SINGAPORE (July 22): “Carrying around their cup was a status symbol. They were the first store in New York to offer extra virgin olive oil. Now Amazon has extra virgin olive oil. Everyone has extra virgin olive oil.” — Restaurant critic Joshua David Stein, on reports that premium grocer Dean and DeLuca’s is struggling to survive after 42 years in the business.
Trump threatens to impose more tariffs on China
US President Donald Trump reiterated that he could impose additional tariffs on Chinese imports if he wanted to. This was after he promised to hold off on slapping more duties in a trade-war truce he reached with his Chinese counterpart Xi Jinping last month. “We have a long way to go as far as tariffs where China is concerned, if we want. We have another US$325 billion ($442 billion) we can put a tariff on, if we want,” Trump said on July 17. In an immediate response, China said further levies would complicate the negotiations. “If the US imposes new tariffs, this would create a new obstacle for US and China trade negotiations, [and] would make the road to coming to an agreement longer,” said Foreign Ministry spokesperson Geng Shuang. “China still hopes to resolve US-China trade frictions through consultation and dialogue.” Trump and Xi called a tariff ceasefire and agreed to resume trade talks after meeting at the Group of 20 summit in Japan in late June, breaking a six-week stalemate. Trump said he was holding off on a threat to impose tariffs on an additional US$300 billion in Chinese imports. In return, Xi agreed to buy large amounts of US farm goods.
IMF: China’s current account in balance
China’s current account surplus has dropped to near zero, which implies that its economic relationship with the rest of the world is roughly in balance, according to the International Monetary Fund (IMF) on July 17. At just 0.4% of GDP in 2018, China’s current account surplus declined by one percentage point y-o-y. For years, China’s current account had showed it to be a big net lender to the world, running a surplus as high as 10% of GDP in 2007. In recent years, however, its economy has become increasingly reliant on domestic demand — as opposed to exports and foreign investments — and that has helped rebalance its trade position. “There’s obviously a lot more still to be done, but it’s important to recognise some of the things that have been done, including increased currency flexibility and reduced reliance on external demand,” Gita Gopinath, IMF’s chief economist, told the Financial Times. “We want China to pivot towards more consumption-driven growth, while at the same time being careful about a further build-up in financial risks.”
IMF sees Singapore economy slowing to 2%
The IMF has cut Singapore’s 2019 growth forecast to 2% from 2.3% as global trade tensions hit exports, causing the economy to grow just 0.1% in 2Q2019. “Risks to the outlook are tilted to the downside and mainly stem from external sources, including a tightening of global financial conditions, escalation of sustained trade tensions and deceleration of global growth,” said the IMF. It has also reaffirmed Singapore’s financial sector oversight to be “among the best globally”, with strong economic fundamentals and sound economic policies. The country’s financial sector was assessed to be resilient, with healthy buffers to withstand severe adverse shocks.
US House calls Trump racist, yet his popularity grows
The US House of Representatives on July 16 voted 240-187 to censure Trump for telling four minority Democrat female lawmakers to “go back” to where they came from. The resolution condemned the president for “racist comments that have legitimised and increased fear and hatred of new Americans and people of colour”. Trump’s tweets on July 14 were seen to be targeting Alexandria Ocasio-Cortez, Rashida Tlaib, Ilhan Omar and Ayanna Pressley. The four first-term Congress members are collectively known as “The Squad”. With the exception of Somalia-born Omar, who migrated to the US as a child, the rest were all born in the US. Trump tweeted that they should “go back and help fix the totally broken and crime-infested places from which they came”. However, in a sign of how divisive US politics has become, support for Trump increased slightly among Republicans, according to a Reuters/Ipsos public opinion poll. His support increased by five percentage points to 72% over the past week.
Visa invests in Go-Jek in combined digital payment push
Visa has become the latest investor in ride-hailing giant Go-Jek as part of a common aim to push for wider use of digital payments in the Asean region. On July 17, the world’s biggest payments network invested an undisclosed amount in Go-Jek for an undisclosed stake. Earlier in July, Go-Jek announced that it had raised funding from Siam Commercial Bank, Mitsubishi Motors Corp, Mitsubishi Corp and Mitsubishi UFJ Lease & Finance Co. The terms of that deal were similarly not disclosed. According to CB Insights, Go-Jek, privately held so far, is worth some US$10 billion.
Qualcomm fined €242 million for predatory-pricing scheme
Qualcomm has been fined €242 million ($369 million) by European Union antitrust regulators for deliberately pricing some chips so low that they could eliminate a smaller rival. The penalty comes a year after the US multinational semiconductor and telecommunications equipment company was ordered to pay €997 million for thwarting rival suppliers to Apple. The EU said on July 18 that the fine was 1.27% of Qualcomm’s revenue last year and “aimed at deterring market players” from trying the same thing. The Qualcomm investigation targeted 3G chips for internet mobile dongles sold between 2009 and 2011. Regulators said these were sold below cost to Huawei Technologies and ZTE Corp, “two strategically important customers”, in order to push Icera, now owned by Nvidia Corp, out of the market. Last year, Qualcomm was handed the EU’s fifth-largest antitrust penalty over payments to Apple that the EU said were an illegal ploy to ensure only its chips were used in iPhones and iPads. Qualcomm is challenging the fine at the EU courts.
China drafting urgent plan to resolve Hong Kong chaos
Chinese officials in charge of Hong Kong affairs are working on an urgent strategy to solve the political chaos in the city and have ruled out the use of military force, reports the South China Morning Post, citing unnamed sources. The officials will soon put forward both an immediate plan to handle the mass protests as well as a longer-term solution to deal with street protests that have been taking place with growing frequency. The proposals, if implemented, can result in China overhauling the management of Hong Kong, SCMP says. Even so, Chinese officials are keen to ensure that Hong Kong remains an attractive financial hub. In the past month, hundreds of thousands of Hong Kongers took to the streets to protest against the controversial extradition bill. CEO Carrie Lam, under pressure to deal with the protests, offered to resign, but the Chinese central government refused to let her leave, according to the Financial Times.
