Tensions between the US and China escalated earlier in the year but appear to be subsiding after Beijing offered to help reduce its trade surplus with America. Mark Schiefelbein/AP
Tensions between the US and China escalated earlier in the year but appear to be subsiding after Beijing offered to help reduce its trade surplus with America. Mark Schiefelbein/AP

Trade war is over, says China as it promises US shopping spree



China will “significantly increase purchases” of US goods, the White House said as Beijing’s special envoy at talks in Washington declared a trade war had been averted between the world’s two largest economies.

A joint statement released by the White House following the talks didn’t place a dollar figure on the increased purchases by China, or address a comment by President Donald Trump’s top economic adviser suggesting Beijing had agreed to slash its annual trade surplus with the US by $200 billion (Dh734bn).

Vice Premier Liu He, a special envoy of China’s President Xi Jinping, told reporters in Washington that talks with Treasury Secretary Steven Mnuchin, Secretary of Commerce Wilbur Ross and US Trade Representative Robert Lighthizer ended with a pledge not to engage in a trade war, according to a Xinhua news agency report.

Mr Liu said both sides agreed to stop “slapping tariffs” on each other and called his visit “positive, pragmatic, constructive and productive,” Xinhua reported. Cooperation will be enhanced in such areas as energy, agriculture, health care, high-tech products and finance, a “win-win” choice for both nations. The statement said China agreed to “meaningful increases in US agriculture and energy exports” with details to be worked out later.

While there’s still a long way to go in terms of specifics, the announcement that that a trade war will be averted should boost global stocks Monday, according to Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney.

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“Investors had been fretting,” Mr Oliver said. “U.S. energy, agriculture, manufacturing and services companies with significant exposure to exports to China will be key beneficiaries. But it’s also a big positive across Asia given supply chain linkages to Chinese companies that ultimately export to the US”

“There was a consensus on taking effective measures to substantially reduce the US trade deficit in goods with China,” the White House said.

The delegations also discussed expanding trade in manufactured goods, and each side agreed to strengthen cooperation on intellectual property. China will “advance relevant amendments” to its laws and and regulations in that area, including its patent law, the White House said.

The statement didn’t mention additional US demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned US companies may be excluded from measures to open its economy.

“This round of talks is generally positive,” said Li Yong, a senior fellow at the China Association of International Trade in Beijing, adding that the US still may take a harder line on reviews of Chinese investments. “Trade tensions will ease gradually, but there still could be frictions.”

On Friday morning, Larry Kudlow, director of the National Economic Council, told reporters that China had offered to reduce its annual trade surplus with the US by at least $200bn. “The number’s a good number,” he said.

Earlier, posts on Chinese state social media disputed a report that China planned to slash its trade surplus by the extent demanded by Washington through increased imports of US products. A foreign ministry official also played down the suggestion.

In a sign that the Chinese government seeks a conciliatory stance, it said Friday it ended an anti-dumping and anti-subsidy investigation into imports of US sorghum, citing “public interest.” That move came days after it restarted a review of Qualcomm’s application to acquire NXP Semiconductors.

A $200bn reduction in the U.S. trade gap with China by 2020 was on a list of demands the US made earlier this month as Mr Mnuchin led a delegation to Beijing. That mission left with little common ground with China and reports emerging of infighting among the US officials. The US merchandise trade deficit with China hit a record $375bn last year.

Trump’s administration has threatened to impose tariffs on as much as $150bn of Chinese imports to the US as tensions over trade have escalated. Trump expressed doubt before his meeting with Liu that China and the US would come to an agreement to avoid a damaging trade war.

The statement didn’t mention ZTE, the Chinese telecom company that Trump a week ago ordered the Commerce Department to get help back into business, reversing a ban on accessing American technology that would have effectively put it out of business.

Mr Kudlow said Friday that ZTE may need to change its management to win a reprieve from US sanctions that shut it off from key parts suppliers.

Tax authority targets shisha levy evasion

The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.

Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".

The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.

He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.

"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.

As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.

Top investing tips for UAE residents in 2021

Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.

Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.

Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.

Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.

Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.

Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.

Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”

Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI. 

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The Lowdown

Kesari

Rating: 2.5/5 stars
Produced by: Dharma Productions, Azure Entertainment
Directed by: Anubhav Singh
Cast: Akshay Kumar, Parineeti Chopra

 

The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.