Fukuoka, Jun 8 (AP/UNB) — Finance chiefs of the Group of 20 major economies meeting in the Japanese city of Fukuoka debated Saturday over how to revise tax systems to ensure big companies pay their fair share and support economies as global growth slows.
One aim is to prevent a "race to the bottom" by countries trying to lure companies by offering unsustainably and unfairly low tax rates as an incentive.
Ensuring governments capture a fair share of profits from the massive growth of businesses like Facebook and Amazon has grown in importance over the many years the G-20 finance chiefs have been debating reforms aimed at preventing tax evasion and modernizing policies, as financial markets and businesses have been transformed by technology.
"Everyone, we are now facing a turning point. This could be the biggest reform of the long established international framework in over 100 years," Japanese Finance Minister Taro Aso told the group.
While the officials from both wealthy and developing nations differed over some details, they agreed on the need to get the job done.
"It sounds like we have a strong consensus, and now we deal with the technicalities of how we turn this into reality," U.S. Treasury Secretary Steven Mnuchin said Saturday.
The talks in this bustling port city come just weeks ahead of the June 28-29 summit of G-20 leaders in Osaka, Japan, where President Donald Trump and his Chinese counterpart Xi Jinping are due to meet and possibly work on resolving their bruising standoff over trade and technology.
Mnuchin has been heading trade talks with Beijing along with U.S. Trade Representative Robert Lighthizer. He was due to meet with Yi Gang, governor of China's central bank, in Fukuoka. It was unclear if their meeting might lead to a restart of those talks after weeks of stalemate.
Concern over the potential blow to the world economy from the battle of wills between the two biggest economies has deepened as the Trump administration prepares to expand retaliatory tariff hikes of up to 25% to another $300 billion of Chinese products.
Meanwhile, after a flurry of negotiations, Trump said in a tweet that he would refrain from imposing 5% tariffs on products from Mexico after it "agreed to take strong measures" to stem the flow of Central American migrants into the United States.
"I am pleased to inform you that The United States of America has reached a signed agreement with Mexico," Trump tweeted Friday night, saying the "tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended."
The Trump administration began slapping tariffs on imports of Chinese goods nearly a year ago, accusing Beijing of resorting to predatory tactics to give Chinese companies an edge in advanced technologies such as artificial intelligence, robotics and electric vehicles. These tactics, the U.S. contends, include hacking into U.S. companies' computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to the Chinese market and unfairly subsidizing Chinese tech firms.
Trump has also complained repeatedly about America's huge trade deficit with China — a record $379 billion last year — which he blames on weak and naive negotiating by previous U.S. administrations.
The United States now is imposing 25% taxes on $250 billion in Chinese goods. Beijing has counterpunched by targeting $110 billion worth of American products, focusing on farm goods such as soybeans in a deliberate effort to inflict pain on Trump supporters in the U.S. heartland.
While the tariffs have taken a minor toll on the overall U.S. economy, the uncertainty and slowing demand are rippling across the globe. Earlier this week, the World Bank downgraded its forecast for the global economy in light of trade conflicts, financial strains and unexpectedly sharp slowdowns in wealthier countries.
The weakness has prompted central banks, most recently in Australia and India, to slash interest rates to fend off recession.
A report Friday of a sharp pullback in U.S. hiring for May intensified fears that the economy has weakened and that many employers have grown nervous, in part from trade conflicts. Yet the stock market soared and bond yields fell because it raised hopes that the Federal Reserve might cut interest rates in the coming months, perhaps as early as July, to support the economy.
Japan, hosting the G-20 for the first time since it was founded in 1999, has plumbed the limits of that strategy. The Bank of Japan's policy interest rate has been at minus 0.1% for years, to keep credit cheap, supporting a modest pace of expansion.
As trade conflicts percolate and leaders come and go, the finance chiefs have carried on chipping away at financial reforms and other perennial issues.
Some European members of the G-20, especially, want to see minimum corporate tax rates for big multinationals. Mnuchin said he disagreed with details of some of the proposals but not with the need for action.
"The world has evolved very quickly with new business models," he said. "If we're going to fix this we need it to work for the next 10 years as well."
The finance leaders are also discussing the issue of how developing countries are handling debts incurred through major construction projects, efforts to combat money laundering and to prevent terrorist groups from using cybercurrencies as a source of funding.
They are likely to issue a joint communique to be endorsed at the G-20 summit in Osaka.
Bangkok, Jun 3 (AP/UNB) — Asian shares wobbled Monday after U.S. and Chinese officials traded jibes in their widening clash over trade and technology.
China's Shanghai Composite lost 0.5% to 2,884.54 after surveys showed a deteriorating manufacturing outlook in May. Japan's Nikkei 225 index lost 1.3% by midday to 20,343.52, and Hong Kong's Hang Seng shed 0.4% at 26,807.91. The S&P ASX 200 dropped 0.9% to 6,340.90.
South Korea's Kospi rose 1% to 2,062.07 after reports said Samsung Electronics' Chairman Lee Jae-yong invited the giant's top executives to discuss concentrating the company's strategy on its core businesses as it weathers slowing demand for computer chips and smartphones and the repercussions of the trade conflict between Beijing and Washington.
India's Sensex rose 0.5% to 39,912.03, while shares fell in Taiwan and Singapore. Markets in Indonesia, Malaysia and Thailand were closed.
A private survey, the Caixin manufacturing purchasing managers' index, or PMI, held steady at 50.2 in May. But business confidence slipped to the lowest level since the series began in April 2012. The official manufacturing PMI, issued Friday, sank to one of the lowest levels in three years.
China issued a report Sunday that blamed the conflict on the Trump administration, but stopped short of announcing details of a plan for retaliation against a U.S. blacklisting of Huawei Technologies. On Friday, it said it would soon announce its own list of "unreliable entities" consisting of foreign businesses, corporations and individuals.
Wang Shouwen, China's vice commerce minister and deputy international trade representative, said China would issue more specific information on the list soon, but that it was aimed at enterprises that "violated market principles" and cut supplies of components to Chinese businesses for non-commercial reasons.
Meanwhile in Singapore, China's defense minister warned its military would "resolutely take action" to defend Beijing's claims over self-ruled Taiwan and disputed areas of the South China Sea.
In his comments to defense chiefs, officials and academics at the Shangri-La Dialogue in Singapore, Gen. Wei Fenghe did not direct that thread at the U.S., and U.S. Acting Defense Secretary Patrick Shanahan was not in the audience.
But Wei did have tough words on the trade war with Washington.
"As for the recent trade frictions started by the U.S., if the U.S. wants to talk, we will keep the door open. If they want to fight, we will fight till the end," Wei said. "As what the general public of China says these days, a talk, welcome. A fight, we're ready. Bully us, no way."
A report issued by the Cabinet spokesman's office on Sunday said China won't back down on "major issues of principle," but offered no sense of whether or how the world's second largest economy might retaliate against U.S. tariffs on goods manufactured in China.
"Let's understand that trade conflicts are the catalyst for the real issue; slower global growth leading to stagflation and recessionary conditions," Chris Weston of Pepperstone said in a commentary. "With the weekend news flow centering again on trade, where a Chinese white paper attributed the blame on relations to Trump, amid Chinese authorities investigating FedEx, it all suggests things will only get worse before they get better."
In the U.S., the stock market stumbled Friday to its first losing month of 2019 in May, primarily due to President Donald Trump's decision to broadly wield his tariff powers, first against China over trade and then against Mexico over immigration.
Friday's losses came after Trump shocked investors by announcing plans via Twitter to impose tariffs on Mexico in a bid to compel the nation's third-biggest trading partner to crack down on migrants attempting to enter the U.S.
The move spurred a broad sell-off that sliced more than 350 points from the Dow Jones Industrial Average, which closed down 1.4% at 24,815.04. The selling left the benchmark S&P 500 index 6.6% lower for the month as it lost 1.3% to 2,752.06.
It's the first time the S&P 500 has dropped for four straight weeks since autumn 2014.
The Nasdaq slid 1.5% to 7,453.15. The Russell 2000 index of smaller companies gave up 1.4% to 1,465.49.
The new tariffs on Mexican goods shocked investors who were already nervous about a global trade war crimping economic growth. It's especially hard on automakers that import vehicles from Mexico.
Investors have been fleeing to safer holdings all month. The shift to utilities and bonds quickened earlier in May after the U.S. and China broke off negotiations. The U.S. then pushed more tariffs on Chinese goods along with a ban on technology sales. That prompted retaliatory tariffs from China and threats over supply flows of rare earths and other key resources.
The flight to safe havens has pushed the Japanese yen strongly higher against the U.S. dollar. On Monday the dollar was trading at 108.11 yen, down from 108.28 yen late Friday. Last week, the dollar had been trading at about 110 yen.
The euro rose to $1.1181 from $1.1170 late Friday.
Increasing uncertainty over the economic outlook has drawn energy futures sharply lower.
Benchmark U.S. crude oil gave up 59 cents to $52.91 per barrel in electronic trading on the New York Mercantile Exchange. It tumbled 5.5% to settle at $53.50 a barrel on Friday. Brent crude, the international standard, skidded 88 cents to $61.11 per barrel. It closed 3.6% lower on Friday.
Beijing, June 2 (AP/UNB) — China issued a report Sunday blaming the United States for a trade dispute and said it won't back down on "major issues of principle."
The statement from the Cabinet spokesman's office said that China has kept its word throughout 11 rounds of talks and will honor its commitments if a trade agreement is reached.
"A country's sovereignty and dignity must be respected, and any agreement reached by the two sides must be based on equality and mutual benefit," it said.
The U.S. has accused China of stealing trade secrets and forced technology transfers. The Trump administration has imposed 25% tariffs on $250 billion in Chinese imports and is planning to tax the $300 billion in imports that have so far been spared. It also escalated the stakes this month by putting the Chinese telecom giant Huawei on a blacklist that effectively bars U.S. companies from supplying it with computer chips, software and other components without government approval.
Beijing responded by imposing tariffs on $60 billion worth of U.S. products, which went into effect Saturday. It also retaliated against the U.S. blacklisting of Huawei by announcing Friday that it will establish its own list of "unreliable entities" consisting of foreign businesses, corporations and individuals.
Being published in eight languages, Sunday's report lays out China's argument for blaming Washington for the frictions as well as the costs to both sides.
"Whatever the future might bring, China is confident of meeting challenges head on, turning risks into opportunities and opening new chapters," it said. "China remains committed to its own cause no matter how the external environment changes."
"We still have sufficient room for fiscal and monetary policy maneuver" to maintain health of the Chinese economy amid frictions, it said.
Wang Shaowen, vice commerce minister and deputy international trade representative, said China had been forced to "take forceful measures in response" to U.S. actions and denied China had backtracked on its earlier commitments.
"It is irresponsible of the U.S. to accuse and smear China," Wang said.
In negotiations "nothing is agreed until everything is agreed," Wang said. He said the U.S. had made unacceptable demands, including on tariffs and compulsory requirements that infringed on Chinese sovereignty.
He said of the U.S. tactics: "You give them an inch, they take a yard."
Dhaka , Jun 1 (AP/UNB)- The stock market stumbled Friday to its first losing month of 2019 in May, primarily due to President Donald Trump's decision to broadly wield his tariff powers, first against China over trade and then against Mexico over immigration.
During stocks' month-long slide investors wrestled with the potential impact that the U.S.'s escalating trade war with China could have on corporate and economic growth. Friday's losses came after Trump announced plans via Twitter to impose tariffs on Mexico in a bid to compel the nation's third-biggest trading partner to crack down on migrants attempting to enter the U.S.
The move shocked investors and spurred a broad sell-off that sliced more than 350 points from the Dow Jones Industrial Average. The selling left the benchmark S&P 500 index 6.6% lower for the month, and up 9.8% for the year so far.
"Clearly the markets were blindsided and completely caught off guard," said Cliff Hodge, director of investments for Cornerstone Wealth.
It was only a month ago that the S&P 500 hit a record high and underlined its claim as the longest bull market for stocks on record, at more than a decade long. The market had climbed steadily through 2019 amid rising investor confidence that a deal with China was at hand and that the Federal Reserve would not tip the economy into recession by raising interest rates too aggressively.
But when the first weekend of May arrived, Trump's tweet threatening more tariffs on China upended months of calm in the market. Investors are now preparing for a much longer and messier resolution to the global trade war than they were expecting just a few weeks ago.
The trade conflicts have also clouded the global economic outlook, with many economists now forecasting U.S. growth to weaken in the coming months. That's likely to weigh on corporate profits this year.
"What you had over the last few days really is an increase in global uncertainty, and the economic data has been poor and weakening," said Tom Martin, senior portfolio manager with Globalt Investments. "With rising costs as a result of tariffs and rising uncertainty, that's definitely going to have a damper on earnings."
The S&P 500 index fell 36.80 points, or 1.3%, to 2,752.06. It's the first time the S&P 500 has dropped for four straight weeks since autumn 2014.
The Dow lost 354.84 points, or 1.4%, to 24,815.04. The Nasdaq slid 114.57 points, or 1.5%, to 7,453.15. The Russell 2000 index of smaller companies gave up 20.04 points, or 1.4%, to 1,465.49.
Major stock indexes in Europe also fell.
"You had a market that was feeling as though President Trump would want to do a deal so that the economy would not be hurt," said Martin. "And now the behavior is indicating that he will use (tariffs) to accomplish his goals and seems less concerned about the actual economic impact."
Since the end of April, investors have sought out safer investments like utilities and bonds. Technology stocks, which led gains all year, were among the month's biggest losers. The technology heavy Nasdaq shed 7.9%, while technology companies within the S&P 500 lost 8.9%.
Utilities, which have lagged the market, fell only 1.3% in May, making them among the month's best performers. Meanwhile, real estate stocks posted a 0.9% gain, the only winners this month.
The new tariffs on Mexican goods shocked investors who were already nervous about a global trade war crimping economic growth.
The new front in the trade war hit automakers particularly hard. Many of them import vehicles from Mexico. General Motors slid 4.3% Friday, while Fiat Chrysler dropped 4.8%. Ford Motor lost 2.3%.
Banks also declined as higher bond prices pushed yields lower. The yield on the 10-year Treasury note slid to 2.13% from 2.22% late Thursday.
Investors have been shifting money into bonds over concerns that economic growth will be crimped by the ongoing trade war. Lower bond yields drag down interest rates, making lending less profitable for banks. Citigroup fell 2.3% and Bank of America lost 2.1%.
Energy companies sank following another broad slide in oil prices. Occidental Petroleum fell 4.1% and Valero Energy dropped 3.4%.
Investors have been fleeing to safer holdings all month. The shift to utilities and bonds quickened earlier in May after the U.S. and China broke off negotiations. The U.S. then pushed more tariffs on Chinese goods along with a ban on technology sales. That prompted retaliatory tariffs from China and threats over other key resources.
While the U.S. economy grew at a solid 3.1% annual rate in the January-March quarter, many economists now think growth is likely to weaken in coming months. They cite a range of threats facing the U.S. economy, including escalating trade conflicts, more cautious spending by consumers and businesses, and a global economic slowdown.
On Friday, a report showed China's factory activity slowed in May as the trade war between Washington and Beijing escalated.
Economists say China may be drawing up its own list of retaliatory targets among U.S. companies. The worry is that a trade war fought on multiple fronts around the world will be a drag on corporate profits and on a U.S. economy that's been supported by a solid job market.
That worry pulled the yield on the 10-year Treasury note to its lowest level since the summer of 2017. That's left long-term Treasury yields below some short-term yields, an unusual occurrence that many investors see as a warning sign of recession.
Investors are also raising their bets that the Federal Reserve will need to cut interest rates later in 2019 to help the economy, less than a year after it had been raising rates to get them closer to normal.
"The fact that the president is willing to use tariffs as a weapon can really cause damage to business confidence," Hodge said. "You've got to be wondering, who's next?"
Energy futures closed broadly lower Friday. Benchmark U.S. crude tumbled 5.5% to settle at $53.50 a barrel. Brent crude oil, the international standard, closed 3.6% lower at $64.49 per barrel.
Wholesale gasoline slid 4.1% to $1.80 per gallon. Heating oil dropped 3.8% to $1.84 per gallon. Natural gas gave up 3.7% to $2.45 per 1,000 cubic feet.
Gold gained 1.4% to $1,311.10 per ounce, silver added 0.5% to $14.57 per ounce and copper fell 0.5% to $2.64 per pound.
The dollar fell to 108.41 Japanese yen from 109.55 yen on Thursday. The euro strengthened to $1.1171 from $1.1135.
Tokyo, May 30 (AP/UNB) — Asian shares were mostly lower Thursday after another round of selling on Wall Street amid investor worries about a trade war.
Japan's benchmark Nikkei 225 dropped 0.4% to 20,913.68. Australia's S&P/ASX 200 slipped 0.8% to 6,385.60. South Korea's Kospi edged up 0.5% to 2,032.49. Hong Kong's Hang Seng was down 0.5% at 27,092.83, while the Shanghai Composite lost 0.9% to 2,889.36.
The latest market slide comes as investors worry that the trade war between the U.S. and China will derail global economic and corporate profit growth as it drags on with no sign of a resolution.
"The cracks in global equity markets threatened to grow wider still as relentless haven-buying of sovereign bonds overnight pushed key yields even lower and sent recession fears through stocks," said Jeffrey Halley, senior market analyst at Oanda.
"Asia is unlikely to feel much relief today either with both the Nikkei 225 and the ASX 200 down."
On Wall Street, overnight, the S&P 500 index fell 19.37 points, or 0.7%, to 2,783.02. The index had been down 1.3% earlier. The Dow Jones Industrial Average lost 221.36 points, or 0.9%, to 25,126.41. It had tumbled 409 points. The Nasdaq composite slid 60.04 points, or 0.8%, to 7,547.31. The Russell 2000 index of small companies dropped 14.07 points, or 0.9%, to 1,489.95.
With two more trading days left in May, the S&P 500 is heading for a loss of 5.5%. That would be its first monthly loss since December. The market has been heading steadily lower this month as prospects for the economy have dimmed and as traders got more worried about the lingering trade feud between Washington and Beijing.
In early May the U.S. and China concluded their 11th round of trade talks with no agreement. The U.S. then more than doubled duties on $200 billion in Chinese imports, and China responded by raising its own tariffs.
Benchmark U.S. crude added 44 cents to $59.25. It fell 0.6% to settle at $58.81 a barrel Wednesday. Brent crude, the international standard, gained 32 cents to $68.19 per barrel.
The dollar rose to 109.70 Japanese yen from 109.31 yen on Wednesday. The euro weakened to $1.1136 from $1.1154.