For U.S. and China, it’s not trade war anymore — it’s something worse… Beijing Targets FEDEX… Defense Minister Warns of ‘Fight to the End’

For U.S. and China, it’s not trade war anymore — it’s something worse… 

What started out two years ago as an effort by President Trump to wring better terms from China on the nuts and bolts of foreign trade now threatens to become a far wider and more ominous confrontation.

The conflict continues to be framed as a “trade war” between the world’s two biggest economies — as Washington and Beijing pursue an escalating series of tariff hikes and other retaliatory measures.

Even as Trump moved Thursday to open a new, potentially damaging trade war with Mexico,however, the conflict with China has widened beyond the original trade-based issues.

Beneath the surface, a new tone has begun to emerge since trade talks broke down in early May and Trump ratcheted up tariffs on imported goods from China, an action met with retaliatory duties from Beijing. Officials on both sides of the Pacific have begun to portray the U.S.-China relationship in nationalistic and emotion-charged terms that suggest a much deeper conflict.

Recently, for example, a private group of American economists and trade experts with long-standing experience in China traveled to Beijing, expecting their usual technical give-and-take with Chinese government officials.

Instead, a member of the Chinese Politburo harangued them for almost an hour, describing the U.S.-China relationship as a “clash of civilizations” and boasting that China’s government-controlled system was far superior to the “Mediterranean culture” of the West, with its internal divisions and aggressive foreign policy.

Beijing Targets FEDEX… 

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China targeted FedEx Corp. in its escalating trade war with the U.S., giving a hint of the kind of foreign companies it may blacklist as “unreliable.”

As details of China’s criteria trickled out, the investigation into FedEx’s “wrongful delivery of packages” was framed by the state news agency as a warning by Beijing after the Trump administration imposed a ban on business with telecom giant Huawei Technologies Co.

A Chinese official said on Sunday that the government is firmly against the U.S.’s “long-arm” jurisdiction on Huawei, while downplaying concerns that the planned list of unreliable entities will be used to target foreign companies as a retaliation tool in the trade war.

To designate an untrustworthy foreign entity, China will look at whether it discriminates against domestic companies, the state-run Xinhua news agency said Saturday. Other considerations will be violations of market rules, breach of contract, harm caused to Chinese firms and actual or potential threats to national security, it reported.

The latest salvo signals there’s no detente in sight in the struggle between the world’s two biggest economies at a time when trade talks have broken down. Chinese retaliatory tariffs on U.S. products kicked in Saturday, affecting more than 2,400 goods that face levies of as much as 25% compared with 10% previously.

On Sunday, China blamed the U.S. for the collapse of trade talks and said it won’t buckle under maximum pressure to make concessions. The trade war hasn’t “made America great again,” and while China doesn’t want conflict, it won’t shy away from one, according to a white paper on its negotiations with the U.S.

Defense Minister Warns of ‘Fight to the End’… 

SINGAPORE—The U.S. and China accused each other of trying to destabilize Asia and stir up geopolitical friction at a high-profile security summit over the weekend. But they also signaled interest in keeping military tensions contained, as trade disputes between the two countries threaten the global economy.

Speaking at the Shangri-La Dialogue on Saturday, acting U.S. Defense Secretary Pat Shanahan said the U.S. would no longer “ignore Chinese behavior” in the Indo-Pacific region, after years of complaints about Chinese island-building in disputed waters and other assertive moves by Beijing.

The greatest threat to the region, he said, came from actors who were using a “toolkit of coercion” to undermine the rules-based international order—remarks that were clearly aimed at China.

In a rare rebuttal on Sunday, his Chinese counterpart, Gen. Wei Fenghe, cast the U.S.’s military activities in the South China Sea and support for Taiwan as provocative, and described Washington as an outsider in Asia that would ultimately “leave a mess behind.”

Factories Feel Pain as Wall St Sees Recession Risk… 

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Global manufacturing took another knock last month from trade tensions, adding to concerns that the world economy is weakening.

The latest signs of factory weakness — in countries including South Korea, Germany and Japan — underscore the growing threat to the world economy posed by the escalating U.S.-China trade war. The reports came amid a fresh warning from Wall Street about recession risks.

In the U.K., where Brexit uncertainty is proving an additional burden, manufacturing shrank for the first time in almost three years in May. That’s partly due to pullback after huge stockpiling before March 29, when Britain was initially due to leave the European Union.

U.S. President Donald Trump has also threatened Mexico with tariffs. On Sunday, China released a document blaming the U.S. for a breakdown in trade talks and accusing it of unreasonable demands. Concern about the global outlook has fueled a flight to safety, boosting demand for bonds and pushing stocks lower.

Contagion Puts Markets on Alert for Fresh Risk Selloff… 

(Bloomberg) — Investors may be about to get further confirmation that they have misread how deep and lasting the global trade war could be.

After last week’s selloff in risk assets, the stand-off between the world’s two largest economies deepened at the weekend as Beijing blamed the U.S. for the latest breakdown in talks. Traders were also left digesting a move by the Chinese toward blacklisting FedEx Corp., a threat by President Donald Trump to slap tariffs on all Mexican goods and a decision to end an arrangement that lets India export almost 2,000 products to the U.S. tax free.

TWITTER Takes Down Dissidents’ Accounts Ahead of Tiananmen Anniversary…

Twitter  has suspended a large number of Chinese-language user accounts, including those belonging to critics of China’s government. It seems like a particularly ill-timed move, occurring just days before thirtieth anniversary of the Tiananmen Square massacre on June 4.

“A large number of Chinese @Twitter accounts are being suspended today,” wrote Yaxue Cao, founder and editor of the U.S.-based publication China Change. “They ‘happen’ to be accounts critical of China, both inside and outside China.”

Cao then went on to highlight a number of the suspended accounts in a Twitter thread.

 

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