China trade experts urge Xi Jinping to respond with caution to US tariffs

Good morning. China trade experts are urging caution on Xi Jinping as he plots the best response to Joe Biden’s sweeping new tariffs on Chinese imports.

Former officials and government advisers in Beijing warned against exacerbating tensions with Washington just as Biden and his rival Donald Trump clash over who can be tougher on trade with China during a politically charged US election campaign.

China’s dominance of cleantech supply chains means that Beijing has the potential to retaliate in kind, curbing access to resources, materials and technologies critical to the US economy.

But trade advisers said Beijing also had to consider the impact of growing US trade restrictions on China’s economy.

“China has the moral high ground,” said Henry Huiyao Wang, a former senior government official and the founder and president of the Beijing-based Center for China and Globalization. “We would like to see China ‘go high’ rather than ‘go low’ with the US.”

• More US tariffs: Joe Biden is set to impose tariffs on double-sided solar panel imports. The announcement comes as US imports of cheap solar panels and cells, largely from south-east Asia, have soared to record highs.

• Reopening military communication: The US and Chinese defence ministers will meet in person for the first time in two years later this month.

Here’s what I’m keeping tabs on today and over the weekend:

• Putin’s China visit: The Russian leader and Chinese counterpart Xi Jinping vowed yesterday to work together against what they said was “destructive and hostile” US pressure. Today Putin will lay a wreath for Soviet soldiers in north-eastern China before attending a China-Russia Expo.

• Economic data: China publishes monthly retail sales and industrial output figures, plus the April House Price Index. Malaysia and Hong Kong report first-quarter GDP.

• Asia-Pacific trade: Apec trade ministers begin a two-day meeting in Arequipa, Peru.

• Thailand: The 74th Fifa congress, the legislative arm of international football’s governing body, meets in Bangkok today.

• Results: Indian steel producer JSW reports earnings.

• Middle East: US national security adviser Jake Sullivan plans to travel to Saudi Arabia and Israel this weekend. (Axios)

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Exclusive: Shein is shifting towards a London listing in the coming months as tensions between Washington and Beijing stall the online fashion giant’s plans for a blockbuster flotation in New York. Executive chair Donald Tang told the FT the Singapore-domiciled company had made “progress” on changing the perception that China controlled Shein “but not enough” to win over US lawmakers.

• Microsoft: The software giant has extended an offer to some of its China-based staff to relocate outside of the country, amid rising tensions between Beijing and Washington over sensitive technology.

2. China’s biggest banks have launched their first-ever sales of a special kind of loss-absorbing debt, moving closer to meeting international requirements designed to avoid repeats of the 2008 financial crisis. China’s banking sector has five institutions out of 30 around the world designated as globally systemically important by the Financial Stability Board.

3. Japan’s economy contracted in the first quarter as consumer spending notched its longest downward streak since early 2009, raising a challenge for the central bank’s plans to tighten monetary policy. The weak yen drove up food and energy costs while corporate spending and exports fell too.

4. A $10bn US property fund is running low on liquidity as investors demand their money back, threatening a reckoning for a sector rocked by rising debt costs and fears over real estate valuations. Starwood Real Estate Investment Trust has drawn more than $1.3bn of its $1.55bn unsecured credit facility since the beginning of 2023.

5. Donald Trump’s defence picked apart a phone call critical to the Manhattan “hush money” case in an explosive exchange yesterday that cast doubt over the reliability of a crucial witness for the prosecution. A lawyer for the former president elicited testimony indicating the call allegedly made by Michael Cohen to Trump’s bodyguard in late 2016 may have been about another matter entirely.

News in-depth

Vladimir Putin met Xi Jinping yesterday in a sign of their countries’ deepening military relationship. Chinese backing for Russia’s war in Ukraine has been western governments’ biggest concern about the two countries’ burgeoning ties. But two weeks ago, US officials raised alarm over their co-operation in another key security theatre: the seas around Taiwan.

We’re also reading . . . 

• ‘Customer harassment’: Demographics are squeezing Japan’s ability to deliver the same high levels of service as before, writes Leo Lewis.

• Deflation: The consequences of China’s economy being sucked into a deflationary spiral would be severe. Suntory Group CEO Takeshi Niinami tells what Beijing can learn from Japan’s “lost decades”.

• TikTok: A “people’s bid” for the app is a new twist that raises profound questions about how we live online, writes Gillian Tett.

Chart of the day

The outcome of a takeover battle for Paramount Pictures may help decide who survives in the streaming era — a period that has seen a sharp drop in the venerable studio’s share price.

Take a break from the news

It’s the most important meal of the day, but could it also be the most joyous? HTSI takes you on a trip to sample some of the world’s best breakfasts, from rural China to cosmopolitan Italy.

Additional contributions from Tee Zhuo and David Hindley