Be careful - Contradictory economic and financial news reports arising from US-China global trade war crisis

Unloading imported soybeans at a port in Nantong, Jiangsu Province, China, on Wednesday. China has said it will raise tariffs on American soybeans, among other products.CreditAgence France-Presse — Getty Images
If There’s a U.S.-China Trade War, China May Have Some ‘Unconventional Weapons’
There are ways to make life harder for American companies in China that need not be formal, or widely publicized.
By Neil Irwin
April 5, 2018
So far in the trade skirmish between the United States and China, there has been a reassuring sense of restrained, tit-for-tat reciprocity. But if this spirals into a bigger conflict between the world’s two biggest economies, it’s worth keeping something in mind: In a trade war, the usual rules of commerce may not apply. That is doubly true in a potential trade war with China, for several reasons. Because the country exports far more in goods to the United States than it imports, China simply doesn’t have as much room to keep up with escalating American tariffs, especially given the Chinese government’s desire to cushion its citizens from higher prices for food staples … for more, go to 

Be careful - Contradictory economic and financial news reports arising from US-China global trade war crisis

KUALA LUMPUR (April 2018): Needless to say, the rest of the world is concern about the possible growing impact of the US-China trade war on the world economy.

It is a trade war between the world’s two biggest economies and there is no way it will not impact the economies of the rest of the world as tensions deepen.

Already, the pro-US S&P Global Ratings is already reporting that China’s tariff plan on US imports is greater. It claims the US$50 billion of goods affected represent 38% of US exports to China, but only 10% of China's exports to the US.

If that is accurate, it only shows the irony that China is more prepared than the US for the global trade war, started by the President Donald Trump-led US.

Bloomberg has also reported from Singapore that policy makers across Southeast Asia are bracing for a fallout from a US-China trade war, turning their focus on bolstering their domestic markets to cushion the blow.

As I Love Malaysia-China Silk Road is based in Malaysia, we wish to advice Malaysians, especially equity players and investors, to exercise “extreme caution” in making decisions and in treating economic and financial news reports.

Malaysia's looming 14th General Election (GE14) complicates the real business and economic situations because the ruling government needs to keep the economy looking good to beef their chances of securing an electoral win.

For the convenience of our readers, we have reproduced four latest news reports for you to digest and form your own conclusion, especially the local news report titled “KLCI rebounds as US-China trade wars ease”:

"Impact of China's tariff plan on US imports greater, says S&P

Thursday, 5 Apr 2018
5:02 PM MYT

KUALA LUMPUR: The impact of China's tariff proposal on its US imports greater than US tariffs on Chinese imports, says S&P Global Ratings.

It said on Thursday the US$50bil of goods affected represent 38% of US exports to China, but only 10% of China's exports to the US.

S&P Global Ratings credit analyst Terry Chan said the risk of a trade war is rising with the recent tit-for-tat retaliatory actions.

“A breakdown in trade negotiations and policy missteps could lead to a full-blown trade war that would damage global business and consumer confidence, investment prospects, and growth," he said.

Chan pointed out that should a flare-up in the trade dispute occur, S&P would need to re-analyse the impact on industry sectors not just for both countries, but also other trade-dependent nations.

"Our base case doesn't factor in a Sino-US trade war. We therefore consider the proposed tariffs are unlikely to materially threaten the economies or overall corporate credit health of either countries," he said.

KLCI rebounds as US-China trade wars ease

Thursday, 5 Apr 2018
5:31 PM MYT
by joseph chin

KUALA LUMPUR: Blue chips rebounded on Thursday to recoup two-thirds of the previous day's losses as the US-China trade wars eased, with Genting Malaysia and banks shoring up the FBM KLCI.

At 5pm, the KLCI was up 20.19 points or 1.11% to 1,836.13 after falling over 30 points on Wednesday. Turnover was 2.22 billion shares valued at RM2.02bil. Advancers beat decliners nearly two to one or 660 gainers to 344 losers and 381 counters unchanged.

World stocks edged higher on Thursday as investors used signs of an easing of the trade tensions to dip back into riskier assets, Reuters reported.

The MSCI world equity index, which tracks shares in 47 countries, climbed 0.4%, while shares in Europe jumped 1.6% to a two-week high.

The ringgit strengthened against several key currencies. It edged up 0.1% against the US dollar to 3.8655, climbed 0.28% to the pound sterling to 5.4289 and advanced 0.25% to the euro to 4.7419 and eked out a gain of 0.13% against the Singapore dollar to 2.9411.

At Bursa, Genting Malaysia rose 30 sen to RM4.89 and added 3.2 points to the KLCI and Genting Bhd was 16 sen higher to RM8.84. IHH gained 13 sen to RM6.03 and nudged the index up 1.9 points while Tenaga gained 12 sen to RM15.82.

Banks were amog the top gainers with Moody's Investors Service concurring with Bank Negara that Malaysian banks have resilient capital and earnings buffers in severe macroeconomic and financial stress, which is a credit positive.

HLFG rose 90 sen to RM19 and it was the top gainer for the day. Hong Leong Bank rose 72 sen to RM18.72 and pushed the KLCI up 2.81 points. Maybank gained 14 sen to RM10.48, CIMB 11 sen higher at RM7.01, AmBank 20 sen to RM3.81, RHB Bank nine sen to RM5.24 while Public Bank gained four sen to RM23.94.

As for telcos, Maxis gained 14 sen to RM5.53 and pushed the KLCI up 1.97 points, Telekom gained 20 sen to RM5.13 but Axiata shed one sen to RM5.25 and Digi two sen to RM4.38.

Crude palm oil for third month delivery rose RM18 to RM2,472 per tonne as exports climbed and stockpiles fell.

Among the plantations, PPB Group fell 22 sen to RM18.78 and erased 0.47 of a point, KL Kepong gained two sen to RM25.50 and IOI Corp four sen higher at RM4.71.

Sime Plantations fell one sen to RM5.50 but Sime Darby rose five sen to RM2.60 and Sime Property three sen to RM1.41.

US light crude oil and Brent shed one sen each to US$63.36 and US$68.01.

Petronas Dagangan fell fell eight sen to RM24.60 and Petronas Chemical one sen to RM8.16 but Petronas Gas gained eight sen to RM17.98.

Hengyuan climbed 72 sen to RM6.87 and Petron 70 sen to RM7.71. LC Titan gained 45 sen to RM5.95.

As for tech and semicon stocks, burn-in tester KESM rebounded 46 sen to RM15.12, Globetronics gained 34 sen to RM3.95, VS Industry 16 sen to RM2.13 and MPI two sen to RM8.30,

Press Metal shed one sen to RM4.18 but Ann Joo added four sen to RM2.93.

Southeast Asia braces for trade war by bolstering growth

Thursday, 5 Apr 2018
4:20 PM MYT

SINGAPORE: Policy makers across Southeast Asia are bracing for a fallout from a U.S.-China trade war, turning their focus on bolstering their domestic markets to cushion the blow.

China’s proposal Wednesday for an additional 25% tariff on about US$50bil of U.S. imports ratcheted up the tension between the world’s two largest economies, rocking global markets and keeping officials on guard for ripple effects.

Indonesia Finance Minister Sri Mulyani Indrawati and Bank of Thailand Governor Veerathai Santiprabhob, who are attending a regional meeting of officials in Singapore, said on Thursday the conflict will have global repercussions, even if the direct impact on Southeast Asia’s gross domestic product may be minimal for now.

“The composition of our GDP is mostly fueled by consumption” and the government is aiming to boost investment to further diversify economic growth beyond exports, Indrawati said in an interview with Bloomberg Television’s Haslinda Amin.

She added that the deteriorating trade relations between the U.S. and China and prospects for further retaliation “is not going to serve the interests of both parties.”

U.S. President Donald Trump is attempting to upend the global trade framework, arguing that China’s trade practices are unfair, with alleged violations including intellectual property theft and export subsidies.

Indrawati, a former World Bank managing director, said those differences should be dealt with through the World Trade Organization rather than erecting tariff barriers.

Currency surge
China is the biggest trading partner for many Southeast Asian economies and an important source of investment and tourism in the region. While large domestic markets in Indonesia and the Philippines help to shelter those economies from a trade war, other economies in the region, like Singapore, Malaysia and Thailand, are more reliant on exports.

Indrawati said she’s still optimistic that Indonesia would meet its GDP growth target for this year of 5.4%, a slight pick-up from 5.1% in 2017.

Veerathai said in a separate Bloomberg Television interview that the U.S.-China trade developments are “definitely something we have to monitor very closely” and that retaliatory actions are of great concern, but that so far “the direct impacts have been quite small.”

The central bank has been trying to manage the currency’s appreciation so it doesn’t undermine the competitiveness of exports as the trade environment becomes more challenging. At the same time, it has to avoid being singled out by the U.S. as a possible currency manipulator.

“As the central bank, we have to step in to ensure that the pace of appreciation is not damaging the economy as a whole,” the governor said. “We have to be careful on the impact of currency movement, in terms of volatility and the pace of appreciation on the real sector.”

Malaysia is seeking an exemption from U.S. tariffs on steel and aluminum shipments and to gain clarity on the solar-based equipment penalties, Trade Minister Mustapa Mohamed said in Parliament on Thursday. The government has requested to meet with U.S. trade representatives April 17 to sort out a deal.

Elsewhere in Asia, authorities are also worried about the impact on their economies. Hong Kong Financial Secretary Paul Chan wrote in a blog post Wednesday that the disputes would “inevitably impede relevant trade activities” and also could negatively impact his economy.

Last year, China’s exports to the U.S. that were routed through Hong Kong represented about 7 percent of the territory’s exports, he said.

Joaquim Levy, managing director and chief financial officer at the World Bank, said he’s optimistic the trade disputes will be resolved.

“At the end, people see that there are many ways to get to a win-win situation, so we are confident it will prevail,” he said in a Bloomberg Television interview Thursday.

“There is so much scope because trade is something that usually expands your frontiers, so that is the natural way where things should gravitate.” - Bloomberg
Mustapa on measures to cushion impact from US-China trade war

Thursday, 5 Apr 2018
11:03 AM MYT
by ganeshwaran kana

atuk Seri Mustapa Mohamed says he will be providing answers on how Malaysia can cushion the impact from the US-China trade war.

KUALA LUMPUR: Minister of International Trade and Industry (MITI) Datuk Seri Mustapa Mohamed says he will be providing answers on how Malaysia can cushion the impact from the US-China trade war.

"Today is the last day of the 13th Parliament session and I'll be answering a question in Dewan Rakyat on the issues and challenges related to the impending trade war between the United States and China.

“I will also answer on Malaysia's possible measures to meet the impacts from the trade war,” he said at the 2018 Asia-Pacific Council of American Chambers of Commerce summit.

Mustapa also said the time is ripe now for the Parliament's dissolution which was likely to be dissolved within the next few days.

"MITI's day-to-day operations have been taken over by my secretary-general. The Parliament will be dissolved in the next few days, but I am not sure when.

“I will be hitting the ground for more engagements in the next few days more actively than before," he said.

Negotiations are expected to be difficult between Donald Trump and Xi Jinping in Beijing. Photograph: Paul J Richards/AFP/Getty Images
China and US jockey for tariff concessions in tit-for-tat trade standoff
Rising tensions stoke fears of full-blown trade war but both sides leave room for manoeuvre
After firing the opening shots of a trade war, China and the US have entered what is likely to be a protracted standoff as they jockey to win concessions from each other and avoid hurting their respective economies. Eleven hours after the White House announced a list of 1,333 Chinese imports to be subject to punitive tariffs of 25%, China responded in kind with a list of about 106 American products, including key US exports to China, such as soya beans, cars and aircraft. Both sides are targeting about $50bn (£36bn) in imports from each other … for more, go to