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.

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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    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.

South China Sea: Xi Jinping attends massive naval display

China’s leader Xi Jinping has attended a massive naval display in the disputed South China Sea.

Speaking from an undisclosed location, Mr Xi said the need for a strong navy had “never been more pressing”.

More than 10,000 naval officers, 76 fighter jets and a flotilla of 48 ships and submarines took part in the drill.

Several nations claim parts of the resource-rich South China Sea, but recent years have seen Beijing reasserting its claim.

The naval display, described by Chinese media as the largest of its kind, came ahead of planned live-fire military drills by China in the narrow strait separating it from Taiwan on 18 April.

Tibet group thanks Sweden in ‘Chinese spy’ case

A Tibetan leader says she hopes other countries will follow Sweden’s example by prosecuting alleged spies who give China information on exiled Tibetans.

On Wednesday, Sweden charged a Tibetan man, Dorjee Gyantsan, with espionage. China allegedly paid him for personal information about fellow Tibetans.

Tibetan community leader Jamyang Choedon said Sweden’s action could “be an example for other countries”.

Her associates in Sweden back the Dalai Lama’s struggle for Tibetan self-rule.

The Dalai Lama – the Tibetans’ exiled spiritual leader – is seen by China as a separatist threat. The Chinese Communist Party insists Tibet is an inseparable part of China.

Read more on China and Tibet:

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    Ms Choedon, speaking to the BBC from Stockholm, said her small community of about 140 Tibetans was “really shocked and a bit scared” by the case of Dorjee Gyantsan, who is 49. She said it was the first such case in Sweden.

    Mr Gyantsan has denied all the charges, his lawyer Mikael Soderberg told the BBC. Arrested in February 2017, he is currently free but not allowed to leave Sweden.

    “We know him, he was actively taking part in the community,” Ms Choedon said. “I never felt he was against the Dalai Lama. He has been in Sweden more than 10 years.”

    “We’re very thankful to the Swedish government that they are taking full steps; I hope all other countries do the same.”

    Trips to Poland

    The indictment accuses Mr Gyantsan of having spied on Tibetan community members in Sweden for “cash benefits” and says he met “a representative of the Chinese state repeatedly in Poland, in connection with this activity”. The espionage allegedly took place in 2015-2017.

    When he was arrested, on returning from Warsaw, he was found to be carrying $6,000 (£4,200) in cash.

    “The offence is considered gross because it was systematic, in progress for a long time and may have caused many people serious harm,” the indictment says.

    In Sweden the minimum jail term for spying is six months and the maximum four years.

    Commenting on the case, Daniel Stenling, an officer of Sweden’s Sapo intelligence service, said Sapo had worked with other European police authorities to monitor Mr Gyantsan’s activities.

    He called such spying “a very serious crime… as it prevents people who are already vulnerable, and have fled their countries, from exercising the rights and freedoms they should be enjoying under Sweden’s constitution”.

Chinese man caught by facial recognition at pop concert

Chinese police have used facial recognition technology to locate and arrest a man who was among a crowd of 60,000 concert goers.

The suspect, who has been identified only as Mr Ao, was attending a concert by pop star Jacky Cheung in Nanchang city last weekend when he was caught.

Police said the 31-year-old, who was wanted for “economic crimes”, was “shocked” when he was caught.

China has a huge surveillance network of over 170 million CCTV cameras.

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Mr Ao was identified by cameras at the concert’s ticket entrance, and apprehended by police after he had sat down with other concert goers.

“The suspect looked completely caught by surprise when we took him away,” police officer Li Jin told state news agency Xinhua.

“He didn’t think the police would be able to catch him from a crowd of 60,000 so quickly,” Mr Li, from Honggutan police station in Nanchang city, added.

Mr Li also told China Daily that there were several cameras at the ticket entrances equipped with facial recognition technology.

‘I wouldn’t have gone’

Mr Ao had reportedly driven 90km (56 miles) from Zhangshu to Nanchang with his wife specially to catch the concert.

News site Kan Kan released footage that appeared to show the suspect speaking in police custody, saying: “If I knew, I wouldn’t have gone [to the concert].”

This is not the first time Chinese police have used facial recognition systems to catch suspects.

In August last year, police in Shandong province arrested 25 suspects using a facial recognition system that was set up at the Qingdao International Beer Festival.

China is a world leader in facial recognition technology and regularly reminds its citizens that such equipment will make it almost impossible to evade the authorities.

The country has been building what it calls “the world’s biggest camera surveillance network”.

An estimated 170 million CCTV cameras are already in place and some 400 million new ones are expected be installed in the next three years.

Many of the cameras use artificial intelligence, including facial recognition technology.

Why China has fallen in love with a baby radish monster

Huba, cat-sized, resembling a radish with four arms and pointy ears, is the star of China’s biggest local film to date.

The green-haired creature is the main character of Monster Hunt, which has swept the box office since it opened on 16 June.

The plot is, well, unconventional and yet it has collected more than 1.317bn yuan ($212m, £137m) to date. The BBC’s Tessa Wong explains why.

Surreal slapstick

Monster Hunt tells the story of hapless villager Tianyin who gets impregnated with Huba by a monster queen.

Tianyin becomes the target of monster-hating humans as well as monster revolutionaries bent on capturing Huba, who is the heir to the monster kingdom.

Though it sounds bewildering – The Hollywood Reporter called it “a confused and confusing fantasy adventure” – the film has become a huge hit, in part thanks to its familiar appeal to Chinese audiences.

Its slapstick humour – one gag involves Tianyin breastfeeding Huba – is typical of many Chinese comedies, and is best exemplified by the Hong Kong mo lei tau (Cantonese for nonsensical) films of the 1990s.

Two veterans from that genre, Sandra Ng and Eric Tsang, play bit parts in Monster Hunt.

Mo lei tau comedy was a style popularised by Hong Kong comedian Stephen Chow, and in fact Monster Hunt bears some similarities to one of his biggest hits, CJ7, which previously held the China box office record.

The 2008 film starred Chow as a construction worker who discovers a green alien.

Both films feature a fantasy-comedy theme, a bumbling main character who has to protect a cute monster, and a blend of live-action and computer-generated imagery.

Kung Fu fighting

With its elaborate costumes and sets, fight sequences, and fantasy setting which resembles ancient China, Monster Hunt has the look and feel of a wuxia (martial arts hero) film.

Wuxia is a hugely popular and classic genre in Chinese literature, film and opera, and features the swashbuckling adventures of a young male protagonist as he embarks on an epic journey.

The twist, in Monster Hunt, is that Tianyin is not quite the hero as he goes on the run.

Instead he is protected by female warrior Xiaonan, who is a trained monster hunter and agrees to protect Tianyin if she gets to later sell Huba for a profit.

Foreign restrictions

One reason why the film may have done so well is that China severely restricts the release of foreign films to just 34 titles a year so that local titles have a better shot at scoring at the box office.

Those that do get approved for release often get delayed opening dates so that local films can get maximum exposure – a restriction especially apparent in the summer.

In Monster Hunt’s case, there was only one foreign film that was allowed to be released in the same week – Shaun the Sheep Movie – reported Variety.

China is not likely to see another foreign film opening until the end of July, according to The Hollywood Reporter.

Controversial ending

Fans have been lapping it up with the film generating buzz online – though some have taken issue with its denouement (warning: spoilers ahead).

After several trials and tribulations, Huba parts ways with Tianyin and Xiaonan and returns to the monster world.

The ending has sparked controversy on social network Weibo, with many calling for a happier ending.

A post by Weibo user Healer_ChenXuelian commenting on that scene has since gone viral and been shared more than 9,000 times. “The ending where Huba was abandoned really made me feel anguished,” she wrote.

Her post attracted hundreds of replies, many of them with crying emojis. “That last scene when Huba… finds that it’s all alone is just too cruel,” said one user.

Bao, Pixar’s first short by a woman, is the story of a Chinese dumpling

The story is simple and sweet: an aging and lonely Chinese mother, suffering from empty nest syndrome, receives an unexpected second chance at motherhood when her homemade dumpling comes to life.

Disney Pixar has now released the short trailer and first glimpse of its much-awaited short film ‘Bao’, made by Chinese-Canadian director Domee Shi, the animation giant’s first female director of an animated short .

The veteran storyboard artist (and self-professed eating enthusiast) describes her culinary fable as a “magical, modern-day fairy tale, kind of like a Chinese Gingerbread Man story”.

“It explores the ups and downs of the parent-child relationship through the colourful, rich and tasty lens of the Chinese immigrant community in Canada,” Pixar said in an official statement.

“Mom excitedly welcomes this new bundle of joy into her life. But Dumpling starts growing up fast and she must come to the bittersweet revelation that nothing stays cute and small forever.”

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Ms Shi’s mother, a Chinese-Canadian immigrant, also served as a “cultural consultant” on the film. Her dumpling-making skills were put to superb use, ensuring that the movie’s animated dumpling-making scenes were as accurate as possible.

Skip Instagram post by pixar

Get a taste of Bao, our upcoming short opening ahead of #Incredibles2 June 15. | Directed by @domeeshi

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Pixar short films generate as much buzz as their feature length offerings and they are pored over in great detail, sometimes proving controversial.

Lava, the short that was screened before the Pixar blockbuster Inside Out, told the tale of a male and female volcano somewhere in the Pacific that fall in love. Many viewers spoke out dismissing the storyline, but its gender representation and even its geological integrity came under fire. Its latest feature animation Coco was also closely examined after years of cartoon stereotypes of Mexicans and Mexican culture.

The question of representation of Asian talent in the entertainment industry has also been a major concern for many. Hollywood has been accused of failing to offer roles to Asian or Asian American actors, even when the part is an Asian character, the so-called “whitewashing” of Hollywood.

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So for fans getting a first glimpse of the trailer on Instagram, the overwhelming expression was one of joy, not least because this was made by an Asian woman, the first to direct for Pixar.

“Very excited for this short because it’s coming from Pixar’s first female Asian director. I can tell that it will be very emotional. Can’t wait,” said fan Abby Berlage.

“Two of my favourite things, baos and babies,” said another Instagram user Lindsey Worley.

One Instagram user observed similarities with another Asian animation. “This new Pixar short reminds me of Huba from Monster Hunt,” wrote Justine Walker, referring to the massive 2015 Chinese hit.

Why China has fallen in love with a baby radish monster

Monster Hunt movie sets Chinese box office record

Others aired their thoughts about the quirkiness of Ms Shi’s edible dumpling baby.

“Cute but terrifying at the same time,” remarked one Instagram user. “What if you were eating soup dumplings (xiao long bao) one day and it suddenly springs to life?”

Others ruefully read the complexity of the immigrant experience into the dumpling fable.

“Prequel: he finds out he is not a pure dumpling. His Dad was a soup dumpling so he doesn’t quite identify with either. Instead, he wants to be a gyoza,” Tracy Almeda-Singian posted on Twitter.

Reporting by the BBC’s Heather Chen.

Tiangong-1: Defunct China space lab comes down over South Pacific

China’s defunct Tiangong-1 space lab mostly broke up on re-entering the Earth’s atmosphere above the South Pacific, Chinese and US reports say.

It re-entered the atmosphere around 00:15 GMT on Monday, China’s Manned Space Engineering Office said.

Tiangong-1 was launched in 2011 to carry out docking and orbit experiments.

It was part of China’s efforts to build a manned space station by 2022, but stopped working in March 2016.

What do we know about where it came down?

The rather vague “above the South Pacific” is the line from space officials.

Experts had struggled to predict exactly where the lab would make its re-entry – and China’s space agency wrongly suggested it would be off Sao Paulo, Brazil, shortly before the moment came.

The European Space Agency said in advance that Tiangong-1 would probably break up over water, which covers much of the Earth’s surface.

It stressed that the chances of anyone being hit by debris from the module were “10 million times smaller than the yearly chance of being hit by lightning”.

It’s not clear how much of the debris reached the Earth’s surface intact.

Why did the space lab fall like this?

Ideally, the 10m (32ft)-long Tiangong module would have been taken out of orbit in a planned manner.

Traditionally, thrusters are fired on large vehicles to drive them towards a remote zone over the Southern Ocean. This option appears not to have been available after the loss of command links.

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    Thirteen space agencies, under the leadership of the European Space Agency, used radar and optical observations to follow Tiangong’s path around the globe.

    Tiangong means ‘Heavenly Palace’

    • The module was launched in 2011 to practise rendezvous and docking
    • Two astronaut crews visited in Shenzhou capsules – in 2012 and 2013
    • They included China’s first female astronauts Liu Yang and Wang Yaping
    • China plans a more permanent space station in the next decade
    • It has developed a heavy-lift rocket, Long March 5, for the purpose

      Is this the biggest space hardware to fall out of the sky?

      Tiangong was certainly on the large size for uncontrolled re-entry objects, but it was far from being the biggest, historically:

      • The US space agency’s Skylab was almost 80 tonnes in mass when it came back partially uncontrolled in 1979. Parts struck Western Australia but no-one on the ground was injured
        • Nasa’s Columbia shuttle would also have to be classed as an uncontrolled re-entry. Its mass was more than 100 tonnes when it made its tragic return from orbit in 2003. Again, no-one on the ground was hit as debris scattered through the US states of Texas and Louisiana

          Astrophysicist Jonathan McDowell believes Tiangong is only the 50th most massive object to come back uncontrolled.

          Skip Twitter post 2 by @planet4589

          By my calculations, Tiangong-1 will be the 50th most massive uncontrolled reentry from Earth orbit in history.

          — Jonathan McDowell (@planet4589) March 25, 2018

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          China has launched a second lab, Tiangong-2, which continues to be operational. It was visited by a re-fuelling freighter, Tianzhou-1, just last year.

          China’s future permanent space station is expected to comprise a large core module and two smaller ancillary modules, and will be in service early in the next decade, the Asian nation says.

          A new rocket, the Long March 5, was recently introduced to perform the heavy lifting that will be required to get the core module in orbit.

Not a trade ‘war’ but a trade ‘dance’

President Trump has tweeted the US is “not in a trade war with China”.

The Chinese say they don’t want a trade war either.

But both sides don’t appear to be backing down from their list of demands.

So if it’s not a trade war – is this a trade dance?

Negotiating tactics

What I mean by that of course, is that these are negotiating tactics.

It’s what happens in any business negotiation – each side is trying to get the other to do what it wants. And while the public declarations of potential tariffs may be quite dramatic, behind the scenes US and Chinese officials are still talking, and laying out all the options.

At the heart of this conflict is one key point : the US says China has used unfair tactics – dumping its cheap products in the US, stealing technology from US firms by forcing them into joint ventures, and limiting their market access – to pull ahead in the global economic race.

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    It’s how, the US alleges, China has been able to see an unprecedented rate of economic growth, improvement in quality of life, and win a bigger share of the global economy in the last few decades.

    China says: that’s not true.

    Both sides have used the threat of tariffs on key products in equal size and scale.

    “I think the parties will make concessions,” international negotiator Martin Medeiros of Medeiros Law told the BBC’s Asia Business Report programme.

    “I think this is a precursor to some negotiations that will get China on a path…to have a robust set of intellectual property laws… that’s the endgame.”

    No one wins in a trade war

    All well and good, but it doesn’t look like we’re getting to that point anytime soon.

    And both sides stand to lose if this turns into a full blown trade war.

    The US

    • China’s $50bn of retaliation covers more than 40% of US goods exports to China, and accounts for 0.3% of US GDP.
    • Politically sensitive areas like the agricultural sector, car manufacturers and aircraft makers have been targeted.
    • US tariffs on Chinese goods include electronics which China is a major exporter of. It’s hard to see where else American suppliers could get these products.

      China

      • While US tariffs on China won’t hurt overall GDP much, but…
      • Restrictions on soybeans could come at a cost to China. The US is the second largest exporter of soybeans to China. Stopping imports of them is not an option, so prices would rise at home – not good news for a government trying to keep food inflation low.

        The endgame

        Both sides have shown they are willing to act boldly if necessary. And they both have strong hands to play.

        China holds the “nuclear threat” of selling US treasuries (government bonds) if it doesn’t feel the US is playing ball. That would hurt the US economy, as I’ve written about before.

        And the US could call China out as a currency-manipulator in the US Treasury’s semi-annual currency report which is due later this month. Donald Trump promised to do that on the campaign trail – but still hasn’t.

        If the US does that, under a 2015 law it has a year to resolve the issue with China through – you guessed it – more negotiations.

        The reality is that a decision like that wouldn’t have any immediate tangible effect – but it would be another way for the Trump administration to cast China as the villain in this story, and if talks don’t go as the US would like – this may be one tool in it’s arsenal.

        So this could go two ways. There’s room for more negotiation, but that mean both sides need to give something up.

        Question is, will they dance and make a deal?

US-China trade: How badly could new US tariffs hurt China?

What do bakery ovens, high definition colour television sets, juice presses, rocket launchers and uranium have in common?

Well, they’re all on a list of about 1,300 Chinese products the US is considering slapping a 25% tariff on.

The juice press might not cause too much of a squeeze for Beijing.

But many of the goods on that list are in industries like aerospace and engineering – areas of innovation that China wants to become a world leader over the next decade.

And the planned 25% tariffs do have the potential to hurt China.

The US bought close to $75bn (£53.2bn) of China’s machinery and computers in 2017.

And that’s expected to be almost $80bn in 2018 and 2019. These goods make up by far the biggest chunk of Chinese imports to the US. And they’re on the list.

“The new US tariffs have really taken it up a notch,” says Tony Nash of research house Complete Intelligence.

“The key issue is that it targets many of the value added goods being traded by China.”

What’s the US afraid of?

A quick history lesson. Let’s go back to the late 1980s, when China was still opening up to the world under the leadership of Deng Xiaoping.

What happened next is the stuff dreams are made of, as the Petersen Institute of International Economics points out:

  • An average of 10% GDP growth every year leading it to become the world’s second largest economy
  • 800 million people lifted out of poverty
  • Mortality rate of children under five halved between 2006 and 2015

    A lot of this growth came from the manufacturing boom of the 70s and 80s.

    But the US says that China forced American companies who wanted access to low-cost labour in the country to tie up with Chinese companies – effectively allowing them to copy and steal American ideas.

    “China is very aggressive about what it wants,” Martin Medeiros of Medeiros Law told me from the US.

    “It has come a long way since the 1980s but the Chinese don’t think about intellectual property the way Americans do.”

    At the heart of this battle is that the US feels unfairly played, and that it is American technology which has given China an unfair advantage in the global innovation game.

    But the reality is that China is racing ahead, and it doesn’t need the US’s permission.

    In its 13th Five Year Plan published in 2016, China announced its vision to become an “innovation nation” by 2020, an “international innovation leader” by 2030, and “a world powerhouse of scientific and technological innovation by 2050”.

    China is spending more money on research and development, and filing thousands of patents. Its companies are some of the world’s leaders in innovation, artificial intelligence and are engaged in cutting edge research.

    The US is worried that Chinese companies will take over America’s influence in these areas.

    So does China need to worry?

    China has to care about what the US does in terms of tariffs, believes Deborah Elms from the Asian Trade Centre.

    These are going to hit real people and some companies will likely go bankrupt if tariffs of 25% are actually applied and if counter-retaliation happens, she says

    In China there is no social safety net to catch folks who lose jobs.

    And in a country where the political system is predicated on the assumption that the government will look after its people, job losses aren’t good for the Communist Party.

    Will US tariffs push China to change?

    In the short term – no, says Mr Medeiros.

    The tariffs will “potentially hurt China simply by lack of market access,” but won’t do much to change China’s IP laws which he acknowledges have improved considerably over the years.

    In the long term though, perhaps it will push Beijing to give up some ground – including the requirements for foreign firms to do joint ventures and technology transfers.

    Don’t hold your breath though.

    With current rhetoric ratcheting up, and a tit-for-tat attitude on both sides, this is more than just a trade war.

    It’s about two superpowers fighting for dominance in an increasingly polarised world. And no one wants to lose face.