Washington :China said it doesn’t fear a trade war with the US and announced plans for reciprocal tariffs on $3 billion of imports from the US in the first response to President Donald Trump’s ordering of levies on Chinese metal exports.
China will also pursue legal action against the US at the World Trade Organization in response to the US planned tariffs on steel and aluminium imports, the statement said, and called for dialogue to resolve the dispute.
Earlier, Trump instructed US Trade Representative Robert Lighthizer to impose broader tariffs on at least $50 billion in Chinese imports, as recompense for alleged intellectual property abuses. Officials then went on to roll out temporary exemptions for the metals levies for Argentina, Australia, Brazil, Canada, Mexico, the European Union and South Korea.
The announcement of broader tariffs directed specifically at China sent equities tumbling. US stock futures traded lower after the S&P 500 Index closed down 2.5%, the biggest drop in six weeks. Stock indexes from Tokyo to Hong Kong tumbled more than 3% and the yen jumped past 105 per dollar for the first time since November 2016.
“The US declared a trade war, but China is acting quite restrained. The list that China has announced appears to be a retaliation, but still it is very measured,” said Li Yong, senior fellow of China Association of International Trade.
The US declared a trade war, but China is acting quite restrained. The list that China has announced appears to be a retaliation, but still it is very measured,” said Li Yong, senior fellow of China Association of International Trade. “The move sends a message that China is able to fight back, but we still want a trade peace instead of a trade war.”
The US will impose 25% duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by United States Trade Representative (USTR). The proposed product list will include items in aerospace, information and communication technology and machinery. The USTR will announce the proposed list in the next “several days,” according to the fact sheet.
“This has been long in the making,” Trump said, adding that the tariffs could affect as much as $60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said.
As he signed the tariffs order, Trump told reporters, “This is the first of many.”
“This is an opening gambit by China, signaling that the imposition of tariffs by the US will elicit what Beijing views as a proportionate retaliatory response,”said Eswar Prasad, a former chief of the International Monetary Fund’s China division and now a professor at Cornell University in Ithaca, New York. “China has the ability to inflict significant economic harm on US exporters of certain goods and can also use other overt as well as covert actions such as supply chain disruptions to hurt US manufacturers.”
Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. Meanwhile, business groups representing companies ranging from Walmart Inc. to Amazon.com Inc. are warning US tariffs could raise prices for consumers and sideswipe stock prices.
Even central banks, which normally stay above the fray of trade spats, are weighing in. “A number of participants reported about their conversations with business leaders around the country and reported that trade policy has become a concern,” Federal Reserve Chairman Jerome Powell said this week, while cautioning that trade issues haven’t changed the Fed’s outlook. The Bank of England warned Thursday that increased protectionism could have a “significant negative impact” on global growth.
Trump also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the US views as strategic, said senior White House economic adviser Everett Eissenstat.
The Trump administration is framing the move as a major turning point in US-China relations. It followed a seven-month investigation by USTR into allegations China violates US intellectual property, under the seldom-used section 301 of the 1974 Trade Act. The US concluded China engages in a range of violations, including policies that force American companies to transfer technology and the accessing of trade secrets through hacking, said Eissenstat.
The initial Chinese response may not be as severe as many fear but the conflict could easily escalate, said Robert Manning, an expert on US-China relations at the Atlantic Council in Washington.
“What you’re probably going to get from the Chinese is a low-key response to try to negotiate their way out of it,” Manning said. “I just worry if it gets really ugly, they may go for the nuclear option.”
He says nuclear option would be to sell a “couple hundred billion” in US Treasuries, which would tank markets and raise US interest rates.
Trump tried to make it clear he wasn’t trying to provoke China or its leader, President Xi Jinping.
“I view them as a friend. I have tremendous respect for President Xi,” Trump said. But, the US’s trade deficit with China is “the largest deficit in the history of our world,” he said.
Trump’s actions represent a “seismic shift from an era dating back to Nixon and Kissinger, where we had as a government viewed China in terms of economic engagement,” White House trade adviser Peter Navarro told reporters on Thursday. “That process has failed.”
“The problem is that with the Chinese in this case, talk is not cheap. It has been very expensive for America,” said Navarro. “Finally the president decided that we needed to move forward.”
Commerce Secretary Wilbur Ross predicted a strong stand on trade would bring concessions without escalating into a broader conflict. ‘We will end up negotiating these things rather than fighting over them, in my view,” Ross said.
Before the tariffs become final, there will be a 30-day comment period, the White House said. Trump also directed his officials to pursue a World Trade Organization complaint against China for discriminatory licensing practices.
RBI asks banks to grout ATMs to wall, floor for security by September-end
Mumbai: The Reserve Bank asked banks to ensure their ATMs are grouted to a wall, pillar, or floor by September-end, except those installed in high secured premises such as airports, to enhance security of the cash vending machines.
In 2016, the RBI had st up a Committee on Currency Movement (CCM) to review the entire gamut of security of treasure in transit.
Based on the recommendations of the panel, the central bank has now issued instructions aimed at mitigating risks in ATM operations and enhancing security.
As part of the security measures, all “ATMs shall be operated for cash replenishment only with digital One Time Combination (OTC) locks”.
Also, “All ATMs shall be grouted to a structure (wall, pillar, floor, etc.) by September 30, 2019, except for ATMs installed in highly secured premises such as airports, etc. which have adequate CCTV coverage and are guarded by state/central security personnel”.
Further, banks may also consider rolling out a comprehensive e-surveillance mechanism at the ATMs to ensure timely alerts and quick response, it said.
The new measures to be adopted by banks are in addition to the existing instructions, practices and guidance issued by the RBI and law enforcement agencies.
The RBI also warned the banks that non-adherence of timelines or non-observance of the instructions would attract regulatory action including levy of penalty.
SBI refuses to disclose communication from RBI, govt on electoral bonds
New Delhi: The State Bank of India has refused to disclose any communication it received from the government or the Reserve Bank of India on electoral bonds, terming it “personal information” and held in “fiduciary capacity”.
Responding to an RTI filed by Pune-based activist Vihar Durve who had demanded copies of all letters, correspondence, directions, notifications or e-mails received from the RBI or any government department between 2017 and 2019, the SBI said it cannot be provided by it.
The bank cited two exemption clauses under the RTI Act to deny information — Section 8(1)(e) which pertains to information held in fiduciary capacity and Section 8(1)(J) which pertains to personal information of a person which has no link to any public activity.
“Information sought by the applicant cannot be disclosed as it is in fiduciary capacity, disclosure of which is exempted under Section 8(1)(e) and 8(1)(j) of the RTI Act, 2005,” the Central Public Information Officer of the bank said in his reply.
The bank also refused to give any details of action taken by it on such communications from the RBI and the government.
The electoral bonds, for giving donations to political parties, are being sold through SBI only. The sale opens in SBI branches when the Finance Ministry issues a notification of their sale for a given period.
The scheme of electoral bonds notified by the Centre in 2018 has been challenged in the Supreme Court.
Only the political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last general election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the bonds.
The bonds may be purchased by a person who is a citizen of India “or incorporated or established in India,” the government had said in a statement last year.
The bonds remain valid for 15 days and can be encashed by an eligible political party only through an account with the authorised bank within that period only.
A voluntary group working in the field of electoral reforms, Association for Democratic Reforms (ADR), has demanded a stay on the sale while the CPI(M) has challenged it before the Supreme Court in separate petitions.
ADR recently filed an application in the Supreme Court seeking a stay on the Electoral Bond Scheme, 2018 which was notified by the Centre in January last year.
Walmart’s Flipkart, Indian startup GOQii settle dispute over sharp discounting
New Delhi: Walmart unit Flipkart has settled a legal dispute with an Indian startup that alleged it suffered losses because its products were sharply discounted on the global retailer’s website.
GOQii, a seller of smartwatch-type health devices, sued Flipkart last month in a Mumbai court, alleging its devices were discounted by around 70 per cent to the retail price, much more than the two sides had agreed. The court had, as an interim measure, ordered device sales to be halted on Flipkart.
In a joint statement , the companies said the dispute had been resolved and GOQii health devices would again be available on Flipkart. They didn’t say how the settlement was reached.
Vishal Gondal, CEO of GOQii, told Reuters the company would withdraw the case against Flipkart. The e-commerce retailer’s “team worked on a resolution benefitting the brand and the customers”, Gondal said in the statement.
The legal spat was seen as a test case of the giant retailer’s operating strategy in the country.
Small traders and a right-wing group close to Prime Minister Narendra Modi’s ruling party have raised concerns about large e-commerce companies, saying they burn billions of dollars deeply discounting some products to lure customers onto their sites, in the expectation that they will also buy other goods.
GOQii said it signed an agreement last year with a Flipkart unit to sell two of its devices at a price not below 1,999 rupees (USD 28.63) and 1,499 rupees. It later found the devices were being sold for 999 rupees and 699 rupees, calling it “unauthorized” discounting.
In response, Flipkart said it reserved “the right to institute actions for defamation, both civil and criminal”, arguing it wasn’t responsible for any discounts which are determined by third-party firms which sell via its website.
The two companies struck a friendlier tone in their joint-statement on Friday as they brought the legal battle to an end.
“We have ensured constant engagement with GOQii to resolve any differences,” Flipkart said in the statement.
With a 19 per cent market share, GOQii was the second-biggest player in India’s so-called wearables market last year, data from industry tracker IDC showed. The market is dominated by China’s Xiaomi, with Samsung a small player.
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