US and China are fighting a trade war and Australia is reaping the benefits

International News

Luckily for Australia, the U.S.-China trade war happened.
Australia faced a personal-credit crunch, housing slump and weak business confidence, threatening to derail the longest-running growth streak in the developed world. Then it got a trade boost as U.S.-China relations soured.
Australia ships around a third of its exports to China, mostly commodities such as iron ore and coal that are used by heavy industry and in the building of apartments. Those exports are in demand as Beijing accelerates construction spending to head off damage caused by Washington raising tariffs.
Trade has been so buoyant that Australia logged its first current-account surplus—a measure of trade and financial flows with other countries—since 1975 in the second quarter of this year. That has provided some much-needed juice to Australia’s economy, on a 28-year run without a recession, as other headwinds to growth intensify. Australia’s gross domestic product expanded at its slowest pace since the financial crisis in the second quarter.
“It seems like a contradiction,” said AMP Capital chief economist Shane Oliver. “We are hearing all this talk about trade wars, which should obviously affect trade, and yet we have a record trade surplus that’s been far greater than anyone expected.”
Australia’s trade experience is unusual for a U.S. ally, some of whose economies have become collateral damage in the trade dispute. Germany’s exports in June fell 8% on a year earlier, and its current-account surplus has declined.

 Global trade volumes grew 4.4% in the first quarter of 2018, when the first U.S. tariffs were imposed, from the same period a year before, according to the International Monetary Fund...Read More

India only Asian economy that's growing its export share amid trade war

International News

The only major Asian economy that’s grown its export share since the start of the tariff wars in 2018 is the one with the fewest trade links to China.
India’s share of world exports rose to 1.71 per cent in the first quarter of 2019 from 1.58 per cent in the fourth quarter of 2017, data compiled by Bloomberg show. The share of every other economy among Asia’s 10 biggest exporting nations fell in the same period.
Part of the reason for India’s outperformance is that it’s not as integrated into global manufacturing supply chains as peers, which means exporters are cushioned from rising trade tensions in the region. It’s a sentiment that was flagged by central bank Governor Shaktikanta Das in a recent interview.
“India is not part of the global value chain,” he said. “So, US-China trade tension does not impact India as much as several other economies.”
China is the biggest buyer of goods from South Korea and Japan, whose share of world exports have fallen the most in Asia. For India, China is the third-largest market, after the US and the UAE.
“Our biggest advantage is that our product basket and market basket are both quite diversified,” said Rakesh Mohan Joshi, a professor at the Indian Institute of Foreign Trade in Delhi.

 Trade tensions between the US and China have given India an opportunity to ramp up exports to both countries, according to Ajay Sahai, director general and chief executive officer of the Federation of Indian Export Organisations. India’s exports to the US grew at the fastest pace in six years in the year ended March 2018, while exports to China surged 31 per cent, the second highest annual pace of growth in more than a decade, data from India’s Ministry of Commerce show....Read More

How will Trump's trade war end? The US-UK war of 1812 may have the answer

International News
President Donald Trump’s escalating trade war against China has drawn plenty of historical parallels.
The Chinese like to invoke the 19th-century Opium Wars and the national humiliation that followed.
In the U.S. the comparison is increasingly to the Cold War against the Soviet Union, or the 1980s trade wars against Japan.

Ask Douglas Irwin, author of “Clashing Over Commerce: A History of U.S. Trade Policy,” however, and he argues the most accurate comparison from an American perspective is the War of 1812.
That conflict was born out of a trade war (a British embargo of France) and fought at least partly as a trade war (a British blockade of America). It also yielded another trade war.

Once the war was won, it prompted calls for a decoupling from a British economy with which America’s was deeply integrated, Irwin said. And like the current calls related to China, that was based on a bigger existential question for the U.S.

“We wanted to reduce our dependence on Britain, which was viewed as an enemy power,’’ said Irwin, a professor at Dartmouth.

Higher Stakes

In response, Washington began imposing higher tariffs on British goods to protect what it declared to be strategic U.S. industries.


 That action grew into manufacturers’ calls for protection from cheap British imports that would become a feature of political debate through the 19th century...Read More

China purchases could undercut Donald Trump's larger trade goal

International News

At the heart of President Trump’s negotiations with China is a troubling contradiction: The United States wants to use the trade talks to encourage the country to adopt a more market-oriented economy. But a key element of a prospective deal may end up reinforcing the economic power of the Chinese state.

Negotiators are still working out deal terms, but any agreement seems certain to involve China’s promise to purchase hundreds of billions of dollars of American goods. For Mr. Trump, this is an essential element that will help reduce the United States’ record trade deficit with China and bolster farmers and other constituencies hurt by his trade war.

But those purchases will be ordered by the Chinese state, and most will be carried out by state-controlled Chinese businesses, further cementing Beijing’s role in managing its economy and potentially making United States industries even more beholden to the Chinese.

“It seems like those types of really simplistic purchasing commitment type of arrangements would actually reinforce state ownership rather than discourage it,” said Rufus Yerxa, the head of the National Foreign Trade Council, which represents the United States’ largest exporters.

After months of talks, the two sides are inching closer to an agreement. Robert Lighthizer, Mr. Trump’s top trade negotiator, and Steven Mnuchin, the Treasury secretary, discussed the remaining sticking points with their Chinese counterparts on Thursday evening and Friday in Beijing. Mr. Mnuchin, in a tweet on Friday, said the talks had been “constructive.”


 Both sides are trying to iron out an agreement by this week, to coincide with a visit to Washington by Liu He, the Chinese special envoy charged with negotiating the deal...Read More

Mark Zuckerberg's call to regulate Facebook, explained

International News

Facebook has faced months of scrutiny for a litany of ills, from spreading misinformation to not properly protecting its users’ data to allowing foreign meddling in elections.
Many at the Silicon Valley company now expect lawmakers and regulators to act to contain it — so the social network is trying to set its own terms for what any regulations should look like.
That helps explain why Mark Zuckerberg, Facebook’s chief executive, wrote an opinion piece for The Washington Post on Saturday laying out a case for how he believes his company should be treated.

In his post, Mr. Zuckerberg discussed four policy areas — harmful content, election integrity, privacy and data portability — which he said the government should focus attention on.
Here’s an annotated analysis of Mr. Zuckerberg’s post and what he is seeking to do with each area.

Harmful content

First, harmful content. Facebook gives everyone a way to use their voice, and that creates real benefits — from sharing experiences to growing movements. As part of this, we have a responsibility to keep people safe on our services. That means deciding what counts as terrorist propaganda, hate speech and more. We continually review our policies with experts, but at our scale we'll always make mistakes and decisions that people disagree with.


 So-called harmful content across Facebook is an enormous category, spanning abuse and bullying to the recent live-streamed shootings at two mosques in New Zealand...Read More