Global stock markets were whipsawed this week by conflicting signals from the White House about President Trumpâs offer to host a dinner with Chinese president Xi Jinping after this monthâs Group of 20 summit in Argentina. Trump inspired a burst of euphoria among investors Thursday morning by tweeting that he had just concluded a âlong and very good conversationâ with Xi and that discussions with China were âmoving along nicely.â Later in the day, his economic adviser Larry Kudlow stoked optimism by telling reporters there may be a âthawâ between the US and China on trade.
There was a moment of uncertainty Thursday afternoon, when US attorney Jeff Sessions unveiled the latest of a series of charges of Chinese theft of US trade secrets. But at a rally in Missouri that night, Trump remained upbeat. The Chinese âwant to make a deal,â he declared, adding: âLots of great things are going to happen over the next short period of time. Itâs going to work out good.â
Word of the G20 meeting, combined with Trumpâs upbeat comments and a Bloomberg report late Thursday suggesting White House officials already are drafting terms of a US-China trade deal, spurred a sharp surge in Asian stock markets Friday (Thursday night US time), which spilled over into a 200 point gain in the Dow Jones Industrial average Friday morning. Trump took to the White House lawn and seemed to bless the rally. âWeâve had very good discussions with China,â he told reporters. âWe are much closer to doing something.â
And then, on Friday afternoon, the White House spin cycle lurched into reverse. Trumpâs national economic adviser Larry Kudlow appeared on CNBC and pooh-poohed talk of a trade breakthrough. âThereâs no massive movement to deal with China,â he said. The administration is doing ânormal, routine preparationâ for Trumpâs meeting with Xi. The Dow Jones average surrendered the morningâs gains and ended the day down more than 100 points.
Whatâs really going on? Only Trump knows. Cynics say Trump is only trying to talk up the stock market ahead of this weekâs midterm elections. True or not, the outcome of those elections will alter the power dynamics when Trump and Xi meet. If, as many analysts predict, the election produces a âblue waveâ that overturns the Republicansâ House majority, will Trump decide its time for a China truce? Or will he just double down?
More China news below.
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Economy and Trade
The olâ one-â¦ On Tuesday the U.S. slapped sanctions on Fujian Jinhua, a Chinese chip maker, alleging that the company posed a threat to U.S. security. The sanctions require U.S. firms to request permission before exporting components to the company, with the assumption permission will be denied. The prohibition could be a death sentence for Jinhua. Beijing rebuked Washingtonâs âsecurity concernsâ, accusing the U.S. of fabricating an excuse to tackle Chinaâs nascent semiconductor industry â" a sector vital to Xi Jinpingâs vision of Chinese tech dominance. Reuters
â¦two. On Thursday, the Justice Department charged Fujian Jinhua and its Taiwanese business partner with theft of trade secrets, following accusations made by Micron Technologies. Announcing the indictment, Attorney General Jeff Sessions accused Chinese actors of repeated economic espionage and declared, âWeâre not going to take it anymore.â Fortune
Split BRICS. Jair Bolsonaro, Brazilâs newly-elected populist president, has been vocal in his opposition to China â" earning him the nickname âTropical Trumpâ. During his campaign Bolsonaro quipped, âChina isnât buying in Brazil, China is buying Brazil,â and promised stronger relations with the U.S. Chinese investment in Brazil hit $25 billion in 2017, a seven-year high, and China remains Brazilâs largest trading partner. Over on South Americaâs west coast, Chile is strengthening ties with China, this week pledging to join the Belt and Road Initiative. InkstoneAdvertisement
Innovation and Tech
Tesla rival in retreat. Cash-strapped Faraday Future, the U.S.-based electric car company founded by Chinese entrepreneur Jia Yueting, has furloughed the majority of its staff, retaining fewer than 100 members on minimum wage. A number of top executives have also resigned, including the last remaining founding members, Dag Reckhorn and Nick Sampson. The turmoil is the result of a $2 billion financing deal turned sour, inked with property developer China Evergrande. Jia Yueting was blacklisted by the Chinese government for debt defaults in 2017, and last month had his shares in self-founded entertainment platform LeShi frozen. The Verge
Follow that car! As California granted Waymo permission to test its first fully-autonomous cars, Guangzhou began piloting Chinaâs first autonomous taxi service, Baiyun Taxi, servicing the roadways of Guangzhou University Town (a district home to a cluster of university campuses). Meanwhile Volvo tapped Baiduâs Apollo platform to develop AVs, a day after Ford partnered with Baidu to begin testing AVs in Beijing. Reuters
Abuse on Appleâs watch. Apple is investigating claims from a labor-rights group that one of its suppliers in Chongqing is using illegal student labor to manufacture Apple Watches. The group claims it found students between the ages of 16 to 19 were being forced to work at the factory through compulsory internships, a practice which violates both Chinese labor laws and Appleâs own standards. CNN
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Politics and Policy
âThe biggest story in Chinese politicsâ. Thereâs no word yet on when a meeting of the Communist Partyâs Central Committee is going to take place. The meeting should convene this month. Analysts say its delay reveals discord in Party ranks, with members lacking consensus on how China should face growing headwinds. In September, Deng Xiaopingâs son delivered a speech urging China to âkeep a sober mindâ and âknow its placeâ, advocating a return to his fatherâs âhide and bideâ approach. That contrasts Xi Jinpingâs vocal promotion of China as a world leader â" a stance that has been walked b ack in light of the trade war. South China Morning Post
Spy games. Tuesday, the Justice Department unsealed an indictment against ten Chinese spies it accused of conspiring to steal aerospace secrets from American and European companies. The indictment was made in 2017. The U.S. has ramped up its pursuit of Chinese spies this year, making an arrest in January, another in September and extraditing a suspect from Belgium last month. The Washington Post
The greater firewall. China is âonce again the worst abuser of internet freedomâ according to a report from watchdog Freedom House. The report also alleges that China is exporting its model of internet censorship. Freedom House claims China has hosted instructional seminars on censorship for foreign media officials and highlights how Chinese companies have exported sophisticated surveillance tech to countries with poor human rights records. TIME
Will it work? China passed new legislation permitting the trade of tiger bones and rhino horns for use in Chinese medicine, weakening previous regulations that outright banned the trade. The new rules permit the use of rhino and tiger samples harvested from farmed animals. Chinese media argue that the new exceptions will help tackle black market trading but wildlife conservationists fear it will encourage poaching. AFPGoogle News Argentina | Netizen 24 Argentina