American envoys are due in Beijing for talks Monday in a tariff battle over Chinese technology ambitions that threatens to hobble global economic growth.

The two days of meetings are aimed at carrying out the Dec. 1 truce by Presidents Donald Trump and Xi Jinping that postponed additional tariff hikes, the Ministry of Commerce announced Friday. It said the American delegation will be led by a deputy U.S. trade representative, Jeffrey D. Gerrish, but gave no other details of the agenda or participants.

The American Embassy in Beijing didn’t immediately respond to a request for confirmation and additional details.

The talks are going ahead despite tension over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions on Iran.

The two governments express interest in a settlement but give no indication their stances have shifted.

They hope to have “positive and constructive discussions,” said a Chinese foreign ministry spokesman, Lu Kang.

The clash reflects American anxiety about China’s emergence as a competitor in telecoms, solar power and other technologies and complaints by Washington, Europe and other trading partners that Beijing’s tactics violate its market-opening obligations.

Trump wants Beijing to roll back initiatives including “Made in China 2025,” which calls for state-led creation of champions in robotics, artificial intelligence and other fields. American officials worry those might erode U.S. industrial leadership.

China’s leaders have offered to narrow its politically sensitive trade surplus with the United States by purchasing more soybeans, natural gas and other American exports. But they reject pressure to scrap technology initiatives they see as a path to prosperity and global influence.

Both governments face economic pressure to reach a settlement.

Chinese economic growth fell to a post-global crisis of 6.5 percent in the quarter ending in September. Auto sales tumbled 16 percent in November over a year earlier and weak real estate sales are forcing developers to cut prices.

Third-quarter U.S. growth was 3.4 percent and unemployment is at a five-decade low. But surveys show consumer confidence is weakening due to concern growth will moderate this year.

Beijing has tried in vain to recruit France, Germany, South Korea and other governments as allies against Trump. They criticize his tactics but echo U.S. complaints about Chinese industrial policy and market barriers.

The European Union filed its own challenged in the World Trade Organization in June against Chinese regulations the 28-nation trade bloc said hamper the ability of foreign companies to protect and profit from their own technology.

Washington has imposed punitive tariffs of up to 25 percent on $250 billion of Chinese goods. Beijing responded by imposing penalties on $110 billion of American goods, slowing down customs clearance for U.S. companies and suspending issuance of licenses in finance and other industries.

Trump and Xi agreed to a 90-day postponement of more tariff hikes due to take effect Jan. 1. But economists say that is too little time to resolve the sprawling disputes that bedevil U.S.-Chinese relations.

The decision to hold this week’s talks at a deputy minister level reflects the need to work out technical details before higher-level officials make “hard political decisions on major issues,” said Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.

The dispute has rattled companies and financial markets that worry it will drag on global economic growth that is showing signs of declining.

For their part, Chinese officials are unhappy with U.S. curbs on exports of “dual use” technology with possible military applications. They complain China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

Chinese exports to the United States held up through late 2018 despite Trump’s tariff hikes. But that was due partly to exporters rushing to beat new duties — a trend that is fading.

Some manufacturers that serve the United States have shifted production to other countries.

The investment bank UBS said Friday that 37 percent of 200 manufacturers surveyed said they have shifted out of China over the past 12 months. It said the threat of U.S. tariff hikes was the “dominating factor” for nearly half, while others moved due to higher costs or tighter environmental regulation.

Another 33 percent of companies said they plan to move out of China in the next six to 12 months, according to the UBS report.

Despite the December truce, “most firms expect trade war to escalate,” the report said.

 
…

American envoys are due in Beijing for talks Monday in a tariff battle over Chinese technology ambitions that threatens to hobble global economic growth.

The two days of meetings are aimed at carrying out the Dec. 1 truce by Presidents Donald Trump and Xi Jinping that postponed additional tariff hikes, the Ministry of Commerce announced Friday. It said the American delegation will be led by a deputy U.S. trade representative, Jeffrey D. Gerrish, but gave no other details of the agenda or participants.

The American Embassy in Beijing didn’t immediately respond to a request for confirmation and additional details.

The talks are going ahead despite tension over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions on Iran.

The two governments express interest in a settlement but give no indication their stances have shifted.

They hope to have “positive and constructive discussions,” said a Chinese foreign ministry spokesman, Lu Kang.

The clash reflects American anxiety about China’s emergence as a competitor in telecoms, solar power and other technologies and complaints by Washington, Europe and other trading partners that Beijing’s tactics violate its market-opening obligations.

Trump wants Beijing to roll back initiatives including “Made in China 2025,” which calls for state-led creation of champions in robotics, artificial intelligence and other fields. American officials worry those might erode U.S. industrial leadership.

China’s leaders have offered to narrow its politically sensitive trade surplus with the United States by purchasing more soybeans, natural gas and other American exports. But they reject pressure to scrap technology initiatives they see as a path to prosperity and global influence.

Both governments face economic pressure to reach a settlement.

Chinese economic growth fell to a post-global crisis of 6.5 percent in the quarter ending in September. Auto sales tumbled 16 percent in November over a year earlier and weak real estate sales are forcing developers to cut prices.

Third-quarter U.S. growth was 3.4 percent and unemployment is at a five-decade low. But surveys show consumer confidence is weakening due to concern growth will moderate this year.

Beijing has tried in vain to recruit France, Germany, South Korea and other governments as allies against Trump. They criticize his tactics but echo U.S. complaints about Chinese industrial policy and market barriers.

The European Union filed its own challenged in the World Trade Organization in June against Chinese regulations the 28-nation trade bloc said hamper the ability of foreign companies to protect and profit from their own technology.

Washington has imposed punitive tariffs of up to 25 percent on $250 billion of Chinese goods. Beijing responded by imposing penalties on $110 billion of American goods, slowing down customs clearance for U.S. companies and suspending issuance of licenses in finance and other industries.

Trump and Xi agreed to a 90-day postponement of more tariff hikes due to take effect Jan. 1. But economists say that is too little time to resolve the sprawling disputes that bedevil U.S.-Chinese relations.

The decision to hold this week’s talks at a deputy minister level reflects the need to work out technical details before higher-level officials make “hard political decisions on major issues,” said Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.

The dispute has rattled companies and financial markets that worry it will drag on global economic growth that is showing signs of declining.

For their part, Chinese officials are unhappy with U.S. curbs on exports of “dual use” technology with possible military applications. They complain China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

Chinese exports to the United States held up through late 2018 despite Trump’s tariff hikes. But that was due partly to exporters rushing to beat new duties — a trend that is fading.

Some manufacturers that serve the United States have shifted production to other countries.

The investment bank UBS said Friday that 37 percent of 200 manufacturers surveyed said they have shifted out of China over the past 12 months. It said the threat of U.S. tariff hikes was the “dominating factor” for nearly half, while others moved due to higher costs or tighter environmental regulation.

Another 33 percent of companies said they plan to move out of China in the next six to 12 months, according to the UBS report.

Despite the December truce, “most firms expect trade war to escalate,” the report said.

 
…

Asian markets Friday continued the global sell-off triggered by Apple’s warning of lower revenues and futures indicators predict a sharply lower opening for U.S. markets.

The Tokyo market dropped 3 percent in morning trading, and markets in Shanghai, Sydney, Seoul and Taipei were also down.

Stock markets across the globe dropped Thursday after tech giant Apple said sales of its devices had fallen sharply in China last month, perhaps signaling a broader slowing in the world economy.

Apple has blamed U.S. President Donald Trump’s trade dispute with China for its shrinking outlook, but the U.S. leader tweeted his defense Thursday, claiming, “The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly. In the meantime we are doing well in various Trade Negotiations currently going on. At some point this had to be done!”

US-China trade talks

On Friday China’s government said a U.S. trade delegation will visit Beijing next week for two days of talks on carrying out an agreement reached by Trump and Chinese President Xi Jinping to postpone new tariff hikes.

On Dec. 1 the two leaders agreed to complete talks about technology, intellectual property and cyber theft issues within 90 days, and hold off on new tariffs in the meantime. U.S. officials have said that if the talks fail to produce a satisfactory agreement Washington will increase tariffs on $200 billion of Chinese goods from 10 percent to 25 percent.

Apple chief executive Tim Cook blamed the company’s sales shortfall on the trade battle President Donald Trump is waging against China.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote.

Not just Apple

Kevin Hassett, chairman of the White House Council of Economic Advisers, said the contentious U.S.-China relations will force other U.S. companies to cut their sales estimates in China.

“It’s not going to be just Apple,” Hassett told CNN. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”

He said slowing consumer demand in China gives Trump an edge in ongoing trade negotiations.

“That puts a lot of pressure on China to make a deal,” he said. “If we have a successful negotiation with China then Apple’s sales and everybody else’s sales will recover.”

The U.S. economy remains strong, with the country’s 3.7 percent jobless rate at a nearly five-decade low. But economists say the U.S. economy could be slowing and uncertainty in global economic fortunes has led to volatile daily swings in stock indexes in recent weeks.

In 2018, U.S. stock indexes suffered their worst year in a decade, with most of the losses recorded in December. The Dow was off 5.6 percent for the year, with the broader Standard & Poor’s index of 500 stocks down 6.2 percent.
…

Herb Kelleher, who changed the airline industry by helping create and lead Southwest Airlines, a low-fare carrier that made air travel more accessible to the masses, has died. He was 87. 

Southwest confirmed that Kelleher died Thursday. 

Kelleher was a lawyer in San Antonio when a client came to him in the late 1960s with the idea for a low-fare airline that would fly between big cities in Texas. Today, Southwest carries more passengers within the United States than any other airline. 

At a time when many other airlines were run by colorless finance wizards, Kelleher boasted about drinking whiskey and showed a gift for wacky marketing ploys.  
…

Three former Credit Suisse Group AG bankers were arrested in London on Thursday on U.S. charges that they took part in a $2 billion fraud scheme involving state-owned companies in Mozambique, a spokesman for U.S. prosecutors said.

Andrew Pearse, Surjan Singh and Detelina Subeva were charged in an indictment in Brooklyn, New York federal court with conspiring to violate U.S. anti-bribery law and to commit money laundering and securities fraud, according to spokesman John Marzulli. They have been released on bail.

The arrests came five days after former Mozambique finance minister Manuel Chang was arrested in South Africa as part of the same criminal case, which was brought by federal prosecutors in Brooklyn.

The prosecutors will seek to have all of the defendants extradited to the United States, according to Marzulli. Lawyers for the defendants could not immediately be reached for comment after business hours in New York and London.

“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank,” Credit Suisse said in a statement. It added that the bank will continue to cooperate with authorities.

Chang oversaw Mozambique’s finances when it failed to disclose government guarantees for $2 billion in international borrowing by state-owned firms. The disclosure of those loans in 2016 plunged the southern African country into a suffocating debt crisis it is still struggling to climb out of two years later.
…

Stock markets around the globe dropped Thursday after tech giant Apple said that sales of its devices had fallen sharply in China last month, perhaps signaling a broader slowing in the world economy.

The widely watched Dow Jones industrial average of 30 prominent U.S. stocks plunged 2.8 percent — more than 660 points — by the close of trading, after stock indexes in Europe and Asia closed with smaller losses. Apple’s stock was down nearly 9 percent.

The stock declines came after Apple announced late Wednesday that its holiday sales were lower than it had expected, especially in China, the world’s second-biggest economy after the United States. In addition, a key gauge of U.S. manufacturing unexpectedly hit a two-year low in December, indicating weak demand and exports.

Apple Chief Executive Tim Cook blamed the company’s sales shortfall on the trade battle President Donald Trump is waging against China. 

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in greater China,” Cook wrote. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in greater China across iPhone, Mac and iPad.” 

​More to come

Kevin Hassett, chairman of the White House Council of Economic Advisers, said the contentious U.S.-China relations would force other U.S. companies to cut their sales estimates in China. 

“It’s not going to be just Apple,” Hassett told CNN. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”

He said slowing consumer demand in China would give Trump an edge in trade negotiations. 

“That puts a lot of pressure on China to make a deal,” he said. “If we have a successful negotiation with China, then Apple’s sales and everybody else’s sales will recover.”

The U.S. economy remains strong, with the country’s 3.7 percent jobless rate at a nearly five-decade low. But economists say the U.S. economy could be slowing, and uncertainty in global economic fortunes has led to volatile daily swings in stock indexes in recent weeks.

In 2018, U.S. stock indexes suffered their worst year in a decade, with most of the losses recorded in December. The Dow was off 5.6 percent for the year, with the broader Standard & Poor’s index of 500 stocks down 6.2 percent.
…

A federal judge says a New York City law forcing Airbnb and HomeAway home-sharing platforms to reveal detailed information about its business seems unconstitutional.

Judge Paul Engelmayer on Thursday blocked the law from taking effect on Feb. 2, finding there’s a greater than 50 percent chance the companies would prevail on claims that the law violates the Fourth Amendment right to be free from unreasonable searches and seizures.

The ruling comes at an early stage of the litigation. Lawyers for the city and the companies will gather additional evidence before Engelmayer makes a final ruling.

The city did not immediately comment.

The San Francisco-based Airbnb in a statement called the ruling a “huge win.”

The law was passed last summer.

 
…

Tesla made about 9,300 more vehicles than it delivered last year, raising concerns among industry analysts that inventory is growing as demand for the company’s electric cars may be starting to wane.

If demand falls, they say, the company will enter a new phase of its business. Like other automakers, Tesla will have to either cut production or reduce prices to raise sales. A drop in demand could also curtail the company’s earnings and jeopardize CEO Elon Musk’s promise to post sustained quarterly profits.

On Wednesday, Tesla did cut prices, knocking $2,000 off each of its three models. The company said the cuts will help customers deal with the loss of a $7,500 federal tax credit, which was reduced to $3,750 this month for Tesla buyers and will gradually go to zero by the end of 2019.

“They have for a long time had more demand than supply,” Gartner analyst Michael Ramsey said. “It’s becoming apparent that that dynamic is changing.”

Tesla reported that it produced 254,530 cars and SUVs last year and delivered 245,240.

The company’s deliveries for the full year matched Wall Street estimates, but its figures for the fourth quarter didn’t reach expectations. Tesla said it delivered 90,700 vehicles from October through December. Analysts polled by data provider FactSet expected 92,000.

Jeff Schuster, a senior vice president at the forecasting firm LMC Automotive, said demand for Tesla’s lower-priced Model 3 has been artificially high for the past six months as the company overcame production problems at its Fremont, California, factory.

“You’ve had these inflated months because of delayed deliveries,” Schuster said. “We’re probably getting to that point where we’re getting to equilibrium and consumers aren’t necessarily waiting for vehicles.”

Last year, Tesla reported that about 420,000 buyers had put down $1,000 deposits to join the Model 3 waiting list.

LMC predicts that Tesla U.S. sales will rise in 2019 because it’s the first full year on the market for the Model 3. It anticipates sales to then fall by about 10,000 in 2020.

Losing the tax credit will hit those who have been holding out for the $35,000 version of the Model 3, Schuster said. At present, Tesla is selling only versions that cost at least $44,000. Under federal law, buyers get the full tax credit until a manufacturer reaches 200,000 in sales since the start of 2010. Tesla hit 200,000 in July but the full credit continued for vehicles delivered by Dec. 31. It was cut in half on Jan. 1 and will go away by the end of the year.

“You’ve had your early adopters, those early followers have already come in” to buy, Schuster said. “Now you’re trying to appeal to the mainstream market. I think that will have an impact on overall demand.”

At the same time, inventory appears to be rising. The company parked hundreds of cars at lots and Tesla stores all over the country at the end of last year, which could indicate excess stock. Tesla wouldn’t give inventory numbers but said it has lower stocks than its two biggest competitors, BMW and Mercedes.

The Associated Press found one lot on the north side of Chicago where Tesla was storing dozens of vehicles in late December, and Mark Spiegel, a hedge fund manager who bets against Tesla stock, said other lots were full across the country.

Tesla said it sometimes stores vehicles on lots as they’re being shipped to company dealerships across the nation. The lot in Chicago has fewer cars on it now, the company said. “Our inventory levels remain the smallest in the automotive industry,” the company said Wednesday.

Tesla also says Model 3 sales should grow worldwide as it expands distribution and begins to offer leases. Deliveries in Europe and China will start in February, and a right-hand-drive version is coming later in the year, the company said.

In addition, inventory dropped in the fourth quarter as Tesla “delivered a few thousand vehicles more than produced.”

Tesla said it had about 3,000 vehicles in transit to customers at year’s end. But even with that number, Schuster said production still exceeded deliveries, which doesn’t fit Tesla’s business model of building cars when they are ordered by customers. Still, even at 9,300, Tesla’s inventory is smaller than other automakers that have to stock dealerships, Schuster said.
…