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China files WTO challenge over US tariffs, as its economy slows – business live China files WTO challenge over US tariffs, as its economy slows – business live
(35 minutes later)
Vincent-Freědeěric Mivelaz of Switzerland’s SwissBank is concerned by today’s Chinese growth figures.
Mivelaz points out that there are signs of weakness, with fixed asset investment dropping from 6.1% to 6% per year in June, industrial production growth down to 6% from 6.8%, and retail sales growth below their recent average.
He adds:
Money supply is tightening, due to caution of financiers and debt risk, so the Chinese economy is expected to slow down industrial activity and private consumption. Trade tariffs will be a key factor in coming months.
Here’s our Beijing correspondent, Lily Kuo, on China’s retaliation against America’s tariffs:Here’s our Beijing correspondent, Lily Kuo, on China’s retaliation against America’s tariffs:
China has filed a complaint against the US at the World Trade Organisation over Donald Trump’s threats to place tariffs on an additional $200bn worth of Chinese goods.China has filed a complaint against the US at the World Trade Organisation over Donald Trump’s threats to place tariffs on an additional $200bn worth of Chinese goods.
The one-sentence announcement on Monday, from China’s ministry of commerce, comes less than a week after the US president called for a second round of tariffs on China, in retaliation for Chinese tariffs placed on American goods.The one-sentence announcement on Monday, from China’s ministry of commerce, comes less than a week after the US president called for a second round of tariffs on China, in retaliation for Chinese tariffs placed on American goods.
On 6 July, the US imposed 25% tariffs on $34bn in Chinese goods, prompting Beijing to hit back with levies on the same amount of US exports to China. In response, the White House last week released a wide-ranging list of $200bn in Chinese goods, from tobacco to dog and cat food, to target with 10% tariffs. Beijing said it would “fight back as usual” and would file a complaint with the WTO.On 6 July, the US imposed 25% tariffs on $34bn in Chinese goods, prompting Beijing to hit back with levies on the same amount of US exports to China. In response, the White House last week released a wide-ranging list of $200bn in Chinese goods, from tobacco to dog and cat food, to target with 10% tariffs. Beijing said it would “fight back as usual” and would file a complaint with the WTO.
The new round of tariffs would not come into effect until September, making China’s response uncharacteristically quick. Up to now Beijing has waited for the US to “fire the first shot” in the escalating trade war...The new round of tariffs would not come into effect until September, making China’s response uncharacteristically quick. Up to now Beijing has waited for the US to “fire the first shot” in the escalating trade war...
More here:More here:
Newsflash: US retail sales grew steadily last month, indicating that America’s economy is growing steadily despite tariff worries.Newsflash: US retail sales grew steadily last month, indicating that America’s economy is growing steadily despite tariff worries.
Retail sales jumped by 0.5% in June, the Commerce Department reports. That’s the fifth monthly rise in a row.Retail sales jumped by 0.5% in June, the Commerce Department reports. That’s the fifth monthly rise in a row.
May’s figures have also been revised higher, to show a 1.3% increase - up from 0.8% previously.May’s figures have also been revised higher, to show a 1.3% increase - up from 0.8% previously.
However, ‘core retail sales’ (stripping out cars, gasoline, food and building materials) were flat in June.However, ‘core retail sales’ (stripping out cars, gasoline, food and building materials) were flat in June.
Here’s some instant reaction:Here’s some instant reaction:
Consumer chugging along: Retail sales up a solid 0.5% m/m in June (in-line with exp.) with upward revisions in prior months https://t.co/AwtoXCMkUF pic.twitter.com/rNWc4DoarkConsumer chugging along: Retail sales up a solid 0.5% m/m in June (in-line with exp.) with upward revisions in prior months https://t.co/AwtoXCMkUF pic.twitter.com/rNWc4Doark
US retail sales a mixed bag in June. Headline was +0.5% after +1.3% in May. However, core sales (ex food, gasoline, building materials and autos) were flat in June, after +0.8% in May. Q2 growth was up on Q1: +7.9% annualised vs 1.8% for headline and +6.5% vs 2.1% for core. pic.twitter.com/yPFTqhFEP4US retail sales a mixed bag in June. Headline was +0.5% after +1.3% in May. However, core sales (ex food, gasoline, building materials and autos) were flat in June, after +0.8% in May. Q2 growth was up on Q1: +7.9% annualised vs 1.8% for headline and +6.5% vs 2.1% for core. pic.twitter.com/yPFTqhFEP4
Here’s a handy chart, showing how the availability of credit in China has recently been reined in, after a long period of loose monetary policy after the financial crisis.Here’s a handy chart, showing how the availability of credit in China has recently been reined in, after a long period of loose monetary policy after the financial crisis.
China ha supuesto la mayor parte de creación de crédito privado en el mundo desde 2008. Vía Citi pic.twitter.com/Gho4mMNbfNChina ha supuesto la mayor parte de creación de crédito privado en el mundo desde 2008. Vía Citi pic.twitter.com/Gho4mMNbfN
London’s stock market has fallen into the red, as City traders fret about the risk of a tradw war.London’s stock market has fallen into the red, as City traders fret about the risk of a tradw war.
The FTSE 100 has shed 88 points, or over 1%, to 7573. After a slow start, equities took a hit as the oil price fell, hitting shares in energy producers and miners.The FTSE 100 has shed 88 points, or over 1%, to 7573. After a slow start, equities took a hit as the oil price fell, hitting shares in energy producers and miners.
Brent crude is now down almost 2% at $73.94 per barrel, following the news that China’s growth rate has slowed.Brent crude is now down almost 2% at $73.94 per barrel, following the news that China’s growth rate has slowed.
Connor Campbell of SpreadEx says:Connor Campbell of SpreadEx says:
The FTSE’s initially meagre losses gathered pace as Monday went on, the index dragged lower by its commodity stocks.The FTSE’s initially meagre losses gathered pace as Monday went on, the index dragged lower by its commodity stocks.
With Brent Crude slipping 1.1%, and copper down 0.7%, both suffering in light of China’s Q2 slowdown, the FTSE’s hefty oil and mining ended up in the red, dragging the UK index lower in the process.With Brent Crude slipping 1.1%, and copper down 0.7%, both suffering in light of China’s Q2 slowdown, the FTSE’s hefty oil and mining ended up in the red, dragging the UK index lower in the process.
Getting back to trade, the boss of asset management giant BlackRock has warned that Donald Trump’s trade dispute with China will hurt growth.Getting back to trade, the boss of asset management giant BlackRock has warned that Donald Trump’s trade dispute with China will hurt growth.
Larry Fink told Bloomberg TV that America’s economy would suffer if the White House imposes tariffs on an extra $200bn of Chinese imports (as it threatened last week).Larry Fink told Bloomberg TV that America’s economy would suffer if the White House imposes tariffs on an extra $200bn of Chinese imports (as it threatened last week).
Fink said that US economic growth has been strong in 2018, but it will weaken in 2019 if America escalates the trade war with China.Fink said that US economic growth has been strong in 2018, but it will weaken in 2019 if America escalates the trade war with China.
He predicted that:He predicted that:
GDP will slow down dramatically.....we’ll have even more uncertainty about the state of the world.GDP will slow down dramatically.....we’ll have even more uncertainty about the state of the world.
Fink added that shares would tumble if a full-blown trade war broke out, adding that “markets will speak louder than any single voice”.Fink added that shares would tumble if a full-blown trade war broke out, adding that “markets will speak louder than any single voice”.
BLACKROCK'S FINK SAYS IF WE HAVE FULL TARIFF WARS, SEES MARKETS DOWN 10-15%BLACKROCK'S FINK SAYS IF WE HAVE FULL TARIFF WARS, SEES MARKETS DOWN 10-15%
Defence secretary Gavin Williamson says the UK’s new concept fighter jet will help the country ““fly higher, further and faster than ever before”.Defence secretary Gavin Williamson says the UK’s new concept fighter jet will help the country ““fly higher, further and faster than ever before”.
Williamson explains that the Tempest could be operated by a pilot, or be flown unmanned (using a virtual cockpit, I think).Williamson explains that the Tempest could be operated by a pilot, or be flown unmanned (using a virtual cockpit, I think).
He hopes that the plane could be operational by 2035, and adds that Britain is open to partnering with other countries on its future fighter programme (as happened with the Eurofighter Typhoon, of course).He hopes that the plane could be operational by 2035, and adds that Britain is open to partnering with other countries on its future fighter programme (as happened with the Eurofighter Typhoon, of course).
Swarming weapons, DEW, virtual cockpit - Def Sec wants Tempest flying alongside F-35 & Typhoon in 2035 #FIA18 #avgeek pic.twitter.com/syJ48XpajSSwarming weapons, DEW, virtual cockpit - Def Sec wants Tempest flying alongside F-35 & Typhoon in 2035 #FIA18 #avgeek pic.twitter.com/syJ48XpajS
Several major engineering and defence firms are already on board, including Rolls-Royce and BAE Systems.Several major engineering and defence firms are already on board, including Rolls-Royce and BAE Systems.
Heads of terms and contract about to be signed for the Combat Air Strategy and Tempest project. Team Tempest = BAE Systems, MBDA, Lombardo and Rolls-Royce. #FIA18Heads of terms and contract about to be signed for the Combat Air Strategy and Tempest project. Team Tempest = BAE Systems, MBDA, Lombardo and Rolls-Royce. #FIA18
Over in Farnborough, Britain’s defence secretary has just unveiled a new concept fighter jet to protect the UK in the coming years.Over in Farnborough, Britain’s defence secretary has just unveiled a new concept fighter jet to protect the UK in the coming years.
It’s called “Tempest”, and dubbed a next-generation fighter jet that could eventually replace the Eurofighter.It’s called “Tempest”, and dubbed a next-generation fighter jet that could eventually replace the Eurofighter.
Defence secretary Gavin Williamson is at Farnborough International Airshow unveiling a sixth-generation fighter jet project to replace Eurofighter Typhoon. A lot of RAF top brass and defence bigwigs waiting with bated breath for the big reveal. Pics to follow. #FIA18Defence secretary Gavin Williamson is at Farnborough International Airshow unveiling a sixth-generation fighter jet project to replace Eurofighter Typhoon. A lot of RAF top brass and defence bigwigs waiting with bated breath for the big reveal. Pics to follow. #FIA18
Defence sec Gavin Williamson and chief of air staff Sir Stephen Hillier. pic.twitter.com/eLUlyLIGy3Defence sec Gavin Williamson and chief of air staff Sir Stephen Hillier. pic.twitter.com/eLUlyLIGy3
Defence secretary Gavin Williamson: United Kingdom remains the world leader in combat air.Defence secretary Gavin Williamson: United Kingdom remains the world leader in combat air.
The UK’s new Tempest aircraft #farnboroughairshow ⁦@GavinWilliamson⁩ pic.twitter.com/b59iqrAr5iThe UK’s new Tempest aircraft #farnboroughairshow ⁦@GavinWilliamson⁩ pic.twitter.com/b59iqrAr5i
We are living in “a dangerous new era” of warfare says ⁦@GavinWilliamson⁩ as he unveils the new “Tempest” fighter jet for the post-Brexit world. pic.twitter.com/AEu5zpn4FxWe are living in “a dangerous new era” of warfare says ⁦@GavinWilliamson⁩ as he unveils the new “Tempest” fighter jet for the post-Brexit world. pic.twitter.com/AEu5zpn4Fx
Just in: the Eurozone suffered a drop in exports in May, narrowing its trade surplus with the rest of the world.Just in: the Eurozone suffered a drop in exports in May, narrowing its trade surplus with the rest of the world.
However, the euro area’s trade surplus with America has grown - which will not please Donald Trump.However, the euro area’s trade surplus with America has grown - which will not please Donald Trump.
Eurostat reports that the eurozone exported €189.6bn of goods to the rest of the world in May 2018, a drop of 0.8% compared with May 2017.Eurostat reports that the eurozone exported €189.6bn of goods to the rest of the world in May 2018, a drop of 0.8% compared with May 2017.
Imports from the rest of the world rose by 0.7% to €173.1bn, (from €171.9bn in May 2017).Imports from the rest of the world rose by 0.7% to €173.1bn, (from €171.9bn in May 2017).
This means the euro area’s goods surplus has shrank to €16.5bn in May, down from €19.3bn a year earlier.This means the euro area’s goods surplus has shrank to €16.5bn in May, down from €19.3bn a year earlier.
The figures also show that the European Union exported 2.1% more goods to America in the first five months of 2018, but imported 3.1% less.The figures also show that the European Union exported 2.1% more goods to America in the first five months of 2018, but imported 3.1% less.
As a result, the EU’s trade surplus with the US has swelled to £54.8bn, up from £48.1bn a year ago [more details here].As a result, the EU’s trade surplus with the US has swelled to £54.8bn, up from £48.1bn a year ago [more details here].
Trump has other things on his mind today, of course, but this data might reinforce his belief that the EU treats America very badly on trade.Trump has other things on his mind today, of course, but this data might reinforce his belief that the EU treats America very badly on trade.
Here’s Associated Press’s take:Here’s Associated Press’s take:
China announced it filed a World Trade Organization challenge on Monday to U.S. President Donald Trump’s proposal for a tariff hike on $200bn of Chinese goods, reacting swiftly amid deepening concern about the economic impact of their spiraling technology dispute.China announced it filed a World Trade Organization challenge on Monday to U.S. President Donald Trump’s proposal for a tariff hike on $200bn of Chinese goods, reacting swiftly amid deepening concern about the economic impact of their spiraling technology dispute.
The one-sentence Commerce Ministry statement gave no legal grounds for the challenge or other details. It is an unusually rapid move for a trade case, coming less than one week after the U.S. Trade Representative [USTR] announced the tariff plan, which wouldn’t take effect until at least September.The one-sentence Commerce Ministry statement gave no legal grounds for the challenge or other details. It is an unusually rapid move for a trade case, coming less than one week after the U.S. Trade Representative [USTR] announced the tariff plan, which wouldn’t take effect until at least September.
The USTR said last week that it proposed the levy in response to Beijing’s decision to retaliate for U.S. tariff hikes over complaints China is hurting American companies by stealing or pressuring foreign enterprises to hand over technology....The USTR said last week that it proposed the levy in response to Beijing’s decision to retaliate for U.S. tariff hikes over complaints China is hurting American companies by stealing or pressuring foreign enterprises to hand over technology....
China files WTO challenge to US $200 billion tariff plan. https://t.co/b9i3vywLy2China files WTO challenge to US $200 billion tariff plan. https://t.co/b9i3vywLy2
This is a swift move by China.This is a swift move by China.
By appealing to the WTO, Beijing is signalling that it won’t accept America’s proposal to slap 10% tariffs on a wide range of imports - from meat and vegetables to chemicals and consumer products (plus plenty of unusual items).By appealing to the WTO, Beijing is signalling that it won’t accept America’s proposal to slap 10% tariffs on a wide range of imports - from meat and vegetables to chemicals and consumer products (plus plenty of unusual items).
However, China still hasn’t revealed how it will retaliate against America’s plan to make $200bn of its imports less competitive.However, China still hasn’t revealed how it will retaliate against America’s plan to make $200bn of its imports less competitive.
That may be because Beijing can’t announce reciprocal tariffs, as it doesn’t import enough stuff from the US....That may be because Beijing can’t announce reciprocal tariffs, as it doesn’t import enough stuff from the US....
Newsflash: China has filed a complaint with the World Trade Organisation over America’s latest threat to impose levies on Chinese imports.Newsflash: China has filed a complaint with the World Trade Organisation over America’s latest threat to impose levies on Chinese imports.
According to Associated Press, Beijing is protesting about the plan to hit $200bn of Chinese goods with a new 10% tariff (probably starting in September).According to Associated Press, Beijing is protesting about the plan to hit $200bn of Chinese goods with a new 10% tariff (probably starting in September).
BREAKING: China says it has filed a WTO challenge to Washington's threat to raise tariffs on $200 billion of Chinese goods.BREAKING: China says it has filed a WTO challenge to Washington's threat to raise tariffs on $200 billion of Chinese goods.
Tom Rafferty of the Economist Intelligence Unit believes China’s economy has held up well despite the trade spat with the US.Tom Rafferty of the Economist Intelligence Unit believes China’s economy has held up well despite the trade spat with the US.
However, he also expects growth to slow in the next few months.However, he also expects growth to slow in the next few months.
Rafferty says:Rafferty says:
“The data shows that global trade headwinds have yet to grip China’s economy. Despite the heated global rhetoric around trade and associated financial market volatility, China’s export sector performed well in the second quarter of the year and will probably prove quite resilient under the limited tariff actions we anticipate from the US and China.“The data shows that global trade headwinds have yet to grip China’s economy. Despite the heated global rhetoric around trade and associated financial market volatility, China’s export sector performed well in the second quarter of the year and will probably prove quite resilient under the limited tariff actions we anticipate from the US and China.
We are more concerned about slowing domestic demand within China’s economy, with investment persistently weak and consumption also having slowed, and these are much more important drivers of growth than exports.We are more concerned about slowing domestic demand within China’s economy, with investment persistently weak and consumption also having slowed, and these are much more important drivers of growth than exports.
The fall in industrial output growth in June was notable in this regard. The authorities have begun to loosen policy settings, but will be reluctant to go too far given their desire to curb financial risks. As such, we expect growth to slow in the second half of the year and more markedly in 2019.”The fall in industrial output growth in June was notable in this regard. The authorities have begun to loosen policy settings, but will be reluctant to go too far given their desire to curb financial risks. As such, we expect growth to slow in the second half of the year and more markedly in 2019.”