U.S. Trade Team Back in Beijing as China Sees Much Still to Do
U.S. trade officials including Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer landed in Beijing Thursday for talks aimed at nailing down a deal with China, as an official there warned there are still many issues outstanding. Arriving at the Westin hotel in Beijing’s Chaoyang district, Mnuchin said he was “pleased” to be there and looked forward to “productive” meetings. Estimates of progress in the talks have veered in recent weeks between expectations of an imminent signing to pushing any finalization months down the line. “There’s still a lot of work to be done,” Ministry of Commerce Spokesman Gao Feng said at a press conference in Beijing on Thursday. One of the biggest sticking points is still disagreement on enforcement, with the U.S. wanting assurances that China will deliver on any promises to change its practices around intellectual property protection. The two sides will hold a working dinner Thursday evening with a full day of talks planned for Friday, Gao said. Chinese Vice Premier Liu He is then scheduled to travel to Washington next week. The urgency of reaching a trade deal is being underscored by the dimming outlook for global commerce. Figures published Monday show trade fell 1.8 percent in the three months through January compared with the previous period. That’s the biggest drop since May 2009. Speaking Thursday, Chinese Premier Li Keqiang said China’s domestic economy has showed signs of stability amid targeted stimulus support, despite threats arising from weakness in global demand.
ECB Needs Convincing to Try to Mitigate Effect of Negative Rates, Praet Says
The European Central Bank’s chief economist says there needs to be a solid monetary-policy case before officials act to mitigate side effects of negative interest rates on banks. ECB staff are examining the issue of tiering — where some of banks’ excess reserves are exempt from the lowest rate — but action isn’t a done deal, Peter Praet said in a Bloomberg interview. “For tiering, we need to be convinced that it would address a monetary-policy question in an efficient way,’’ he said. “We have to be ready for all the possible instruments that we could use.’’ The language about a monetary-policy case echoes that used by President Mario Draghi at the start of this year about a possible new round of long-term loans. Those were subsequently announced this month. Praet’s view comes in the wake of comments from Draghi about maintaining the positive effects of sub-zero rates while reviewing any negative fallout. The remark was taken by investors as an assurance that the ECB is ready to ease a squeeze on profit margins produced by banks’ inability to pass on costs. European bank stocks fell on Thursday, with the EURO STOXX Banks Index trading 0.9 percent lower at 11:30 a.m. Frankfurt time. Interest in the topic has increased after a more persistent than expected slowdown forced a sharp downward revision in the ECB’s projections for growth and inflation and a delay in plans to raise borrowing costs. Economic confidence fell more than expected in March to the lowest level since 2016. “The perspective of low rates for longer has triggered the debate about the side effects of a negative rates,” Praet said.
Kenya ‘Not in a Rush’ for IMF Loan, Central Bank Governor Says
Kenya’s central bank chief said the East African nation is not in a hurry for a new standby loan facility from the International Monetary Fund, and doesn’t have a timeline on when negotiations should conclude. “We are not in a rush,” Governor Patrick Njoroge told reporters in Kenya’s capital, Nairobi on Thursday. “We have had meetings and i expect that we will continue with these talks when we go for the spring meetings in April.”A similar facility, where the IMF availed $1.5 billion for Kenya to draw from in the event of balance-of-payments shocks, expired in September. Negotiations for the loan are happening as the government plans to sell $2 billion of Eurobonds this year. Njoroge made the comments amid market sentiments that having the IMF facility in place would be reassuring for buyers of Kenyan debt, as the Washington-based lender said the government needs to further reduce its fiscal deficit. “Some of us may feel that these two things are so aligned and that is why some people think we are under pressure,” Njoroge said. But having an IMF program and going to the Eurobond market are separate things, he said. “We do know the benefits and we are working to ensure we have a program that works for us and is favorable for us,” Njoroge said. At the same briefing, the governor said that the bank will be part of an appeal against a court ruling that annulled a law capping interest rates, but said it can’t fault lawmakers for legislating on an interest-rate ceiling. The central bank had earlier criticized the law that capped borrowing rates at 4 percentage points above the benchmark rate, and said it complicated monetary policy formulation.
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