[路透社 Reuters], !即時 Instant News, China's crackdown on sugar smuggling leaves global storage headache

By Maytaal Angel and Hallie Gu

LONDON/BEIJING (Reuters) - A crackdown on sugar smuggling into China has left abundantly supplied markets in Asia and beyond struggling to absorb excess supplies, causing a wider storage problem for global markets.

Vast tonnages of sugar smuggled into China are believed to be produced mostly in India or Thailand and shipped to Myanmar, Laos or Vietnam before entering the Chinese mainland.

Those flows should more than halve this year to about 800,000 tonnes versus previous years when between 1.5-2.8 million tonnes would be smuggled in, according to Wang Weidong, a sugar analyst based in southern China.

The crackdown comes as Beijing faces pressure from industry to extend hefty sugar import tariffs beyond 2020 and keep growth in licensed imports into China historically low.

“Chinese authorities have really clamped down on that (smuggling trade) this year. It’s been shut down for all intents and purposes,” said a source a London-based sugar trader with ties to Asia.

Traders and analysts in London and Beijing said they expect the clamp-down to continue.

International Sugar Organization (ISO) figures show the global market will record a deficit of nearly 5 million tonnes in the 2019/20 season, meaning Asia will be able to absorb some of the excess resulting from China’s crackdown.

However, following two straight years of surplus, the world market has some 95 million tonnes of stock to absorb, the ISO said. That is equivalent to about six months worth of demand and is disproportionately concentrated in Asia.

CHINA’S OFFICIAL IMPORTS SLOW
China’s tariffs should leave official sugar imports into the country little changed this year at around 3 million tonnes, said Justin Liu, China-based senior sugar analyst at Chaos Research Institute.

The lack of growth is unusual for a developing economy like China which has a sugar deficit, and shows Beijing is serious about protecting its domestic industry.

“With the domestic output and imports under the quota, China’s domestic demand can be met. Supply and demand is balanced. If China opens its market completely, the domestic sugar industry will be doomed,” said Weidong.

“Everyone is speaking from their own interest. Why produce so much when you can’t consume it?” he added.

China in May 2017 hit major exporting nations with hefty tariffs on sugar imports, and started to levy extra tariffs on out-of-quota sugar imports from all origins in August last year.

The measures, with the smuggling crackdown, have helped push Chinese white sugar prices up some 20 percent this year, after they sank to near four-year lows last year.

THAI STOCKS BUILD
China’s smuggling crackdown has also contributed to a build-up of stock in Thailand, some of which made its way onto global markets mid this year via record deliveries against ICE futures contracts.

Analysts Green Pool said Thailand, the world’s second largest exporter, was sitting on nearly 7 million tonnes of stock at end-September, 1.1 million tonnes more than last September and nearly 3 million more than the previous two years.

“In an ideal world they would have sold all their stock by September,” Green Pool analyst Tom McNeill said. A large proportion of this stock will have to be cleared by the end of the year to make way for the new crush, he added.

Industry sources say Thai raw sugar is again trading at a premium to the ICE futures, indicating the supply-demand balance in Asia is starting to tighten. But the China crackdown still leaves Asian markets with unwelcome excess supply.

https://www.reuters.com/article/us-china-sugar-smuggling-analysis/chinas-crackdown-on-sugar-smuggling-leaves-global-storage-headache-idUSKBN1WT005

[路透社 Reuters], !即時 Instant News, China September exports, imports in deeper contraction as tariffs take toll

BEIJING (Reuters) - A slide in China’s exports picked up pace in September while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the Sino-U.S. trade war drags on.

Analysts say it could take time for Chinese exports to recover amid slowing global growth despite tentative signs of a thaw in tense trade relations between the world’s top two economies.

On Friday, U.S. President Donald Trump outlined the first phase of a deal to end the trade war with China and suspended a threatened tariff hike set for Oct. 15. But existing tariffs remain in place and officials on both sides said much more work needed to be done.

September exports fell 3.2% from a year earlier, the biggest fall since February, customs data showed on Monday. Analysts had expected a 3% decline in a Reuters poll after August’s 1% drop.

“The headline figures suggest that global demand softened last month, adding to the pressure from the U.S. tariffs that went into effect in September,” said analysts at Capital Economics.

Economists also attributed the export slowdown to a fading in the so-called “front-loading” effect. Some Chinese firms had rushed to ship goods to the United States ahead of the September deadline, supporting overall July and August export readings.

“We expect shrinking exports will likely be one of the biggest drag on China’s economic growth in the coming months, as the tariff impact will be further in place, along with the pay-back effects,” said Ting Lu, chief China economist at Nomura.

Total September imports fell 8.5% after August’s 5.6% decline, the lowest since May, and were expected to fall 5.2%.

Some sectors held a silver lining. China’s industrial metals imports, including iron ore and copper, surged in September fueled by firm demand at steel mills.

But analysts at ANZ noted volumes were buoyed by recovery from recent disruptions in Australia and Brazil, and may also have been lifted by restocking ahead of China’s 70th anniversary celebrations, suggesting overall demand remains weak.

Nomura’s Lu pointed to subdued imports in the raw material processing sector and softening global commodity prices possibly playing a role in depressing overall imports.

Despite more than a year of growth boosting measures, China’s domestic demand has remained stubbornly weak as economic uncertainty weighs on business and consumer confidence and discourages fresh investment.

TRADE SURPLUS
China reported a trade surplus of $39.65 billion last month, compared with a $34.84 billion surplus in August. Analysts had forecast $33.3 billion.

Its trade surplus with the United States stood at $25.88 billion in September, narrowing from August’s $26.96 billion.

China’s exports to the United States fell 10.7% from a year earlier in dollar terms in January-September, while U.S. imports dropped 26.4% during that period, the customs data showed.

September had marked a major escalation in the trade row, with Washington imposing 15% tariffs on more than $125 billion in Chinese imports from Sept. 1, and Beijing hitting back with retaliatory levies.

Though President Trump had agreed not to proceed with a hike in tariffs set for Tuesday, U.S. Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.

Analysts are also skeptical that the “mini deal” would mark a major breakthrough.

“It is difficult to take that much comfort from the latest signs of progress given that we’ve had plenty of apparent truces in recent months end abruptly in a sudden further escalation in trade tensions,” said analysts at Capital Economics.

Customs spokesman Li Kuiwen told a news conference on Monday China’s stable domestic economy had provided a strong cushion against external challenges, but added that trade development in the future was still complicated and severe.

Economists at UBS expect further pressure on China’s job market as the impact of the latest U.S. tariff escalations filter through to struggling manufacturers.

“We think the time to watch for potentially significant job losses is from December this year until March 2020, assuming all announced tariff hikes are implemented. Job losses may be more concentrated in a few sectors that have higher exposure to foreign final demand, such as textiles, computers and electronics and electrical equipment, among others.”

Analysts believe China’s economic growth cooled further in the third quarter from a near 30-year low of 6.2% hit in April-June, and is threatening to breach the lower end of the government’s full-year target of 6.0-6.5%.

A growing number of economists are forecasting growth could fall into the upper 5% range in 2020 due to lingering trade tensions and a combination of cyclical and structural factors.

Writing by Lusha Zhang; Editing by Jacqueline Wong

https://www.reuters.com/article/us-china-economy-trade/china-september-exports-imports-in-deeper-contraction-as-tariffs-take-toll-idUSKBN1WT07P

[路透社 Reuters], !即時 Instant News,As options narrow on Syria, Trump prepares to drop sanctions hammer on Turkey

WASHINGTON (Reuters) - President Donald Trump’s administration is set to impose economic sanctions on Ankara, potentially as early as this week, for its incursion into northern Syria, one of the few levers the United States still has over NATO-ally Turkey.

Using the U.S. military to stop the Turkish offensive on U.S.-allied Kurdish fighters was never an option, defense officials have said, and Trump asked the Pentagon on Sunday to begin a “deliberate” withdrawal of all U.S. troops from northern Syria.

After Treasury Secretary Steven Mnuchin said on Friday that Trump had authorized “very powerful” new sanctions targeting Turkey, the administration appeared ready to start making good on Trump’s threat to obliterate Turkey’s economy.

On Sunday, Trump said he was listening to Congress, where Republicans and Democrats are pushing aggressively for sanctions action.

“Dealing with @LindseyGrahamSC and many members of Congress, including Democrats, about imposing powerful Sanctions on Turkey,” Trump said on Twitter, referring to the loyal Trump ally and U.S. senator who lambasted the president last week.

“Treasury is ready to go, additional legislation may be sought. There is great consensus on this. Turkey has asked that it not be done. Stay tuned!” he added.

A U.S. official, speaking on condition of anonymity, told Reuters that sanctions were “being worked out at all levels of the government for rollout.”

Trump is struggling to quell harsh criticism, including from some of his staunchest Republican backers, that he gave Turkish President Tayyip Erdogan a green light to attack the Kurds last Sunday when he decided to pull a small number of U.S. troops out of the border area.

Turkey’s offensive aims to neutralize the Kurdish YPG militia, the main component of the Syrian Democratic Forces (SDF) and seen by Ankara as a terrorist group aligned with Kurdish insurgents in Turkey. But the SDF has also been Washington’s key ally in fighting that has dismantled Islamic State’s jihadist “caliphate” in Syria.

Trump’s decision, rooted in his long-stated aim to get the United States out of “endless wars,” has prompted bipartisan concerns that it opens the door to the revival of Islamic State.

While sanctions appear to be the strongest tool of deterrence, the United States and its European allies could also ponder arms sales bans and the threat of war crimes prosecutions.

“Good decision by President @realDonaldTrump to work with Congress to impose crippling sanctions against Turkeys outrageous aggression/war crimes in Syria,” Graham tweeted.

‘MONUMENTAL FAILURE’
It is unclear what sanctions are in the order drafted last week, which Mnuchin said was ready for activation at any moment, and whether they would be as severe as what lawmakers are proposing.

Representatives Eliot Engel, the Democratic chairman of the U.S. House of Representatives Foreign Affairs Committee, and Mike McCaul, the committee’s senior Republican, introduced a bill last Friday that would sanction Turkish officials involved in the Syria operation and banks involved with Turkey’s defense sector until Turkey ends military operations in Syria.

It also would stop arms from going to Turkish forces in Syria, and require the administration to impose existing sanctions on Turkey for its purchase of a Russian S-400 missile-defense system.

https://www.reuters.com/article/us-syria-security-turkey-usa-sanctions/as-options-narrow-on-syria-trump-prepares-to-drop-sanctions-hammer-on-turkey-idUSKBN1WS0SF

[路透社 Reuters], U.S. outlines 'Phase 1' trade deal with China, suspends October tariff hike

WASHINGTON (Reuters) - U.S. President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed.

The emerging deal, covering agriculture, currency and some aspects of intellectual property protections, would represent the biggest step by the two countries in 15 months to end a tariff tit-for-tat that has whipsawed financial markets and slowed global growth.

But Friday’s announcement did not include many details and Trump said it could take up to five weeks to get a pact written.

He acknowledged the agreement could fall apart during that period, though he expressed confidence that it would not.“I think we have a fundamental understanding on the key issues. We’ve gone through a significant amount of paper, but there is more work to do,” U.S. Treasury Secretary Steven Mnuchin said as the two sides gathered with Trump at the White House. “We will not sign an agreement unless we get and can tell the president that this is on paper.”

With Chinese Vice Premier Liu He sitting across a desk from him in the Oval Office after two days of talks between negotiators, the president told reporters that the two sides were very close to ending their trade dispute.

“There was a lot of friction between the United States and China, and now it’s a lovefest. That’s a good thing,” he said.

Liu took a different tone in his remarks, however.

“We have made substantial progress in many fields. We are happy about it. We’ll continue to make efforts,” Liu said.

China’s official state-owned news organization Xinhua said that both sides “agreed to make the efforts towards a final agreement.”

In an editorial published online by the state-run People’s Daily newspaper on Saturday, China called the latest round of talks constructive, frank and efficient and noted that while the two sides were moving toward a resolution, “it is impossible to resolve the problem by putting arbitrary pressure on the Chinese side.”

Trump, who is eager to show farmers in political swing states that he has their backs, lauded China for agreeing to buy as much as $50 billion in agricultural products. But he left tariffs on hundreds of billions of dollars of Chinese products in place.

His announcement, while seen as progress, drew some scepticism.

“I’m unsure that calling what was announced by President Trump an agreement is justified,” said Scott Kennedy, a China trade expert at the Center for Strategic and International Studies in Washington.

“If they couldn’t agree on a text, that must mean they’re not done. Wishing an agreement does not one make. This isn’t a skinny deal. It’s an invisible one.”

Mnuchin said the president had agreed not to proceed with a hike in tariffs to 30% from 25% on about $250 billion in Chinese goods that was supposed to have gone into effect on Tuesday.

But U.S. Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.

“I think that we’re going to have a deal that’s a great deal that’s beyond tariffs,” Trump said.PHASED APPROACH
The world’s two largest economies have made progress in their trade dispute before without sealing a deal. In May U.S. officials accused China of walking away from a sweeping agreement that was nearly finished over a refusal to make changes to Chinese laws that would have ensured its enforceability.

Trump had said previously he would not be satisfied with a partial deal to resolve his effort to change China’s trade, intellectual property and industrial policy practices, which he argues cost millions of U.S. jobs. On Friday he said he had decided that a phased approach was appropriate.

U.S. stocks ended more than 1% higher on Friday but well off the day's highs after the announcement, with the S&P 500 .SPX up 1.09% after rising as much as 1.7% earlier on hopes of an agreement.

Trump and Chinese President Xi Jinping are both scheduled to attend a Nov. 16 summit of the Asia Pacific Economic Cooperation countries in Santiago, Chile, and Trump hinted that a written agreement could be signed there.

There have been positive signs from China in recent days.

China’s securities regulator on Friday unveiled a firm timetable for scrapping foreign ownership limits in futures, securities and mutual fund companies for the first time. Increasing foreign access to the sector is among the U.S. demands at the trade talks.

Beijing previously said it would further open up its financial sector on its own terms and at its own pace.

On Thursday, the U.S. Department of Agriculture confirmed net sales of 142,172 tonnes of U.S. pork to China in the week ended Oct. 3, the largest weekly sale to the world’s top pork market on record.

The president said China had agreed to make purchases of $40 billion to $50 billion in U.S. agricultural goods. Mnuchin said the purchases would be scaled up to that amount annually.

A person briefed on the talks said that the proposed intellectual property provisions were largely centered on strengthening “20th century” IP protections such as those involving copyrights, trademarks and piracy. Not addressed were more difficult technology transfer issues involving data flows, cybersecurity, product standards reviews and a new social credit system that evaluates company behavior.

The status of China’s Huawei Technologies Co Ltd, the world’s biggest telecoms gear maker, which has been put on a U.S. trade blacklist since May, was not part of the deal, Lighthizer said.

Trump said some IP issues would be left for later phases of the talks. He said talks over a second phase would begin as soon as the first phase agreement was signed and said a third phase might be necessary, too.

Liang Haiming, Hong Kong-based chairman of think-tank China Silk Road iValley Research Institute, called the agreement “anesthetic, pain relief, not an antidote.”

https://www.reuters.com/article/us-usa-trade-china/u-s-outlines-phase-1-trade-deal-with-china-suspends-october-tariff-hike-idUSKBN1WQ10X