Trade War Update

Trade War Update

Trade War Update

China

China said Friday that its attitude on respecting and protecting intellectual property rights (IPR) is serious and its actions are effective, calling the U.S. allegations of so-called IPR theft by China groundless.

“In recent months, the United States has repeatedly accused China of stealing intellectual property rights, but it has never been able to come up with strong evidence,” said Chinese Foreign Ministry spokesperson Hua Chunying at a daily press briefing, when commenting on the Statement by the U.S. Trade Representative on Section 301 Action released July 10.

“Facts speak louder than words,” said Hua, noting that China has moved into the second position as a source of international patent applications filed via the Patent Cooperation Treaty.

According to a World Intellectual Property Organization (WIPO) report in 2017, the number of invention patent applications filed to China’s State Intellectual Property Office exceeded 1.3 million, ranking first in the world for seven consecutive years.

Hua said such facts demonstrated that China has become a major country that independently creates intellectual property.

In the meantime, in 2017, China’s external payments for IPR royalty totaled 28.6 billion U.S. dollars, with the deficit exceeding 20 billion U.S. dollars, and the payment for using U.S. intellectual property increased by 14 percent year on year.

These figures and facts refuted from one aspect U.S. allegations of the so-called IPR theft by China, and demonstrated that China’s attitude on respecting and protecting IPR is serious and its actions are effective, Hua said.

China was among the top 20 most-innovative economies in the annual Global Innovation Index (GII) ranking published on Tuesday by Cornell University and the WIPO, and the only mid-income economy on the list.

Hua said that China is gradually becoming a leader in innovation and branding in the world.

“Innovation and intellectual property are by no means exclusive ‘patents’ of the United States. The use of IPR and the promotion of economic and social progress are also not exclusive rights of the United States,” said Hua.

“Innovation and intellectual property should serve the progress and well-being of all mankind, and should not be turned into a tool for the United States to suppress other countries’ development and maintain its self-interest,” said Hua.

Trade Data

As the US-China trade war escalates, the latest trade numbers appear to back Washington’s biggest gripe with Beijing. China’s trade surplus with the US has grown to a record high of nearly $29 billion in June.

Analysts expect to see the impact of the tariffs in the coming months, warning of a less favorable trade balance for China.

“We expect the trade numbers for July to disappoint since that’s when the first round of US tariffs took effect,” China analyst at Nordea Bank in Singapore Amy Zhuang told the BBC.

“Still, we do not expect a plunge because those tariffs only targeted $34 billion worth of goods which is fairly small compared to China’s total trade,” she said.

Statistics showed that in the first six months of the year, China’s exports to the US rose 13.6 percent from a year earlier, while imports from the US increased by 11.8 percent. China’s trade surplus with the US over the same period was $133.76 billion, up from $117.51 billion last year.

Last week, the United States and China introduced tariffs of 25 percent on $34 billion of each other’s exports. China’s Commerce Ministry said that Beijing had no choice but to fight back after the US “launched the largest trade war in economic history,” accusing Washington of violating the rules of the World Trade Organization (WTO).

In turn, the Trump administration accused China of not negotiating “seriously” on trade and released on Tuesday a list of $200 billion worth of Chinese exports that could be subject to new 10-percent tariffs. The new tariffs would kick in within 60 days.

If the US proceeds with its proposal for a new round of tariffs on $200bn of Chinese goods, there could be knock-on effects, Amy Zhuang warned. “Not only will Chinese exporters suffer but American consumers as well,” she said.

“Targeting such a large amount of basic consumers will inevitably have an effect on US inflation.”


Europe

Trading with the EU is unfair, according to US President Donald Trump, who warned the bloc would pay a high price if it does not remove trade barriers.

While talking to journalists at a joint press conference with UK Prime Minister Theresa May at her country residence in Chequers, Trump asked May to work out a Brexit plan in such way that the two countries could “have an even trade.”

“We do not have a fair deal with the European Union on trade right now. They treat the United States horribly and that’s going to change,” Trump said, adding that “if it doesn’t change they are going to pay a very big price. And they know what that price is.”

Trump expressed hope that Washington and Brussels could work something out on July 25 when trade talks with European Commission President Jean-Claude Juncker are expected to occur.

“They [the EU – Ed.] have barriers that are beyond belief. Barriers where they won’t to take our farm products, they won’t to take many of our things, including our cars. They charge us tariffs on cars far greater than we charge them,” he said.

Trump told May that last year, the US lost $151 billion in trade with the EU. “We’re not going to have this any longer,” he stressed.

The US leader has recently threatened to hit imports of European cars with a 20-percent tariff if Brussels doesn’t remove levies and other trade barriers on US goods.

He said the EU was “as bad” as China when it came to the way European countries traded with the US. Trump also dismissed suggestions that his attacks on the EU were counterproductive and that he should instead strengthen relations with European countries to tackle the Chinese trade issue together.

The EU warned the US of a new round of retaliatory tariffs on American goods worth as much as $300 billion, if Washington moves ahead with new duties on European cars.

At a summit in Brussels, EU leaders said that the bloc would respond to all US actions “of a clear protectionist agenda.”

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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