learning difficulties can progress to the next school year.

In another comparison to Potter, the advocacy of children has been an important part of the campaign.

Warning to donors

Before Moldova’s government agreed to reform its education system, a boy from a mainstream school made an impassioned speech to the country’s education minister.

“It was great to watch this young man wagging his finger at the minister, saying ‘we mean it, we expect you to do this’,” says Ms Mulheir. “It had quite an impact on her.”

Ms Mulheir says the problem of children in inappropriate institutions is not confined to less developed countries – these places still exist in some of the richest countries in the world.

“People would be quite shocked to learn about the situation in Belgium and to a lesser extent France, where there are still institutions for babies even though all of the evidence shows this seriously harms early brain development,” she says.

Last year, a report by Lumos warned that charitable givers from the US who believed they are helping orphans in Haiti could be funding places where children were at risk of abuse.

More than a third of Haiti’s orphanages are funded by donations from abroad.

“One of the things that Lumos has taught me is be very, very careful how you give,” JK Rowling said after the report’s launch.

She said “very, very well-meaning donors” are “inadvertently propping up a system that we know, with nearly 80 years of hard research, shows that even a well-run institution, even an institution set up with the best possible intentions, will irrevocably harm the child”.

Lumos is now expanding its work into new countries, including Colombia.

“We are really confident that by 2050 at the latest there will be no more children in institutions anywhere in the world,” says Ms Mulheir.


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WTO warns over tit-for-tat trade wars

Global trade has seen its most rapid growth in six years, says the World Trade Organization’s annual analysis.

But the positive news could be put at risk by tit-for-tat tariff wars that have broken out, according to the head of the WTO, Roberto Azevedo.

Broader global tensions could also see trade suffer.

Last month, President Donald Trump unveiled plans for a 25% tariff on US steel imports from countries such as China and a 10% tariff on aluminium.

That followed an announcement earlier in the year for tariffs – import taxes – on washing machines and solar panels.

The president said that battles on trade were good and “easy to win”.

China responded by imposing its own tariffs on US goods and has complained to the WTO and threatened legal action, claiming unfair treatment.

‘Unmanageable escalation’

“The strong trade growth that we are seeing today will be vital for continued economic growth and recovery and to support job creation,” said Mr Azevedo, the WTO director-general.

“However, this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation.

“A cycle of retaliation is the last thing the world economy needs.”

He said that countries should show restraint and settle their differences “through dialogue” and collective action.

China has already announced retaliatory action against the US move, announcing tariffs of up to 25% on US imports such as pork, fruit, nuts and wine.

Despite growing fears over a global trade war between the world’s two largest economies, trade volume growth in 2017 hit 4.7%, the highest level since 2011.

Stronger world growth and increasing levels of consumption have driven the rise, which has helped, for example, the UK economy, where exports are valued at more than £600bn a year.

Tariff uncertainty

WTO economists said that 2018 should see trade growth expansion of about 4.4%, well above the post financial crisis average of 3%, though still below the 4.8% average seen in the 1990s.

The WTO annual trade report said risks were now “tilted to the downside” because of the uncertainty over tariff policy, which could affect business investment and that trade growth would slow to about 4% in 2019.

It also cautioned that central banks were looking to tighten monetary policy – for example, by raising interest rates – at a faster pace.

The Bank of England has already said that interest rates are set to rise more quickly than previously thought, with the next rise expected by the markets as early as next month.

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Carmakers fear rising trade barriers after Brexit

A storm is brewing as clouds gather over Bristol Port, with the rain set to fall on tens of thousands of vehicles parked in the port’s car compounds, ready for export by ship, or destined for UK dealerships.

It is an apt backdrop for the UK automotive sector’s current predicament.

“Brexit has derailed the industry,” says Sarwant Singh, senior partner and global head of automotive and transportation at consultants Frost & Sullivan.

“The uncertainty causes people not to buy cars.”

The number of cars sold in the UK dropped 5.7% in 2017, according to industry body the Society of Motor Manufacturers & Traders, and ratings agency Moody’s predicts a further 5.5% fall this year.

There has been little respite from foreign markets, with exports slipping 1% last year.

Each year, about 80% of the vehicles built in the UK are exported, so smooth international trade relations are vital for the automotive sector’s continued prosperity.

But these days, the relations are as choppy as the sea in the Bristol Channel.

Industry executives’ main fear is that Brexit will result in heightened barriers to trade, not only with the European Union, but with the rest of the world too, once the transition period ends on 31 December 2020.

The prospect of an escalating trade dispute between the US and its main trading partners, the EU and China, also looms large, after US President Donald Trump’s recent threat to tax cars imported into the world’s largest market.

“All of Europe is exposed,” says Justin Cox, director of global production at consultants LMC Automotive, “but some plants are more exposed than others, and it so happens that several of those are in the UK.”

Then there’s China, the world’s second-largest car market. Trading relations with China are already complicated, and may well be subject to even greater complexity in future.

“A UK-China free trade agreement will be neither easy nor clearly advantageous for the UK,” says Bruegel, a European think tank that specialises in economics.

Part of the issue, it says, is that the UK would like to land better trade deals with China when it leaves the bloc than the ones the EU already has in place. But being smaller, the UK will be in a weaker position during trade talks, so there are no guarantees China will be prepared to offer better terms.

On top of this, UK automotive trade with China – and other fast-growing markets such as India, Brazil and Russia – could suffer, depending on the terms of a post-Brexit trade deal with the EU, Mr Singh says.

That’s because the UK might not be able to piggyback on the EU’s existing bilateral trade agreements with third countries, including those entered into since the Brexit vote with Canada and Japan. Instead, it would face years of protracted trade talks with dozens of countries.

Getting a good Brexit deal is also important because of the interdependence of European automotive companies.

“The motor industry has taken advantage of the EU’s single market as much as, perhaps more than, any other industry,” says Mike Hawes, chief executive of SMMT.

As a result, EU customers buy about €15bn ($18.5bn; £13bn) worth of British-made cars per year, accounting for some 53% of the UK’s vehicle exports, according to the European Automobile Manufacturers Association (ACEA).

Conversely, EU manufacturers deliver 81% of the cars imported by the UK, to the tune of about €45bn, a trade imbalance that Brexit supporters hope will give the UK leverage during trade talks.

At the same time, about 80% of the parts and components used to build cars in the UK are also imported from the EU, while 70% of the parts and components made in the UK are exported to EU countries.

“Any changes to the deep economic and regulatory integration between the EU and the UK will have an adverse impact on automobile manufacturers with operations in the EU and/or the UK, as well as on the European economy in general,” the ACEA says.

Hence, both the UK and the European car industries are keen to see a final UK-EU deal that retains frictionless trade in the long-term.

“Anything short of single market membership could be a problem for the UK,” says Simon Dorris, managing partner at Lansdowne Consulting.

Free trade is indeed key to future prosperity, not just within Europe but beyond, according to Prof Patrick Minford of Cardiff University, who chairs Economists for Free Trade, a group of pro-Brexit economists.

Its much debated paper, From Project Fear to Project Prosperity, suggests fears of rising trade barriers for carmakers after Brexit are misplaced.

Prime Minister Theresa May has said that Brexit presents an “opportunity to strike free trade deals around the world“.

“Auto manufacturers will improve profitability post-Brexit,” Prof Minford predicts.


Motor vehicle production, 2017

  • UK production: 1.75 million motor vehicles. Exports to the EU: 800,000
  • EU 27 production: 19.69 million motor vehicles. Exports to the UK: 2.3 million

    Source: ACEA


    Despite the uncertainty about a future trade deal, a number of big carmakers have committed to building more cars in the UK since the Brexit vote, including Nissan, BMW, Toyota, and last week Vauxhall, which is owned by French group PSA.

    But Parliament’s cross-party Business, Energy and Industrial Strategy Committee is pessimistic, recently warning that “there are no advantages to be gained from Brexit for the automotive industry for the foreseeable future”.

    The UK prime minister’s desire for free trade is shared by the global motor industry more generally.

    Executives are nevertheless pragmatic, and accept that although international trade is governed by rules policed by the World Trade Organization, free trade is rarely a reality.

    Trade-distorting subsidies and a variety of measures, such as regulatory barriers, internal tax measures, and intellectual property rights, still impede the free flow of goods, even when trade agreements are in place, according to the European Commission.

    The EU, for instance, will not import cars unless they meet EU safety and emissions requirements.

    Moreover, trade agreements are generally conditional. For instance, cars exported from the EU must be predominantly made within the EU to be allowed free entry into other markets.

    Such “Rules of Origin” could complicate exports for UK carmakers after Brexit, as an estimated 55%-75% of the parts and components that make up a car built in Britain are imported, according to Mr Hawes of SMMT.


    Global Trade

    More from the BBC’s series taking an international perspective on trade:

New Zealand to ban new offshore oil drilling over climate change

New Zealand has said it will ban new permits for offshore oil exploration as it attempts to move towards a low-carbon future.

The announcement has been lauded by climate groups but industry groups have vociferously opposed such a move.

Prime Minister Jacinda Ardern said it would help “protect future generations from climate change”.

The move will not affect 22 existing permits, which could even extend to mining permits in the decades ahead.

Ms Ardern, who was voted in as New Zealand’s leader last year in a tight race, campaigned heavily on climate change prevention and says the decision is a responsible step forward.

“Transitions have to start somewhere and unless we make decisions today that will essentially take effect in 30 or more years’ time, we run the risk of acting too late and causing abrupt shocks to communities and our country,” Ms Ardern said on Thursday.

“We have been a world leader on critical issues to humanity by being nuclear free… and now we could be world leading in becoming carbon neutral.”

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    But industry groups and some politicians have slammed the move, saying it will hurt local jobs, local businesses, and the nation’s economy.

    New Zealand’s $186.4bn (£130.9bn) economy relies most heavily on agriculture, together with manufacturing and tourism, but it is estimated that the oil and gas industry contributes about $1.84bn; (£1.29bn) every year.

    New Zealand Oil and Gas, a leading energy firm, said it had not been warned of the move and that it was a sudden change of policy for the centre-left Labour government.

    Ms Ardern’s government is backed by the country’s Green Party, a tie-up some analysts say is less than business friendly.

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Volkswagen puts Herbert Diess in the driving seat

Volkswagen has replaced its chief executive with Herbert Diess, who takes on responsibility for the entire company after overseeing the VW brand.

He takes over from Matthias Mueller, who was appointed in 2015 at the height of the diesel emissions scandal.

Mr Diess has clashed with unions and is known for his cost-cutting measures.

The move is part of sweeping changes announced by the German company, which also owns several other brands including Audi and Porsche.

The carmaker said it will reorganise its 12 brands by creating six new vehicle divisions and a special arm devoted to China, its largest market.

More details about the restructuring are expected to be revealed at a press conference at VW’s Wolfsburg headquarters on Friday morning.

The management shake-up signals VW’s desire to move forward from the emissions scandal and press on with its “Strategy 2025” plan to build greener vehicles.

Mr Mueller had been running Porsche before being elevated to replace Martin Winterkorn as VW chief.

He has presided over a wide ranging restructuring of the company and its other brands.

However, in May 2017 prosecutors in Stuttgart said they were investigating Mr Mueller over suspicions he may have known about the diesel cheating before it became public.

The scandal, in which VW installed emissions-cheating software in 11 million vehicles worldwide, has cost the firm at least $30bn (£22.4bn) in fines and other costs.

As well as cars, the VW empire spans motorbikes, bus, and truck operations. Its brands also include Bentley, Scania, Skoda and Ducati.

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        VW chairman Hans Dieter Poetsch said in a statement that Mr Mueller had done “outstanding work” for the company.

        The statement continued: “He assumed the chairmanship of the board of management in the fall of 2015 when the company faced the greatest challenge in its history.

        “Not only did he safely navigate Volkswagen through that time, together with his team, he also fundamentally realigned the group’s strategy.”

        ‘Man of action’

        However, Mr Mueller was seen by critics as having failed to refocus the group’s portfolio of brands, a key pillar of “Strategy 2025” to transform the company into a leader in cleaner cars after the diesel scandal.

        Some analysts cheered the appointment of Mr Diess.

        “Diess is a man of action, he is the most plausible choice at VW to lead the group into the next phase of its transformation,” said Nord LB analyst Frank Schwope.

        VW also announced that works council executive Gunnar Kilian would replace Karlheinz Blessing as human resources chief.

        And the chief executive of Porsche, Oliver Blume, will join the main VW board.

China’s Uber has plans to take on the rest of the world

You’ve probably already heard of China’s Didi Chuxing. It’s the ride-hailing firm best known for driving Uber off China’s streets.

It is now also the world’s largest ride-hailing app, and with its worth currently at $56bn (£39.4bn), it is also the world’s most valuable start-up.

But how much do you know about its enigmatic, low-key founder, Cheng Wei?

Well for a start, he’s only 35 years old.

“I was born in 1983,” he tells me as we walk around the massive Didi complex on a chilly Beijing morning.

It is his first TV interview with foreign media.

“My entire management team has a lot of people in their 30s,” he says. “We are idealistic and can be rash sometimes, but we also bring a lot of surprises.”

No-one could accuse Cheng Wei of being rash. Every step of the Didi journey has been well planned.

His first step was to rule the market in China.

His next step, he tells me, is to take over the world: “The Chinese market is of course very important, but today Didi’s vision is already going global.”

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    But Cheng Wei is quick to point out that Didi’s way of entering new markets is not what most in the West may be used to.

    “Didi’s global strategy may be a little different from others,” he says, smiling. “Our strategy isn’t always to do everything ourselves.”

    “But in markets where there aren’t any successful local companies, then Didi will enter that market to share our experience. That’s what we’re doing right now.”

    Global market moves

    Precisely and methodically, Didi is making its move into global markets.

    It has already entered Japan and Taiwan. And earlier this year, it acquired 99, Brazil’s leading ride-hailing app.

    Just this week, the company told the BBC it was also launching in Mexico. The move will set it up to compete against its old American nemesis – Uber – right in that firm’s own backyard.

    But expanding internationally for Didi may not be all that easy, simply because of the suspicions Chinese companies sometimes face when they try to go overseas.

    Take Chinese telecommunications giant Huawei, for instance.

    Earlier this year, Huawei said it was not able to strike a deal to sell its new smartphone via a US carrier, over security concerns.

    The scuppered deal was just the latest example of a Chinese firm struggling to do business in the US.

    Huawei hit back and said that the reason the US wanted to keep it out of the country was because it is too competitive.

    But many US politicians and businesses believe that Chinese companies have been given an unfair advantage by their government.

    Some also say that Chinese companies that deal in data, as Didi does, hand that data back to the Chinese government – a perception Cheng Wei is quick to correct.

    “When American companies first entered China, there were also these concerns,” he says.

    “Whether you’re Chinese or American, data is the lifeline of any business. If you can’t guarantee data security, that’s going to be totally destructive for the business.”

    Not old China

    Cheng Wei is very much the face of new China.

    He’s quietly confident, with the conviction to carry out what he wants to achieve. And he’s got the cash to splash on ambitious plans for the future.

    “This is not old China. This is a new generation, ” says Chris DeAngelis, who routinely advises Western companies coming into China.

    “The US needs to wake up because right now, we’re going to get our asses kicked basically,” adds Chris, speaking of the prowess that Chinese tech firms such as Didi have over American ones.

    But Cheng Wei isn’t losing any sleep over the US-China rivalry.

    “For the past two decades, it was China who learned more from the US,” he says. “But in the next 10 years, we’ll ride on each other’s successes. There’s no point thinking who will surpass who.”

    Watch out world, Didi is coming.

    And you can watch the rest of Cheng Wei’s interview on BBC World’s Asia Tech Titans series this weekend at these times.

Jaguar Land Rover to shed 1,000 contract staff

Jaguar Land Rover says it will not be renewing the contracts of 1,000 temporary workers at two factories.

The UK’s biggest carmaker, owned by India’s Tata Motors, blamed “continuing headwinds” affecting the car industry.

It said it was continuing to recruit large numbers of engineers and apprentices and it remained committed to its UK plants.

Earlier this year, it said it would cut production amid uncertainty over Brexit and changes to taxes on diesel cars.

Those cuts were made at its Halewood plant in Merseyside. These jobs will go at the Solihull.

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    JLR was expected to announce the cuts on Monday, with Brexit and confusion over diesel cars again being cited as the chief reasons for the changes.

    JLR employs 40,000 people in the UK, 10,000 at Solihull.

    Professor of industry, David Bailey, from Aston University, said: “With the big turn against diesel engines, Jaguar Land Rover is particularly exposed as more than 90% of its UK sales are diesels.

    “JLR has just revealed its full-electric i-Pace model and have indicated offering all-electric or hybrid variants of all their models by around 2021, but they have been far too slow compared with Tesla and BMW.”

    He said the problems caused by Brexit were also unlikely to be solved in a timely manner: “It’s hard to say how long this production uncertainty will continue around Brexit negotiations, because it’s still unclear what the trading relationship will be between the UK and EU with regards to tariffs.”

    Analysis: Simon Jack, business editor

    JLR was very exposed to the demise of diesel. Recent figures from the trade body showed sales of diesels fell a whopping 37% in March compared with the previous year.

    Unhappily for JLR, 90% of its vehicles are powered by diesel engines and there are critical industry voices that say they have been slower than their rivals to embrace hybrids and electric.

    JLR Plants in China and Slovakia are increasing production, but company insiders were keen to stress that it would continue to invest in its UK plants and recently launched a drive to recruit another 5,000 engineers.

    Jaguar sales are down 26% so far this year, compared with last year, while demand for Land Rovers in the UK is down 20%.

    Last year, global sales hit a record, but the company acknowledged that the UK market was “tough”.

    Diesel registrations overall in the UK industry have plunged, down a third compared with January to March 2017

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Jaguar Land Rover’s diesel dependency

JLR was very exposed to the demise of diesel. Recent figures from the trade body showed sales of diesels fell a whopping 37% in March compared with the previous year.

Unhappily for JLR, 90% of its vehicles are powered by diesel engines and there are critical industry voices that say they have been slower than their rivals to embrace hybrids and electric.

JLR Plants in China and Slovakia are increasing production, but company insiders were keen to stress that it would continue to invest in its UK plants and recently launched a drive to recruit another 5,000 engineers.

All cylinders

The use of agency staff is fairly common in the automotive sector to cover periods of peak production and, until the diesel crisis hit, JLR had been firing on all cylinders with strong global demand for its vehicles.

The company said Brexit uncertainty had dented consumer confidence, but insiders conceded that the confusion over diesel was the most acute problem facing the company.

The automotive industry continues to insist that new, cleaner diesel cars are part of the pollution solution and critical to keeping CO2 emissions reduction targets within reach.

Lobbying groups are desperate for government ministers to deliver that message. However, central government has largely devolved responsibility on diesel policy to local authorities, saying they know best how to regulate their own pollution hotspots.

Confused

In London, for example, the Mayor, Sadiq Khan, has proposed that diesel cars over four years old by April 2019 will then incur a charge of £12.50 a day for driving into the centre of the city – 24 hours a day, seven days a week.

Motorists who have been regularly hit with new regulations and tax changes are understandably nervous that the goalposts may be moved again in the future – on a city by city basis.

It’s little wonder they are confused and putting off purchases.

While this confusion reigns, diesel sales plummet, production falls with them and -inevitably – jobs are lost.

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London Stock Exchange names David Schwimmer as new boss

The London Stock Exchange has appointed a new chief executive to replace Xavier Rolet, who quit last November amid a bruising boardroom row.

David Schwimmer, who has spent 20 years at investment bank Goldman Sachs, will take up the post on 1 August.

The stock exchange described him as “a leader with great experience”.

Mr Rolet was asked to leave a year earlier than planned, with one of the firm’s biggest shareholders claiming he was forced out.

Under Mr Rolet’s leadership, the company’s value went from £800m to nearly £14bn, but press reports suggested some staff disliked his management style.

Following the row, the stock exchange announced that its chairman, Donald Brydon, who had faced a shareholder vote on the decision to remove Mr Rolet from the board, would step down in 2019.

Sir Chris Hohn, the hedge fund tycoon whose fund owns more than 5% of the LSE, had pushed for Mr Rolet to remain as the stock exchange’s boss and for Mr Brydon to leave instead.

‘Robust intellect’

Mr Brydon said he was “delighted” to announce Mr Schwimmer’s appointment after “a comprehensive global search”.

He added: “David is a leader with great experience in the financial market infrastructure sector, which he has been closely involved in throughout his investment banking career, as well as capital markets experience in both developed and emerging markets.

“He is well known for his robust intellect and partnership approach with clients and colleagues alike.”

Mr Schwimmer, aged 49, is currently Goldman Sachs’ global head of market structure and global head of metals and mining.

“It seems an odd choice to go for an investment banker with little experience in equities, though at least he and [Mr] Rolet have both worked for Goldman Sachs,” said Michael Hewson, chief market analyst at CMC Markets.

“I’m sure he will be a good appointment, given his experience at Goldman Sachs, but why he won’t be joining until 1 August also seems rather odd.”

Analysis, Simon Jack, business editor

The appointment of ex-Goldman Sachs banker David Schwimmer brings down the final curtain on a leadership drama fit for the stage.

It started when predecessor Xavier Rolet – who increased the value of the business from £800m to £14bn – was ousted, to the disgust of some shareholders. In an extraordinary move, veteran activist investor Chris Cohn called for Mr Rolet to be reinstated and the chairman, Donald Brydon, sacked.

The mutiny failed and directors will hope that Mr Schwimmer can get on with the job of steering the LSE through some challenging waters ahead. The group also owns a clearing house – essentially a middle man where thousands of buy and sell orders in are matched to reduce the risk to customers of one side not being able to pay.

This is under attack from some in France and Germany who think the trillions of euro denominated trades cleared in London should be done in the EU. Mr Schwimmer will have a key role in the negotiations over London’s role in a post-Brexit world.

Trump threatens further $100bn in tariffs against China

US President Donald Trump has instructed officials to consider a further $100bn (£71.3bn) of tariffs against China, in an escalation of a tense trade stand-off.

These would be in addition to the $50bn worth of US tariffs already proposed on hundreds of Chinese imports.

China’s Ministry of Commerce responded, saying China would “not hesitate to pay any price” to defend its interests.

Tit-for-tat trade moves have unsettled global markets in recent weeks.

The latest US proposal came after China threatened tariffs on 106 key US products.

In response to Mr Trump’s latest announcement, Foreign Minister Wang Yi said: “China and the US as two world powers should treat each other on a basis of equality and with respect.

“By waving a big stick of trade sanctions against China, the US has picked a wrong target.”

Ministry of Commerce Spokesman Gao Feng said: “We do not want to fight, but we are not afraid to fight a trade war.”

He said that if the US side ignores opposition from China and the international community and insists on “unilateralist and protectionist acts,” then China will “not hesitate to pay any price, and will definitely strike back resolutely… [to] defend the interests of the country and its people.”

Analysts have warned of the risk of a full-blown trade war for the global economy and the markets, and believe ongoing behind-the-scenes negotiations between the two giants are crucial.

Market reaction in Asia on Friday suggested investors were relatively untroubled by the latest twist in the trade row. Hong Kong’s Hang Seng index rose more than 1% while Japan’s Nikkei index edged lower.

How has this unfolded?

Earlier this year, the US announced it would impose import taxes of 25% on steel and 10% on aluminium. The tariffs were to be wide-ranging and would include China.

China responded last month with retaliatory tariffs worth $3bn of its own against the US on a range of goods, including pork and wine. Beijing said the move was intended to safeguard its interests and balance losses caused by the new tariffs.

Then the US announced it was imposing some $50bn worth of tariffs on Chinese-made goods, blaming what it described as unfair Chinese intellectual property practices, such as those that pressured US companies to share technology with Chinese firms.

Mr Trump argues that because Beijing forces any US firms setting up shop in China to tie up with a Chinese company, US ideas are left open to theft and abuse.

Mr Trump reiterated in his statement on Thursday that China’s “illicit trade practices” had been ignored by Washington for years and had destroyed “thousands of American factories and millions of American jobs”.

The draft details of the $50bn to $60bn worth of tariffs were released last week when Washington set out about 1,300 Chinese products it intended to hit with tariffs set at 25%.

China responded this week by proposing retaliatory tariffs, also worth some $50bn, on 106 key US products, including soybeans, aircraft parts and orange juice. This set of tariffs was narrowly aimed at politically important sectors in the US, such as agriculture.

In Mr Trump’s Thursday statement he branded that retaliation by Beijing as “unfair”.

“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” he said.

“In light of China’s unfair retaliation, I have instructed the USTR (United States Trade Representative) to consider whether $100bn of additional tariffs would be appropriate… and, if so, to identify the products upon which to impose such tariffs.”

He said he had also instructed agricultural officials to implement a plan to protect US farmers and agricultural interests.

What could the impact be?

On the political front, Mr Trump’s latest announcement has elicited a less-than-friendly reception from some fellow Republicans.

They have warned that the tariffs will hurt Americans and cost jobs. They have also said relationships the US has with its other big trading partners could be hurt.

US retail giants including Walmart and Target have also asked Mr Trump to consider carefully the impact the tariffs would have on consumer prices and American families.

On Thursday, Ben Sasse, a Republican Senator from the farming area of Nebraska, said Mr Trump’s latest plan was “nuts” and that he hoped the president was “just blowing off steam”.

“Let’s absolutely take on Chinese bad behaviour, but with a plan that punishes them instead of us,” he said.

“This is the dumbest possible way to do this.”

Mr Sasse’s comments echo sentiment pouring out of various Republican-voting farming belts in the US. America’s soybean farmers are expected to be particularly hurt by Mr Trump’s tariff tactics.

To get a sense of how things might play out for those farmers, the trade tit-for-tat could hit soybean producers in the US – and possibly around the world.

China, which is a big producer of soybeans itself, buys about 60% of all soybeans exported by the US.

It uses the product to feed farmed animals, including pigs and chickens, as well as fish. Those animals are in turn used to help feed China’s enormous population.

China’s demand for soybeans and soybean products has buoyed the price of US soybeans for some time.

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  • Not a trade ‘war’ but a trade ‘dance’
  • Why China won’t baulk at US tariff threat

    But Beijing’s tariffs against US soybeans will mostly likely see sales to China fall off, which will in turn hurt American farmers.

    Meanwhile, China will need to set about sourcing the extra soybeans it needs from other countries.

    India is one of the world’s biggest soybean producers, and analysts there have already pointed to a potential trade war between the US and China as an opportunity for its economy.

    Other big soybean producers are Argentina and Brazil, and some studies suggest that is where China will turn to should the current set of proposed tariffs come into force.

    But it could end up paying more than it currently does, ultimately forcing up the price of those animals which eat soybean products. So that would mean pork, for example, China’s most popular meat, could get more expensive. And food price inflation is something that will worry Beijing.

    Beijing Deals

    What China sells to the US

    $462.6bn

    The value of of goods bought by the US from China in 2016.

    • 18.2% of all China's exports go to the United States

    • $129bn worth of China-made electrical machinery bought by US

    • 59.2% growth in Chinese services imported by US between 2006 & 2016

    • $347bn US goods trade deficit with China

      CIA Factbook; USTR. All data for 2016. Getty Images

      How long could this last?

      China has initiated a complaint with the World Trade Organization over the US tariffs, in what analysts say is a sign that this will be a protracted process.

      The WTO circulated the request for consultation to members on Thursday, launching a discussion period before the complaint heads to formal dispute settlement process.

      Meanwhile, under US law, the proposed set of tariffs against about 1,300 Chinese products must now go under review, including a public notice and comment process, and a hearing.

      The hearing is scheduled at the moment for 15 May, with post-hearing filings due a week later.

      So, it could be some months before the USTR will announce its final findings or any decision on whether or not it will move ahead with the proposed tariffs.