May 26, 2019

Huawei’s own operating system could be ready this year if cut off from US tech, top exec says

The head of the company’s consumer division Richard Yu told CNBC the operating system could be ready for use in China by the fourth quarter of this year, while its international version will be available in either the first or second quarter of 2020.

“Today we [Huawei – Ed.] are still committed to Microsoft Windows and Google Android. But if we cannot use that, Huawei will prepare the plan B to use our own OS,” he said.

Also on ‘Stupid economics’: Attack on Huawei tells world to avoid doing business with US – Prof. Wolff

The company’s own app store, known as the App Gallery, would be available on its own operating system, Yu added.

“We don’t want to do this but we will be forced because of the US government. I think this kind of thing will be bad news not only for us, but also for the US companies because we support the US business, so we will be forced to do this on our own,” the top executive said. “We don’t want to do this but we have no other solution, no other choice.”

Following accusations of spying for the Chinese government, US President Donald Trump issued an order barring US firms from supplying Huawei with parts or technology.

Also on Huawei CEO says company’s own OS will run Android apps – reports

The company was granted a 90-day grace period to continue doing business with US firms, but the order will see Huawei lose access to Google’s apps and services thereafter, and forbid the Chinese tech giant from using Intel and Qualcomm chips in its devices.

The Chinese communications firm has denied all the accusations of spying. Its founder and CEO Ren Zhengfei said on Sunday that Huawei has been “preparing for this” for a long time. The crackdown on the tech firm comes at a time of heightened trade tensions between Washington and Beijing.

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End of Trump’s tariff game with Canada & Mexico sends warning signal to ‘high-risk adversary’ China

Washington announced its decision to remove tariffs on steel and aluminum imported from Canada and Mexico, effective on Monday, in an effort to boost ratification of a new trade deal to replace NAFTA, known as the United States-Mexico-Canada Agreement (USMCA).

Initially tearing apart the old deal and imposing tariffs was just “political theatre” to gain internal political support, Richard Wolff, a professor emeritus of economics at the University of Massachusetts, told RT.

FILE PHOTO: The F-35 Lightning II © Reuters / Tom Reynolds China’s other nuclear option in trade war with US – Rare earth materials

“It was a way to show Mr. Trump is a warrior of American interests, it portrayed Mexico and Canada as taking advantage of the United States,” Wolff said, adding that the reality is that every White House administration for the last 200 years managed to have mutually beneficial relationships with its northern and southern neighbors.

“The decision to end the tariff[s] is most likely due to the need to focus on the trade war with China and to get the new trade agreement with Canada and Mexico ratified,” former managing director and CEO of International Strategic Alliances, George Koo, wrote in an emailed comment.

Apart from a step toward the new trade deal with the two countries, the latest Trump decision indicates that steel and aluminum are strategically important industries “that can’t be outsourced to high risk adversaries” like Beijing, according to Jack Worthington, managing partner at Arundel Co.

“It is a strong signal that the Trump administration believes the trade war/adversarial relationship with China is long term and won’t be resolved anytime soon. It’s an admission of irreconcilable trade and geopolitical differences with China,” the analyst said.

There is one thing similar in the tariffs imposed by the US on Canada, Mexico, and China, and that is the fact that they are used as an excuse for Washington’s domestic problems, according to Wolff.

Also on ‘Stupid economics’: Attack on Huawei tells world to avoid doing business with US – Prof. Wolff

“What is similar, is the attempt by the US government to enforce a few changes on the trading partners. This is part of the idea that the problems of the American economy has something to do with foreigners,” the professor told RT, adding that US capitalism is obviously in trouble.

So, the tariff war with China follows from the same strategy that started with tariffs on Mexico and Canada.

While Wolff stressed that Mexican and Canadian exports cannot replace Chinese ones “at least for many years,” others argue that Trump’s move can help the countries’ investors to boost steel and aluminum manufacturing capacity, Worthington said.

The removal of duties on metals can actually take some of the pressure off US consumers, Peter Earle from American Institute for Economic Research noted.

Also on Huawei has long been ready for US ban won’t bow to pressure, CEO says

“Canada and Mexico may now be able to, and be in a position to, supply the US with some of the steel, aluminum, and/or other goods which tariffs on Chinese imports have made much more expensive,” the researcher explained.

Meanwhile, former CEO George Koo stressed that ending tariffs on the two US neighbors might have little impact on the trade war with China because the situation will worsen anyway due to the Trump administration’s actions.

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Auto industry will never let Tesla drive at high speed, analyst tells RT’s Boom Bust

The company has taken many attempts to remedy the tense situation. Earlier this week, Tesla said it would reduce the prices of its two most expensive models. Shortly after a weak first quarter report, the company announced plans to sell car insurance to Tesla owners.

Lauren Fix, an automotive analyst known as “The Car Coach” has shed light on what to expect from the producer of the world’s first massively produced electric vehicle.

Also on Tesla stock continues to crash as Morgan Stanley adds fuel to the fire

“I think we’re going to have a second-quarter loss with Tesla,” the expert told RT’s Boom Bust. “I mean it’s great to say that he’s got all these great ideas, but realize that this insurance idea that he has is great only as an idea.”

The analyst stressed that getting an insurance company approved takes passing through a lot of government hurdles. “Beyond that fact, you have to be able to get a reinsurance company back it up.”

“Plus the fact that we are looking at the product that’s not being purchased. Theу lost their federal tax credit here in the US and across other countries. They’re no longer getting that the same drive because of competitors, such as Jaguar and Audi and Mercedes, which are really taking up a chunk of that business,” Fix added.

The expert projects Tesla to face second-quarter losses with the company’s stock to drop well below $200.

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China’s other nuclear option in trade war with US – Rare earth materials

A routine visit by President Xi Jinping to a Chinese rare earths facility earlier this week came amid rising tensions between the two countries and shortly after the US turned up the heat on Chinese tech giant Huawei. Despite the lack of any official announcement from Beijing, the visit has triggered fears that China is ready to use the materials, specifically a ban on their export, as an advantage against the US.

© Global Look Press / Artur Widak US to face ‘deadly punch’ from ‘kung fu master’ China in response to trade war tricks – ex-official

Rare earth materials are indeed one more way China can retaliate, independent political analyst, Alessandro Bruno, told RT.

“It could put heavy restrictions on the rare earth metals that are necessary to make all kinds of electronic equipment, especially phones. This is a significant threat because the West does not have its own supply,” he explained.

The minerals are unsurprisingly not included on the US list of $200 billion worth of Chinese goods facing higher import tariffs. Shortly after Chinese and other media reported that Beijing is considering an embargo, shares of rare earth miners skyrocketed.

On Tuesday, the rare-earth sector jumped by 8.5 percent, according to Global Times. China Rare Earth Holdings Ltd enjoyed the biggest gains in the industry as its shares soared 108 percent.

The strategic importance of rare earth elements, which are mostly metals so the group is often referred to as “rare earth metals,” is hard to overestimate. We use them every day even without knowing it – from your smartphone to a laptop to hybrid or electric vehicles. Rare earths are also used in modern weapons, for example in missile guidance systems and fighter jets.

So it is obvious that American industries would suffer a painful blow should China cut the supplies. The most painful part for the US is that China has a virtual monopoly in the sphere, as it accounts for around 80 percent of the imports, according to the US Geological Survey. This could make Beijing’s ban on such materials a nuclear option against Washington.

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The US used to be the largest rare-earths-producing country in 1990, but China has stolen the crown long ago. In 2018, Beijing mined 120,000 tons of the materials – a 15,000-ton increase compared to a year earlier, while the US produced just 15,000 tons in total. China holds 44 million tons of the elements if its reserves, while the US just 1.4 million tons.

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Mass exodus of US firms from China amid trade war won’t mean they’ll be coming home, survey shows

“The negative impact of tariffs is clear and hurting the competitiveness of American companies in China,” a press release from the lobbying bodies reads.

However, less than six percent of the surveyed firms are ready to move their manufacturing facilities back to the US with 24.7 percent of those who are thinking of relocation expected to settle in South East Asia. Mexico is reportedly the destinations for 10.5 percent of the respondents. Nearly 8.5 percent may move their production lines to India, Bangladesh, Pakistan or Sri Lanka.

Also on Chinese farm stocks gaining as US-China trade war escalates

The poll, conducted jointly by the American Chamber of Commerce in Shanghai and the Beijing-based American Chamber of Commerce in China, covers 250 firms, 61.6 percent of which are manufacturing-related, 25.5 percent represent services, 3.8 percent retail and distribution, and the remaining 9.6 percent are focused on other industries.

The survey, held from May 16 to May 20, also shows that 75 percent of the respondents claimed that tit-for-tat tariffs, by the world’s two strongest economies over the past years, have had a negative impact on business. The increase in import duties reportedly dragged down demand for products, boosted manufacturing costs, and resulted in higher sales prices for products.

Also on Burden of Trump’s trade war to fall on US businesses consumers, expert tells RT’s Boom Bust

The latest round of Sino-American talks over reciprocal trade claims failed to find a resolution, with Washington taking another step towards escalating the dispute. The US hiked tariffs on $200 billion worth of Chinese imports from 10 to 25 percent. President Donald Trump threatened to impose further levies on another $300 billion of goods imported from China. Beijing retaliated by hiking tariffs on $60 billion worth of US products, starting June 1.

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Monsanto abused dominant position in India, overcharging farmers for GMO seed – probe

According to a report, MMBL also entered into pricing agreements directly aimed at overcharging farmers who use Bt cotton technology seeds. Bt cotton is a genetically modified organism (GMO) or genetically modified pest-resistant plant cotton variety, which produces an insecticide to bollworm.

Also on Monsanto challenges Indian court’s decision that undermines its GMO cotton monopoly

An equal joint venture of Maharashtra-based seed company Mahyco and Monsanto, MMBL sells genetically modified seeds to many Indian companies and charges a licensing fee called ‘trait fee’, or technology fee.

“It has been shown that trait fee was linked with the maximum retail price of seed packets by MMBL just to extract surplus as much as possible from the end consumer of Bt cotton seeds i.e. farmers,” said CCI report seen by Economic Times.

It noted that there were multiple instances where MMBL abused its dominant position in the market, most notably by charging higher trait fees from seed producers in Haryana, Punjab and Rajasthan compared with others as there was no price regulation in those states.

Also on India slashes Monsanto’s GMO seed royalty, says US firm ‘free to leave’ anytime

“Charging different prices in different geographic locations in the light of local conditions especially when such variation is not related to costs can distort competition and is in the nature of third-degree price discrimination exercised by a monopolist. There is no evidence of welfare enhancement of consumers on account of the price discrimination.”

MMBL also charged a higher trait fee in states such as Maharashtra and Andhra Pradesh where the government had fixed trait fees “on the pretext of pendency of litigation.”

The investigation found that the trait fees charged by MMBL were not based on high costs incurred by MMBL as it is “merely a licensing entity with very limited fixed costs.” The company does not undertake any research and development activity which could push up its costs, said the report.

“MMBL, which holds patents for Bt cotton, insisted that partner organizations use proprietary hybrids and not public (government) released varieties. By doing so, the company tried to hold control not only on their technology but also the plants so that farmers cannot reuse them. This made farmers and the local companies perpetually dependent on them,” said GV Ramanjaneyulu, executive director, Centre for Sustainable Agriculture.

US agrochemical giant Monsanto, currently owned by Bayer, has been selling genetically modified cotton seed to India since 1998. Since that time it has established an absolute monopoly over Bt cotton production in the country. Some 90 percent of India’s cotton –11.8 million hectares of cotton fields – now cultivate Bt crops. However, the Indian authorities are trying to push Monsanto out of the market to create more favorable economic conditions for domestic farmers.

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In 2015, India’s agriculture ministry and Nuziveedu group filed a complaint with the CCI against Monsanto Group alleging abuse of its dominant position in the Bt cotton technology market, after which the investigation was started. Challenging the role of CCI, Monsanto had filed cases in the Delhi High Court.

CCI has asked MMBL and the complainants to file their replies. It will consider all the information before making a final ruling on the matter.

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‘Stupid economics’: Attack on Huawei tells world to avoid doing business with US

The trade war with China has already evolved into a technological one as Washington barred American companies from supplying Huawei with components or technology. The move will eventually deprive the Chinese corporation of access to Google’s apps and services as well as Intel and Qualcomm chips when the measure fully comes into force.

FILE PHOTO: Huawei company logo © Reuters /Aly Song Huawei has long been ready for US ban won’t bow to pressure, CEO says

“This is going to hurt the American economy for years to come in countless ways, it will leave an economic scar on the American economy and there is… a stunning example of stupid economics,” professor emeritus of economics at the University of Massachusetts, Richard Wolff, stressed in an interview to RT.

He explained that the way the Trump administration is “hurting” Huawei may apply to many others. Now, CEOs realize that interactions with US firms may become unsafe and put companies in a vulnerable position. Thus doing business with the US can result in damages for companies, who can “be destroyed by a political operation” as the Huawei case shows.

“Here is the terrible, terrible miscalculation of the United States, which is very similar to the miscalculation of this tariff war. You’re teaching the rest of the world not to trust doing business with the United States,” Wolff said.

“Every CEO of every company has this morning sent a memo to the vice president, saying ‘reduce our interactions with United States companies, it is not safe for us.’ We become vulnerable.”

Trump’s decision also hurts US companies as they are forbidden from operating “in the normal way – to find the best quality at the lowest price.” The analyst stressed that no other political leader in Europe or Latin America has done such a “public attack” on their own businesses.

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India’s economy will ‘come back with a bang,’ country’s ‘Warren Buffett’ says

He told CNBC that the economic situation in the country started to improve after five years of a banking crisis and the introduction of important reforms.

“We are now having improvement in credit culture, we are having integrity come to the fore,” said Jhunjhunwala, who is commonly referred to as the “Warren Buffett of India.”

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According to the investor, the government has taken steps to improve the ease of doing business in the country. “The China-America spat on trade is (also) a great opportunity for India. I don’t see any reason why growth in India will not come back with a bang,” he said.

The country’s growth will likely reach around eight to nine percent in the near future and then jump into double-digit figures in the longer term, Jhunjhunwala suggested.

“We’ve raised our rate of growth in every decade since independence,” he said, adding, “I think India’s sitting on what is going to be the highest level of growth it has ever seen from 2020 to 2030.”

Also on Indian rupee goes from worst to best-performing currency in Asia

While many economists, including from the International Monetary Fund, questioned the credibility of government statistics, Jhunjhunwala downplayed the concerns.

“Just because you don’t agree with the figures, you’re suspicious of them, you can’t say the method of calculation is incorrect,” he said. “If they were incorrect, Mr. Raghuram Rajan [23rd Governor of the Reserve Bank of India between 2013 and 2016 – Ed.] should’ve corrected them. When he was the RBI governor, what was he doing?”

The businessman also specified promising sectors on the Indian market for investors. They include aviation, pharmaceuticals, infrastructure, and banking.

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Major Chinese airline demands compensation from Boeing over 737 MAX grounding

“The grounding of 737 MAX aircraft since March 11, 2019 has caused relatively big losses to China Eastern. With the passing of time, related losses will further expand,” the state-run People’s Daily cited the company as saying. “At the same time, delayed deliveries of planes ordered by China Eastern also caused economic losses.”

The Shanghai-based airline didn’t specify precisely how large the required compensation is. The company is reportedly closely monitoring Boeing’s work to fix safety risks of its 737 MAX aircraft.

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The carrier had to stop operating its 14 MAX jets after the Civil Aviation Administration of China (CAAC) halted the commercial operations of all Boeing 737 MAX planes in the country for an indefinite period, citing safety concerns. The measure was triggered by the second fatal accident involving Boeing’s best-selling aircraft in five months.

Boeing’s flagship plane crashed on March 10 not far from the Ethiopian capital of Addis Ababa six minutes after takeoff on the way to Nairobi, Kenya, killing 157 people. It was the second deadly crash involving the same jet model in less than six months. In October, the same type of aircraft, operated by Indonesia’s Lion Air, crashed in the Java Sea shortly after takeoff, claiming the lives of 189 people.

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Last week, media reports emerged that China’s airline majors, including Air China, China Southern and China Eastern Airlines were considering teaming up to seek legal compensation for the disruption caused by the global grounding.

The US Federal Aviation Administration, which was the last official body to ground the troubled jet on a nationwide scale, is currently hosting a conference for the world’s aviation regulators. The event is intended to review software and propose pilot training for Boeing’s customers before deciding whether to end the two-month grounding.

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Tesla stock continues to crash as Morgan Stanley adds fuel to the fire

Elon Musk’s company stock was down 3.5 percent in premarket trading and was down more than 2.6 percent after the opening bell on Tuesday. Thus Tesla shares have declined in 10 of the last 11 trading days.

The yet another negative start came just one day after the stock plummeted below $200 on intraday trading, hitting the lowest price since December 2016. Monday’s collapse came after Wedbush Securities cut its price target on Tesla stock from $275 to $230 per share, with its analyst citing “major concerns” about the company’s future.

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The new blow negatively affecting Tesla’s stock came from Morgan Stanley on Tuesday. A researcher from the investment bank slashed its bear forecast on Tesla’s stock from $97 to $10, stressing that the company misses the current Chinese volume forecast “by roughly half.” The electric cars’ producer may have over-saturated the retail market for battery electric vehicles outside of China, the analyst added.

“However, Tesla may now find itself in a cycle where a lower share price may itself contribute to a potential deceleration of employee morale as well as potentially increased counterparty risk with both customers and business partners … potentially further impacting fundamentals,” Adam Jonas of Morgan Stanley said in a note.

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Earlier, investors were spooked after Musk told employees that the company must review “literally every payment” from its bank account amid tough cost-cutting measures or it will run out of cash in about 10 months. This is despite the $2.7 billion Tesla recently raised from stock and convertible notes.

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