Mattis arrives in China; NKorea to be key topic of meetings

Ann Santiago
June 28, 2018

Trump has blamed past U.S. administrations for being soft on China and allowing the country to become dominant in manufacturing, and for failing to protect sensitive technologies.

He also made the point that nowadays the tech stocks such as Facebook, Amazon, Netflix, Google (Alphabet) and others such as Apple make up 25% of the S&P 500 Index!

The U.S. defense chief will first visit China from Tuesday to Thursday to discuss regional issues with Chinese officials.

New rules that would curb investment in American technology firms are reportedly in the works within the Treasury Department.

The administration is still debating some aspects of the new investment restrictions that are set to be announced on Friday, a government official said.

Societe Generale, in a research note, said that the near-term implications of the trade spat - if all threats are followed through - could result in a drag on the Chinese economy of close to 1 percent of gross domestic product growth and 3 million to 4 million jobs, while the effect on US real GDP would be a "far more modest" 0.1 percent to 0.2 percent.

"There's no plans to impose investment restrictions on any countries that are interfering in any way with our country".

Neither did confirmation from Peter Navarro, director of the National Trade Council, that the Administration has no plans to impose investment restrictions.

"Good news for the French beef sector to which the Chinese market is opening", Emmanuel Macron, France's President, tweeted today.

That seemed to reassure investors somewhat, though the market anxiety didn't completely disappear.

Ahead of Mattis' arrival, Chinese state media said a formation of Chinese warships has been holding daily combat drills for more than a week in waters near Taiwan, and there have been frequent Chinese air force exercises near the island. He thought markets were overreacting and I hope he is right because my SWTZ fund got to $2.62 cents yesterday - 1 cent off its all-time high - but it slipped to $2.59 before the close on all of this Trump trade tensions!

According to the Rhodium Group, a research firm, Chinese investment in the United States fell 35 percent in 2017 from the record $45.6 billion in 2016, and has slowed to a trickle, just $1.4 billion in the first quarter of this year.

The rules would also represent a major departure from the way foreign investment in the United States has been regulated for years. The inter-agency panel, which is chaired by the Treasury Department, scrutinizes some deals that could allow a foreign investor to take control of a United States business, and looks for potential risks to national security.

While this was not explicitly reacting to the tariffs on washing machines and solar panels, the timing suggested a repeat of China's retaliation to former US President Obama's safeguard tariffs on tyres in 2009.

The investment crackdown is likely to be disruptive, experts say.

It becomes clear that Washington is trying to inflict as much pain as possible to disrupt any attempt by China to usurp America's high-tech dominance. Congress is considering legislation that would expand the panel's authority. Xi's top economic lieutenant has traveled to Washington, D.C. twice and even offered to buy $200 billion more American products annually.

Other reports by

Discuss This Article