Trump says U.S., China still talking on trade but not ready for a deal

FILE PHOTO: U.S. President Donald Trump speaks about the shootings in El Paso and Dayton in the Diplomatic Room of the White House in Washington, U.S., August 5, 2019. REUTERS/Leah Millis

By Roberta Rampton

WASHINGTON (Reuters) – President Donald Trump said on Friday that the United States and China were still pursuing a trade agreement but he was not ready to make a deal.

Speaking to reporters at the White House before departing for fundraisers in New York state, Trump also said the United States would continue to refrain from doing business with Chinese telecoms equipment giant Huawei Technologies.

U.S. stocks extended losses after his comments, looking set to end a punishing week deep in the red on rising trade war worries.[.N]

“We’re doing very well with China. We’re talking with China. We’re not ready to make a deal – but we’ll see what happens,” Trump said.

“China wants to do something, but I’m not ready to do anything yet. Twenty-five years of abuse – I’m not ready so fast, so we’ll see how that works out.” the president added.

Trump said the United States would not do business with Huawei for the time being, although that might change with a trade deal.

The U.S. Commerce Department, which had effectively banned Huawei in May from purchasing U.S. technology, software and services over national security concerns, had been considering granting some licenses for American companies to sell certain products to Huawei.

(Reporting by Roberta Rampton and Jonas Ekblom; Writing by David Lawder and Humeyra Pamuk; Editing by Steve Orlofsky and Howard Goller)

Latest U.S.-China trade talks called ‘constructive’ by both sides

Chinese Vice Premier Liu He, at right, looks over as United States Trade Representative Robert Lighthizer, third from left gestures near Treasury Secretary Steve Mnuchin, second from left before the start of talks at the Xijiao Conference Center in Shanghai, China July 31, 2019. Ng Han Guan/Pool via REUTERS

By Brenda Goh and David Stanway

SHANGHAI (Reuters) – U.S. and Chinese negotiators wrapped up a brief round of trade talks on Wednesday that both sides described as “constructive,” including discussions over further Chinese purchases of American farm goods and an agreement to reconvene in September.

The first face-to-face talks since a ceasefire was agreed to last month in the trade war between the world’s two largest economies amounted to a working dinner on Tuesday at Shanghai’s historic Fairmont Peace Hotel and a half-day meeting on Wednesday, before U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin flew out.

“The meetings were constructive, and we expect negotiations on an enforceable trade deal to continue in Washington … in early September,” White House spokeswoman Stephanie Grisham said in a statement.

“Both sides, according to the consensus reached by the two leaders in Osaka, had a candid, highly effective, constructive and deep exchange on major trade and economic issues of mutual interest,” China’s Commerce Ministry said in a statement shortly after the U.S. team left Shanghai.

It was not immediately clear what, if any, further agricultural products China agreed to buy from the United States and when – an issue that had become a bone of contention after U.S. President Donald Trump said China had not made good on promised purchases.

“The Chinese side confirmed their commitment to increase purchases of United States agricultural exports,” the White House’s Grisham said, offering no other details.

Representatives for the U.S. Trade Representative’s office did not immediately respond to a request for comment.

The Chinese statement said negotiators discussed more Chinese purchases of agricultural products from the United States, but did not say there was any agreement to buy more.

The talks began amid low expectations. Trump on Tuesday warned China against waiting out his first term to finalize any trade deal, saying if he wins re-election in the November 2020 U.S. presidential contest, the outcome will be worse for China.

Fresh fears over the trade war and concerns about a protracted fight with little near-term progress weighed on global markets on Wednesday.

Chinese Foreign Ministry spokeswoman Hua Chunying said on Wednesday that she was not aware of the latest developments during the talks, but that it was clear it was the United States that continued to “flip flop”.

“I believe it doesn’t make any sense for the U.S. to exercise its campaign of maximum pressure at this time,” Hua told a news briefing in response to a question about the tweets.

“It’s pointless to tell others to take medication when you’re the one who is sick,” she said.

EARLY FINISH

The U.S.-China trade war has disrupted global supply chains and shaken financial markets as each side has slapped tariffs on billions of dollars of each other’s goods.

An official Chinese government survey released on Wednesday showed factory activity shrank for the third month in a row in July, underlining the growing strains the dispute has placed on the No. 2 economy.

The Shanghai talks were expected to center on “goodwill” gestures, such as Chinese commitments to purchase U.S. agricultural commodities and steps by the United States to ease some sanctions on Chinese telecoms equipment giant Huawei Technologies Co Ltd, a person familiar with the discussions told Reuters earlier.

Those issues are somewhat removed from the primary U.S. complaints in the trade dispute such as Chinese state subsidies, forced technology transfers and intellectual property violations – all topics the White House in its statement said were discussed. China’s account of the discussions did not mention any of the non-agricultural issues.

Trump and Chinese President Xi Jinping agreed in June at the G20 summit in Osaka, Japan, to restart trade talks that stalled in May, after Washington accused Beijing of reneging on major portions of a draft agreement. The collapse in talks prompted a steep U.S. tariff hike on $200 billion of Chinese goods.

The U.S. Commerce Department put Huawei on a national security blacklist in May, effectively banning U.S. firms from selling to Huawei, a move that enraged Chinese officials.

Trump said after the Osaka meeting that he would not impose new tariffs on a final $300 billion of Chinese imports and would ease some U.S. restrictions on Huawei if China agreed to make purchases of U.S. agricultural products.

But so far, U.S. semiconductor and software makers are still mostly in the dark about the administration’s plans.

In Sao Paulo on Tuesday, U.S. Commerce Secretary Wilbur Ross said decisions on license applications by U.S. firms to resume some sales to Huawei could come as early as next week.

Hu Xijin, editor-in-chief of China’s nationalistic Global Times tabloid, run by the ruling Communist Party’s People’s Daily newspaper, wrote on Twitter that the negotiators had “efficient and constructive” exchanges.

“The two sides discussed increasing purchase of U.S. farm products and the U.S. side agreed to create favorable conditions for it. They will hold future talks,” Hu said, without elaborating.

(Reporting by Brenda Goh, David Stanway, Yilei Sun, Engen Tham, and Josh Horwitz in Shanghai, and Huizhong Wu in Beijing; and Roberta Rampton, David LAwder and Andrea Shalala in Washington; Writing by Michael Martina in Beijing and Susan Heavey in Washington; Editing by Simon Cameron-Moore, Kim Coghill and Will Dunham)

U.S., China to relaunch talks with little changed since deal fell apart

By David Lawder and Chris Prentice

WASHINGTON/NEW YORK (Reuters) – The United States and China are set to relaunch trade talks this week after a two-month hiatus, but a year after their trade war began there is little sign their differences have narrowed.

After meeting with Chinese President Xi Jinping in Japan just in late June, U.S. President Donald Trump agreed to suspend a new round of tariffs on $300 billion worth of imported Chinese consumer goods while the two sides resumed negotiations.

Trump said then that China would restart large purchases of U.S. agricultural commodities, and the United States would ease some export restrictions on Chinese telecom equipment giant Huawei Technologies.

But sources familiar with the talks and China trade watchers in Washington say the summit did little to clear the path for top negotiators to resolve an impasse that caused trade deal talks to break down in early May.

A U.S. official said last week the discussions were expected to resume with a phone call between U.S. Trade Representative Robert Lighthizer, Chinese Vice Premier Liu He and Treasury Secretary Steven Mnuchin.

A USTR spokesman said the call was expected this week, but gave no further details.

The United States is demanding that China make sweeping policy changes to better protect American intellectual property, end the forced transfer and theft of trade secrets and curb massive state industrial subsidies. At stake, U.S. officials say, is dominance of the high-tech industries of the future, from artificial intelligence to aerospace.

“We’ve had a change in atmospherics,” said Derek Scissors, a China expert at the American Enterprise Institute, a business-oriented Washington think tank. “While this is great for markets, the administration has not said one specific thing about how we’re unstuck.”

Scissors, who has at times consulted with Trump administration officials, said that both sides got what they wanted out of the summit — a lowering of the temperature and the avoidance of new tariffs that would have been painful for both sides.

“The pressure for one side to give into the other is diffused right now. I expect this to drag out for months,” Scissors added.

NO FIRM COMMITMENTS

Washington and Beijing appear to have different ideas of what the two leaders agreed in Osaka.

Three sources familiar with the state of negotiations say that the Chinese side did not make firm commitments to immediately purchase agricultural commodities.

One of the sources said Trump raised the issue of agricultural purchases twice during the meeting, but Xi only agreed to consider purchases in the context of a broader final agreement.

Other than a small purchase of American rice by a private Chinese firm, no purchases have materialized. Chinese officials and state media accounts in the past week have emphasized that any deal, including agricultural purchases, is dependent on removal of U.S. tariffs.

“The Chinese have been clear they didn’t promise anything,” said one source familiar with the talks.

“The idea they would give up their main leverage before getting anything doesn’t make sense. I could see them buying some pork and buying some soybeans, but it’s still going to be pennies.”

Trump administration officials have also downplayed the extent of pledges to allow Huawei to purchase U.S. technology products, with White House trade adviser Peter Navarro saying that only “lower-tech” U.S. semiconductors could be made available for sale to the company..

Reuters reported last week that the Commerce Department’s export control enforcement staff was told to continue to treat Huawei as a blacklisted entity as the department considers requests for licenses to U.S. firms to sell products and services to Huawei

Chinese officials point out that they only got the United States to concede on Huawei at the Osaka talks, rather than on their other demand, which was removing the existing tariffs.

So the focus on the upcoming talks will be the scrapping on the tariffs, they say.

A second source said that U.S. tariffs on $250 billion worth of Chinese goods and Chinese tariffs on $160 billion worth of U.S. goods could wind up being “the new normal.”

One Chinese official familiar with the situation said that trade talks would be re-started very quickly, but that there was a “fairly large gap” in the core demands of both countries and it would be a challenge to reach consensus on the toughest issues.

“The negotiating environment is even more severe,” the official said.

Another official said China remained concerned about the presence of hawks in the U.S. team, such as Trump advisor Peter Navarro.

“There are bullies there,” the official said.

The officials spoke to Reuters on condition of anonymity.

China’s foreign ministry cited Xi as telling Trump at Osaka that “on issues concerning China’s sovereignty and dignity, China must safeguard its core interests”.

A senior Beijing-based Asia diplomat said there would be pressure on China’s leadership not to give in to the United States and for any outcomes to seen as equal and balanced.

“A trade deal cannot be portrayed as a victory for the United States,” the diplomat said, citing conversations with Chinese officials.

WHICH TEXT?

There has been no indication the two sides will resume negotiations using a text that had been largely agreed before China backtracked on commitments in early May, prompting Trump to proceed with a long-threatened tariff hike to 25 percent on a $200 billion list of Chinese imports.

Beijing had cut out of that text commitments to make changes to its laws reflecting reform pledges, arguing that this would violate its national sovereignty.

Lighthizer has insisted on legal changes to make it more likely that Chinese reform pledges will be carried out.

Finding a way around this issue is paramount for talks. Beyond that, there are many other difficult issues to resolve, including the structure of an enforcement mechanism designed to hold the two sides to their pledges.

U.S. demands for curbs to provincial and local subsidies for Chinese state companies, access to China’s cloud computing market, agricultural biotech approvals and the ultimate size of China’s purchases of agricultural products are all divisive issues for the two sides.

Claire Reade, a former China trade negotiator at USTR who is now a Washington-based trade lawyer with the firm Arnold and Porter, said there was room on both sides to get a deal.

“It’s a question of political will and there are ways to maneuver around the current red flags that have been put in the ground,” Reade said. “Both President Xi and President Trump have to come out of this saying they stood strong, and they in-effect got a win.”

One way for China to avoid the appearance of giving in to U.S. demands is to take some legal steps on key issues before the deal is agreed. That way they can say they’re doing it on their own terms, she added.

(Additional reporting by Ben Blanchard in Beijing and Andrea Shalal in Washington; Editing by Simon Webb and Alistair Bell)

Trump officials say U.S.-China trade talks to resume next week

Workers load goods for export onto a crane at a port in Lianyungang, Jiangsu province, China June 7, 2019. Picture taken June 7, 2019. REUTERS/Stringer

By Jeff Mason

WASHINGTON (Reuters) – Top representatives of the United States and China are organizing a resumption of talks for next week to try to resolve a year-long trade war between the world’s two largest economies, Trump administration officials said on Wednesday.

“Those talks will continue in earnest this coming week,” White House Economic Adviser Larry Kudlow told reporters in a briefing.

An official from the Office of the U.S. Trade Representative said later that the two sides were in the process of scheduling a principal-level phone call with Chinese officials for next week.

The principal negotiators on the U.S. side are U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, while China’s top negotiator is Vice Premier Liu He.

The two sides have been in communication by telephone since last weekend, when U.S. President Donald Trump and Chinese President Xi Jinping agreed to relaunch talks that had stalled in May.

Kudlow was unclear about the timeline for relaunching face-to-face talks, saying that these would begin “soon” and that an announcement would be forthcoming.

“I don’t know precisely when. They’re on the phone. They’re going to be on the phone this coming week and they’ll be scheduling face-to-face meetings,” he said.

Talks between the two sides broke down in May after U.S. officials accused China of pulling back from commitments it had made previously in the text of an agreement that negotiators said was nearly finished.

The United States accuses China of allowing intellectual property theft and forcing U.S. companies to share their technology with Chinese counterparts in order to do business in China. It wants China to change its laws on those and other issues.

China denies such practices and is reluctant to make sweeping legal changes.

Both countries have levied tariffs on the other, but Trump made two major concessions at the meeting with Xi to get talks started again: he agreed not to put tariffs on some $300 billion in additional Chinese imports and to loosen restrictions on Chinese technology company Huawei.

China welcomed the U.S. decision not to put new tariffs on Chinese goods, commerce ministry spokesman Gao Feng told a regular media briefing on Thursday, but added the removal of existing U.S. tariffs was essential for a trade deal.

“The U.S. move to unilaterally increase tariffs on Chinese imports started the Sino-U.S. economic and trade frictions. If both sides could reach a deal, those tariffs must be completely removed,” said Gao.

The United States has 25% tariffs on $250 billion of Chinese goods now ranging from semi-conductors to furniture.

“We’ve been accommodative. We will not lift tariffs during the talks,” Kudlow said. “We are hoping that China will toe its end of it by purchasing a good many of American imports.”

Gao said China hoped the United States would follow through on Trump’s promise to ease restrictions on telecommunications giant Huawei.

Trump surprised markets on Saturday with an announcement that U.S. companies would be allowed to sell products to Huawei, which was placed on a so-called Entity List in May over national security concerns.

But industry and government officials are uncertain what the new policy will be.

The U.S. Commerce Department is reviewing license requests from U.S. companies seeking to export products to Huawei “under the highest national security scrutiny”.

(Reporting by Jeff Mason and David Lawder in Washington; Additional reporting by Stella Qiu; Editing by James Dalgleish and Lisa Shumaker)

Trump says China trade talks ‘back on track,’ new tariffs on hold

U.S. President Donald Trump and China's President Xi Jinping shake hands before their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque

By Roberta Rampton and Michael Martina

OSAKA (Reuters) – The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.

China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table, Trump said. No deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant parts of an agreement.

The last major round of talks collapsed in May.

Financial markets, which have been rattled by the nearly year-long trade war, are likely to cheer the truce. Washington and Beijing have slapped tariffs on billions of dollars of each other’s imports, stoking fears of a wider global trade war. Those tariffs remain in place while negotiations resume.

“We’re right back on track,” Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping at a summit of leaders of the Group of 20 (G20) major economies in Osaka, Japan.

“We’re holding back on tariffs and they’re going to buy farm products,” Trump said, without giving details about the purchases.

Trump tweeted hours later that the meeting with Xi went “far better than expected.”

“The quality of the transaction is far more important to me than speed,” he tweeted. “I am in no hurry, but things look very good!”

The U.S. president had threatened to slap new levies on roughly $300 billion of additional Chinese goods, including popular consumer products if the meeting in Japan proved unsuccessful. Such a move would have extended existing tariffs to almost all Chinese imports into the United States.

In a lengthy statement on the two-way talks, China’s foreign ministry quoted Xi as telling Trump he hoped the United States could treat Chinese companies fairly.

“China is sincere about continuing negotiations with the United States … but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.

Trump offered an olive branch to Xi on Huawei Technologies Co [HWT.UL], the world’s biggest telecom network gear maker. The Trump administration has said the Chinese firm is too close to China’s government and poses a national security risk, and has lobbied U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure.

Trump’s Commerce Department has put Huawei on its “entity list,” effectively banning the company from buying parts and components from U.S. companies without U.S. government approval.

But Trump said on Saturday he did not think that was fair to U.S. suppliers, who were upset by the move. “We’re allowing that, because that wasn’t national security,” he said.

CHEERS FROM CHIP MAKERS

Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval.

China welcomed the step.

“If the U.S. does what it says, then of course, we welcome it,” said Wang Xiaolong, the Chinese foreign ministry’s envoy for G20 affairs.

U.S. microchip makers also applauded the move.

“We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei,” John Neuffer, president of the U.S. Semiconductor Association, said in a statement.

Republican U.S. Senator Marco Rubio, however, tweeted that any agreement to reverse the recent U.S. action against Huawei would be a “catastrophic mistake” and that legislation would be needed to put the restrictions back in place if that turned out to be the case.

Last month, Rubio and Democratic U.S. Senator Mark Warner urged Trump to not use Huawei as a bargaining chip for trade negotiations.

Huawei has come under mounting scrutiny for over a year, led by U.S. allegations that “back doors” in its routers, switches and other gear could allow China to spy on U.S. communications.

The company has denied its products pose a security threat. It declined to comment on the developments on Saturday.

The problems at Huawei have filtered across to the broader chip industry, with Broadcom Inc warning of a broad slowdown in demand and cutting its revenue forecast.

Trump said he and Xi did not discuss the extradition proceedings against Meng Wanzhou, Huawei’s chief financial officer, who was arrested in Canada in December on charges alleging she misled global banks about Huawei’s relationship with a company in Iran.

RELIEF AND SCEPTICISM

Scores of Asia specialists, including former U.S. diplomats and military officers, urged Trump to rethink policies that “treat China as an enemy,” warning that approach could hurt U.S. interests and the global economy, according to a draft open letter reviewed by Reuters on Saturday.

Investors, businesses and financial leaders have for months been warning that an intractable tit-for-tat tariff war between the United States and China could damage global supply chains and push the world economy over a cliff.

International Monetary Fund Managing Director Christine Lagarde on Saturday urged G20 policymakers to reduce tariffs and other obstacles to trade, warning that the global economy had hit a “rough patch” due to the trade conflict.

Although analysts cheered a resumption of talks between Washington and Beijing, some questioned whether the two sides would be able to build enough momentum to breach the divide and forge a lasting deal.

“Translating this truce into a durable easing of trade tensions is far from automatic … especially as what’s in play now extends well beyond economics to include delicate national security issues of both immediate- and longer-term nature,” said Mohamed El-Erian, chief economic adviser at Allianz.

The United States says China has been stealing American intellectual property for years, forces U.S. firms to share trade secrets as a condition for doing business in China, and subsidizes state-owned firms to dominate industries.

China has said the United States is making unreasonable demands and must also make concessions.

The negotiations hit an impasse in May after Washington accused Beijing of reneging on reform pledges made during months of talks. Trump raised tariffs to 25% from 10% on $200 billion of Chinese goods, and China retaliated by raising levies on a list of U.S. imports.

(Reporting by Roberta Rampton, Michael Martina and Chris Gallagher in Osaka; Additional reporting by Koh Gui Qing in New York, Ben Blanchard in Beijing and Leika Kihara in Osaka and Jennifer Ablan in New York; Writing by Linda Sieg, Malcolm Foster, Jeff Mason and Paul Simao; Editing by Clarence Fernandez, Himani Sarkar)

Trump prepares for ‘productive’ talks with Xi on trade war

Japan's Prime Minister Shinzo Abe is flanked by U.S. President Donald Trump and China's President Xi Jinping during a meeting at the G20 leaders summit in Osaka, Japan, June 28, 2019. REUTERS/Kevin Lamarque

By Roberta Rampton

OSAKA (Reuters) – U.S. President Donald Trump on Friday said he hoped for productive talks with Chinese President Xi Jinping on a trade war that is casting a shadow on global growth, but said he had not made any promises about a reprieve from escalating tariffs.

The trade feud and signs of a global slowdown have loomed over a two-day Group of 20 (G20) summit in the Japanese city of Osaka, where Trump and Xi met in passing and prepared for one-on-one talks on Saturday.

To lay the groundwork, Chinese Vice Premier Liu He met Trump’s treasury secretary, Steven Mnuchin, and Trade Representative Robert Lighthizer at the hotel where the U.S. delegation was staying, a source familiar with the talks said.

Expectations have dimmed that the world’s two biggest economies can ease tension when Trump and Xi meet.

“At a minimum it will be productive. We’ll see what happens and what comes out of it,” Trump told reporters after a series of meetings with leaders where he made clear that his priority was two-way trade deals to boost the U.S. economy.

Asked, however, if he had promised Xi a six-month reprieve on imposing new tariffs on a $300 billion list of Chinese imports, Trump said: “No.”

Trump has already imposed tariffs on $250 billion of Chinese imports and is threatening to extend those to another $300 billion of goods, effectively everything China exports to the United States. China has retaliated with tariffs on U.S. imports.

Asian shares stumbled and gold slipped on Friday, as doubts grew that the highly anticipated meeting between the two leaders would bring progress.

In Beijing, foreign ministry spokesman Geng Shuang said he hoped the U.S. side could meet China halfway.

“This accords with the interests of both countries and is what the international community is hoping for,” he told a news briefing.

China has consistently pushed back against criticism from Western countries, especially the United States and European Union, about things like intellectual property rights and the difficulty of doing business in China.

“China’s promise to expand its opening up is not just a cheque that can’t be cashed,” Xi told German Chancellor Angela Merkel at a side meeting in Osaka.

THREAT TO GLOBAL GROWTH

Trump’s administration also has trade feuds with India, Japan and Germany, whose leaders he met on Friday.

Trump said he saw U.S. trade prospects improving, days after criticizing the U.S.-Japan security treaty and demanding that India withdraw retaliatory tariffs.

“I think we’re going to have some very big things to announce. Very big trade deal,” Trump said before he began talks with Indian Prime Minister Narendra Modi. He gave no details.

A White House official said the two leaders had called on their teams to work on mutually beneficial trade solutions.

Trump also made a push to discuss U.S. concerns about Chinese telecoms equipment maker Huawei.

The United States has pressed its allies to shun Huawei in their fifth generation, or 5G, networks on security grounds, and it has also suggested it could be a factor in a trade deal with Xi.

“We actually sell Huawei many of its parts,” Trump said at his meeting with Modi. “So we’re going to be discussing that and also how India fits in. And we’ll be discussing Huawei.”

Several leaders warned that the growing Sino-U.S. trade friction was threatening global growth.

“The trade relations between China and the United States are difficult, they are contributing to the slowdown of the global economy,” European Commission President Jean-Claude Juncker told a news conference.

Xi also warned about the protectionist steps he said some developed countries were taking.

“All this is destroying the global trade order … This also impacts common interests of our countries, overshadows peace and stability worldwide,” Xi told a gathering of leaders of the BRICS grouping on the sidelines of the G20.

Japanese Prime Minister Shinzo Abe, other leaders and delegates attend a family photo session at G20 leaders summit in Osaka, Japan, June 28, 2019. REUTERS/Kim Kyung-Hoon/Pool

Japanese Prime Minister Shinzo Abe, other leaders and delegates attend a family photo session at G20 leaders summit in Osaka, Japan, June 28, 2019. REUTERS/Kim Kyung-Hoon/Pool

REFORMING WORLD TRADE RULES

Modi, at the same meeting, called for a focus on reforming the World Trade Organization (WTO) and Russian President Vladimir Putin decried what he called efforts to destroy the Geneva-based body.

“We consider counter-productive any attempts to destroy WTO or to lower its role,” Putin said.

The situation of the global economy was worrying, as trade felt the effect of “protectionism (and) politically motivated restrictions”, he added.

Russian Economy Minister Maxim Oreshkin said there was no agreement on how to reform the WTO system, whose rules Washington believes are outdated, though a Japanese official said G20 members agreed on the importance of reform.

The G20 leaders were also struggling to find common ground on issues such as information security, climate change and migration, said Svetlana Lukash, a Russian official helping to coordinate the meetings.

A White House official took a more positive view, saying there was a “good sense of unity in the room” between most leaders on working together on economic issues.

“China was less positive in its outlook which was in stark contrast to basically everybody else,” said the official, who spoke on condition of anonymity.

Trump, who often castigates trading partners on Twitter and at raucous political rallies, put a positive spin on trade developments.

“I appreciate the fact that you’re sending many automobile companies into Michigan and Ohio and Pennsylvania and North Carolina,” Trump told Japanese Prime Minister Shinzo Abe, who had presented him with a map showing the locations of Japanese auto investments in the United States.

Abe urged G20 leaders to send a strong message in support of free and fair trade, warning that trade and geopolitical tensions were rising and downside risks to the global economy prevailed. He also said he wanted to see momentum toward WTO reform.

Japanese and U.S. officials will meet next month to accelerate progress toward a trade deal, Economy Minister Toshimitsu Motegi told reporters after meeting Lighthizer, but added that they did not discuss a target date.

(Additional reporting by Leika Kihara, Kiyoshi Takenaka and Katya Golubkova; Additional reporting by Ben Blanchard in BEIJING; Writing by Linda Sieg in Tokyo; Editing by Clarence Fernandez, Robert Birsel and Nick Macfie)

Donald Trump welcomed to Buckingham Palace by Queen Elizabeth

U.S. President Donald Trump inspects an honour guard at Buckingham Palace, in London, Britain, June 3, 2019. REUTERS/Simon Dawson/Pool

By Steve Holland and Toby Melville

LONDON (Reuters) – Britain rolled out the royal red carpet for Donald Trump on Monday but the pomp, pageantry and banquet with Queen Elizabeth looked set to be overshadowed by the U.S. President’s views on Brexit, the UK’s next leader and a row over China’s Huawei.

U.S. President Donald Trump and First Lady Melania Trump arrive for their state visit to Britain, at Stansted Airport near London, Britain, June 3, 2019. REUTERS/Carlos Barria

U.S. President Donald Trump and First Lady Melania Trump arrive for their state visit to Britain, at Stansted Airport near London, Britain, June 3, 2019. REUTERS/Carlos Barria

Trump and his wife, Melania, were greeted by the 93-year-old monarch at Buckingham Palace at the start of a three-day state visit which sees him feted with the full force of royal ceremony: a formal dinner with the queen, tea with heir Prince Charles, and a tour of Westminster Abbey, coronation church of English monarchs for 1,000 years.

“I look forward to being a great friend to the United Kingdom, and am looking very much forward to my visit,” Trump wrote on Twitter as he landed at London’s Stansted Airport.

But beyond the theater, the proudly unpredictable 45th U.S. president is rocking the boat with the United States’ closest ally, whose political establishment has been in chaos for months over Britain’s departure from the European Union.

As he was flying into the British capital, he reignited a feud with London Mayor Sadiq Khan – who had written on Sunday that Britain should not be rolling out the red carpet for the U.S. president – describing him as a “stone cold loser.

The state visit, promised by Prime Minister Theresa May back in January 2017 when she became the first foreign leader to meet him after he took office, is cast as a chance to celebrate Britain’s “special relationship” with the United States, boost trade links and reaffirm security cooperation.

At Buckingham Palace, Melania, stood beside Elizabeth and Charles’s wife Camilla, while Charles and Trump inspected the guard.

Trump will have lunch with the queen before the monarch’s second son Prince Andrew accompanies him to Westminster Abbey where the president will lay a wreath at the Grave of the Unknown Warrior.

The day culminates with a lavish state banquet at Buckingham Palace – where men wear white tie coats with tails and women evening gowns.

U.S. President Donald Trump and First Lady Melania Trump meet Britain's Prince Charles and Camilla, Duchess of Cornwall, as they arrives at Buckingham Palace, in London, Britain, June 3, 2019. REUTERS/Simon Dawson/Pool

U.S. President Donald Trump and First Lady Melania Trump meet Britain’s Prince Charles and Camilla, Duchess of Cornwall, as they arrives at Buckingham Palace, in London, Britain, June 3, 2019. REUTERS/Simon Dawson/Pool

UNCONVENTIONAL

But away from the pageantry, Trump is set to make his trip the most unconventional state visit in recent British history.

He has already waded far into Britain’s turbulent domestic politics, where more than a dozen candidates are vying to replace May, who announced last month she was quitting after failing to get her EU divorce deal through parliament.

The president, who has regularly criticized May’s Brexit tactics, said Britain must leave the bloc on the due date of Oct. 31 with or without a deal and praised a more radical Brexit-supporting potential successor as British leader.

He also called for arch-Brexiteer Nigel Farage, a scourge of May’s ruling Conservative Party, to conduct talks with the EU.

Brexit is the most significant geopolitical move for the United Kingdom since World War Two and if it ever happens then London will be more reliant on the United States as ties loosen with the other 27 members of the EU.

HUAWEI TENSIONS

At a meeting with May, Trump will also warn Britain that security cooperation, a cornerstone of the western intelligence network, could be hurt if London allows China’s Huawei a role in building parts of the 5G network, the next generation of cellular technology.

The Trump administration has told allies not to use its 5G technology and equipment because of fears it would allow China to spy on sensitive communications and data. Huawei denies it is, or could be, a vehicle for Chinese intelligence.

U.S. Secretary of State Mike Pompeo told Britain last month it needed to change its attitude toward China and Huawei, casting the world’s second-largest economy as a threat to the West similar to that once posed by the Soviet Union.

Britain’s relationship with the United States is an enduring alliance, but some British voters see Trump as crude, volatile and opposed to their values on issues ranging from global warming to his treatment of women.

Hundreds of thousands protested against him during a trip last year and a blimp depicting Trump as a snarling, nappy-clad baby will fly outside Britain’s parliament during the visit. Other protesters plan a “carnival of resistance” in central London.

Jeremy Corbyn, the socialist leader of Britain’s opposition Labour Party, who has declined an invitation to attend the state banquet, scolded Trump for getting involved in British politics.

 

While Monday is dominated by pageantry, the second day of Trump’s trip will focus on politics, including breakfast with business leaders, talks with May in 10 Downing Street, a news conference and a dinner at the U.S. ambassador’s residence.

(Additional reporting by Kate Holton, Andrew MacAskill, Alistair Smout and William Schomberg; Writing by Guy Faulconbridge and Michael Holden; Editing by Jon Boyle)

Special report – Hobbling Huawei: Inside the U.S. war on China’s tech giant

By Cassell Bryan-Low, Colin Packham, David Lague, Steve Stecklow and Jack Stubbs

CANBERRA (Reuters) – In early 2018, in a complex of low-rise buildings in the Australian capital, a team of government hackers was engaging in a destructive digital war game.

The operatives; agents of the Australian Signals Directorate, the nation’s top-secret eavesdropping agency. had been given a challenge. With all the offensive cyber tools at their disposal, what harm could they inflict if they had access to equipment installed in the 5G network, the next-generation mobile communications technology, of a target nation?

What the team found, say current and former government officials was sobering for Australian security and political leaders: The offensive potential of 5G was so great that if Australia were on the receiving end of such attacks, the country could be seriously exposed. The understanding of how 5G could be exploited for spying and to sabotage critical infrastructure changed everything for the Australians, according to people familiar with the deliberations.

Mike Burgess, the head of the signals directorate, recently explained why the security of fifth generation, or 5G, technology was so important: It will be integral to the communications at the heart of a country’s critical infrastructure – everything from electric power to water supplies to sewage, he said in a March speech at a Sydney research institute.

Washington is widely seen as having taken the initiative in the global campaign against Huawei Technologies Co Ltd, a tech juggernaut that in the three decades since its founding has become a pillar of Beijing’s bid to expand its global influence. Yet Reuters interviews with more than two dozen current and former Western officials show it was the Australians who led the way in pressing for action on 5G; that the United States was initially slow to act; and that Britain and other European countries are caught between security concerns and the competitive prices offered by Huawei.

The Australians had long harbored misgivings about Huawei in existing networks, but the 5G war game was a turning point. About six months after the simulation began, the Australian government effectively banned Huawei, the world’s largest maker of telecom networking gear, from any involvement in its 5G plans. An Australian government spokeswoman declined to comment on the war game.

After the Australians shared their findings with U.S. leaders, other countries, including the United States, moved to restrict Huawei.

The anti-Huawei campaign intensified last week, when President Donald Trump signed an executive order that effectively banned the use of Huawei equipment in U.S. telecom networks on national security grounds and the Commerce Department put limits on the firm’s purchasing of U.S. technology. Google’s parent, Alphabet, suspended some of its business with Huawei, Reuters reported.

Until the middle of last year, the U.S. government largely “wasn’t paying attention,” said retired U.S. Marine Corps General James Jones, who served as national security adviser to President Barack Obama. What spurred senior U.S. officials into action? A sudden dawning of what 5G will bring, according to Jones.

“This has been a very, very fast-moving realization” in terms of understanding the technology, he said. “I think most people were treating it as a kind of evolutionary step as opposed to a revolutionary step. And now that light has come on.”

The Americans are now campaigning aggressively to contain Huawei as part of a much broader effort to check Beijing’s growing military might under President Xi Jinping. Strengthening cyber operations is a key element in the sweeping military overhaul that Xi launched soon after taking power in 2012, according to official U.S. and Chinese military documents. The United States has accused China of widespread, state-sponsored hacking for strategic and commercial gain.

A THREAT TO CRITICAL INFRASTRUCTURE

If Huawei gains a foothold in global 5G networks, Washington fears this will give Beijing an unprecedented opportunity to attack critical infrastructure and compromise intelligence sharing with key allies. Senior Western security officials say this could involve cyber attacks on public utilities, communication networks and key financial centers.

In any military clash, such attacks would amount to a dramatic change in the nature of war, inflicting economic harm and disrupting civilian life far from the conflict without bullets, bombs or blockades. To be sure, China would also be vulnerable to attacks from the U.S. and its allies. Beijing complained in a 2015 defense document, “China’s Military Strategy,” that it has already been a victim of cyber-espionage, without identifying suspects. Documents from the National Security Agency leaked by American whistleblower Edward Snowden showed that the United States hacked into Huawei’s systems, according to media reports. Reuters couldn’t independently verify that such intrusions took place.

However, blocking Huawei is a huge challenge for Washington and its closest allies, particularly the other members of the so-called Five Eyes intelligence-sharing group; Britain, Canada, Australia and New Zealand. From humble beginnings in the 1980s in the southern Chinese boomtown of Shenzhen, Huawei has grown to become a technology giant that is deeply embedded in global communications networks and poised to dominate 5G infrastructure. There are few global alternatives to Huawei, which has financial muscle – the company reported revenue for 2018 jumped almost 20 percent to more than $100 billion – as well as competitive technology and the political backing of Beijing.

“Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger,” the company said in a statement in response to questions from Reuters. Such moves, it said, would only limit “customers in the U.S. to inferior and more expensive alternatives.”

For countries that exclude Huawei there is a risk of retaliation from Beijing. Since Australia banned the company from its 5G networks last year, it has experienced disruption to its coal exports to China, including customs delays on the Chinese side. In a statement, China’s foreign ministry said it treated “all foreign coal equally” and that to assert “China has banned the import of Australian coal does not accord with the facts.”

Tension over Huawei is also exposing divisions in the Five Eyes group, which has been a foundation of the post-Second World War Western security architecture. During a trip to London on May 8, U.S. Secretary of State Mike Pompeo issued a stark warning to Britain, which has not ruled out using Huawei in its 5G networks. “Insufficient security will impede the United States’ ability to share certain information within trusted networks,” he said. “This is exactly what China wants; they want to divide Western alliances through bits and bytes, not bullets and bombs.”

Huawei’s 74-year old founder, Ren Zhengfei, is a former officer in China’s military, the People’s Liberation Army. “Mr. Ren has always maintained the integrity and independence of Huawei,” the company said. “We have never been asked to cooperate with spying and we would refuse to do so under any circumstance.”

In an interview with Reuters at the company’s headquarters in Shenzhen, Eric Xu, a deputy chairman, said Huawei had not allowed any government to install so-called backdoors in its equipment – illicit access that could enable espionage or sabotage – and would never do so. He said 5G was more secure than earlier systems.

“China has not and will not demand companies or individuals use methods that run counter to local laws or via installing ‘backdoors’ to collect or provide the Chinese government with data, information or intelligence from home or abroad,” the Chinese foreign ministry said in a statement in response to questions from Reuters.

Washington argues that surreptitious backdoors aren’t necessarily needed to wreak havoc in 5G systems. The systems will rely heavily on software updates pushed out by equipment suppliers – and that access to the 5G network, says the United States, potentially could be used to deploy malicious code.

So far, America hasn’t publicly produced hard evidence that Huawei equipment has been used for spying.

Asked whether the United States was slow to react to potential threats posed by 5G, Robert Strayer, the State Department’s lead cyber policy diplomat, told Reuters that America had long been concerned about Chinese telecom companies, but that over the past year, as 5G loomed closer, “we were starting to talk more and more with our allies.” Banning Huawei from 5G networks remains “an end goal,” he said.

THE TECH THREAT

The West has long harbored concerns about Chinese telecom equipment. In 2012, a U.S. House Intelligence Committee report concluded Chinese tech companies posed a national security threat. Huawei denounced the finding.

Despite such concerns, the U.S. government’s response to the threats posed by 5G only took shape more recently.

In February 2018, Malcolm Turnbull, then prime minister of Australia, flew to Washington D.C. Even before Australia’s eavesdropping agency had run its war game, Turnbull was already raising red flags in Washington. A former technology entrepreneur, he believed 5G presented significant risks and wanted to press allies to act against Huawei.

“He was warning about how important 5G networks would be and the security risks we all needed to think about around countries that had capability, form and intent, as well as coercive laws,” a senior Australian source told Reuters.

A spokesman for Turnbull declined to comment.

Turnbull and his advisers met U.S. officials, including Kirstjen Nielsen, then U.S. secretary of homeland security, and Michael Rogers, then head of the U.S. National Security Agency, the U.S. signals-intelligence operation. The Australians said they believed Beijing could compel Huawei to do its bidding and that this posed a threat should tensions with China rise in the future, said two of the Australian officials familiar with the meeting.

The U.S. officials were receptive to the Australian message, but imposing restrictions on the world’s largest maker of mobile network gear didn’t appear to be a high priority, according to the two Australian officials. “They didn’t share our concern with the same urgency,” said one.

Rogers declined to comment. A Department of Homeland Security official did not elaborate on the meeting, but said the agency works closely with Australia on security issues and that “China will continue to use cyber espionage and bolster cyber-attack capabilities to support its national security priorities.”

5G technology is expected to deliver a huge leap in the speed and capacity of communications. Downloading data may be up to 100 times faster than on current networks.

But 5G isn’t only about faster data. The upgrade will see an exponential spike in the number of connections between the billions of devices, from smart fridges to driverless cars, that are expected to run on the 5G network. “It’s not just that there will be more people with multiple devices, but it will be machines talking to machines, devices talking to devices – all enabled by 5G,” said Burgess, the Australian Signals Directorate chief, in his March address.

This configuration of 5G networks means there are many more points of entry for a hostile power or group to conduct cyber warfare against the critical infrastructure of a target nation or community. That threat is magnified if an adversary has supplied equipment in the network, U.S. officials say.

Huawei said in its statement that the company does “not control in any way the networks in which our equipment is deployed by our clients. The US and Australian allegations are fanciful and are not rooted in any evidence at all.”

In July 2018, Britain delivered a blow to Huawei. A government-led panel that includes senior intelligence officials said it was no longer fully confident it could manage national security risks posed by the Chinese telecom equipment giant.

That panel oversees the work of a laboratory that was set up by the British government in 2010 and is funded by Huawei to vet the company’s equipment used in the UK. The facility was established because even then Huawei was perceived as a security risk. The oversight panel said serious problems it had identified with Huawei’s engineering processes “exposed new risks in the UK telecommunication networks and long-term challenges in mitigation and management.”

That report was a “bombshell,” shaping how the Americans viewed the Huawei 5G risk, said one U.S. official.

U.S. officials also point to Chinese laws enacted in recent years that they say could compel individuals and companies to assist the Chinese government in conducting espionage.

China’s foreign ministry called this portrayal by U.S. officials of Chinese legislation “a misreading and a wanton smearing of relevant Chinese laws,” adding: “Trying to smear others to wash oneself clean is futile.”

THE WEST AWAKES

Through the middle of last year, the Australians continued to apprise other countries of their worries about 5G. “We were sharing our concerns about security with many allies, not just the U.S. and not just the traditional partners,” said one of the senior Australian officials. “We shared our thoughts with Japan, Germany, other European countries and South Korea.”

In Washington, the administration began imposing restrictions on Huawei. In August, Trump signed a bill banning federal agencies and their contractors from using equipment from Huawei and ZTE Corp, another Chinese telecom equipment maker. Huawei has since filed a lawsuit in federal court in Texas challenging the ban.

In late August, the Australians went further: They banned companies that didn’t meet their security requirements, which included Huawei, from supplying any equipment for the country’s 5G network, whether run by the government or by private firms.

Australia’s decision, China’s Foreign Ministry said in a statement, “has no basis in fact, and is an abuse of ‘national security’ standards. China urges the Australian side to abandon Cold War thinking and ideological prejudices, and provide a fair, transparent, non-discriminatory environment for Chinese companies.”

In November, New Zealand’s intelligence agency blocked the country’s first request by a telecom service provider to use Huawei kit for a 5G network, citing national security concerns.

Like the Australians and Americans, British security officials had concerns over China’s potential use of Huawei as a channel for conducting espionage. But the options are limited. Huawei is one of only three major global companies that analysts say can supply a broad range of advanced mobile network equipment at scale. The other two are Ericsson and Nokia. And Huawei has a reputation among telecom operators for supplying cost-effective equipment promptly.

Nevertheless, British security officials were becoming increasingly frustrated with what they viewed as Huawei’s failure to fix software flaws in its equipment, particularly discrepancies in the source code; the programs’ underlying set of instructions. This problem means the laboratory near Oxford set up to vet Huawei equipment cannot even be sure that the code it is testing is exactly the same as the code Huawei deploys in its real-world equipment. This makes it difficult to provide safety assurances about the company’s gear.

British officials say the array of flaws could be exploited by China, as well as other malevolent actors. Ian Levy, a British security official who oversees the UK’s review of Huawei equipment, told Reuters the company’s software engineering is like something from 20 years ago. “The chance of a vulnerability with a Huawei piece of kit is much higher than other vendors,” he said.

The company said it has pledged to spend at least $2 billion “over the next five years” to improve its software engineering capabilities.

British ministers have agreed to allow Huawei a restricted role in building parts of its 5G network, but the government has yet to announce its final decision. The European Union has left it to individual governments to decide whether to ban any company on national security grounds. Some European security officials say banning one supplier doesn’t address the broader issue of the risks posed by Chinese technology in general.

HUAWEI FIGHTS BACK

As the tensions between the West and Huawei intensified through last year, they suddenly took a personal turn. U.S. law enforcement officials had for some time been investigating links between Huawei and Iran, including the involvement of Meng Wanzhou, Huawei’s chief financial officer, who is the daughter of the company’s founder. The probe followed Reuters stories in 2012 and 2013 that revealed links between Huawei, Meng and another company that allegedly attempted to violate U.S. sanctions on Iran.

When U.S. officials became aware that Meng would be traveling through Vancouver in December, they pounced, asking Canada to detain her on allegations of bank and wire fraud. Meng remains free on bail in Canada while the U.S. government tries to have her extradited. Huawei said in its statement that Meng “is not guilty of the charges she faces,” and that they are “politically motivated.”

The Huawei conflict isn’t only about U.S.-China superpower rivalry: The activities of Meng and Huawei were under scrutiny by U.S. authorities long before Trump began a trade war with China, according to interviews with people familiar with those probes. But there is no doubt the wider showdown with Huawei has now become intensely geopolitical.

In recent months, the U.S. has ramped up diplomatic efforts to urge allies to sideline Huawei. 5G is a “game-changing technology with implications across all aspects of society from business, government, military and beyond,” Gordon Sondland, U.S. ambassador to the European Union, told Reuters in February. “It seems common sense to me to not hand over the keys to your entire society to an actor that has … demonstrated malign conduct.”

Asked whether there is evidence of Huawei equipment having been used for espionage, Sondland said “there is classified evidence.” He declined to expand on the nature of the material beyond saying there was no doubt that Huawei had “the capability to hack a system” and “the mandate by the government to do so upon request.”

Pompeo has publicly gone further than most U.S. officials by directly linking the company to Beijing. “Huawei is owned by the state of China and has deep connections to their intelligence service,” he said in March. “That should send off flares for everybody who understands what the Chinese military and Chinese intelligence services do.”

Huawei has repeatedly denied it is controlled by the government, military or Chinese intelligence services. “U.S. Secretary of State Pompeo is wrong,” the company said in its statement, adding that it is owned by its employees.

While Huawei was initially muted in its public response, it too has become more combative. In late February, the company confronted the United States at a major annual gathering of mobile industry executives in Barcelona, where Huawei’s red logo was ubiquitous. Top American officials arrived intent on warning government and industry representatives off Huawei. But the company had flown in a team of senior executives to offer customers and representatives of European governments reassurance in the face of the U.S. accusations.

In a keynote speech, Guo Ping, a deputy chairman at Huawei, took aim at America’s own spying operations. “Prism, Prism on the wall. Who’s the most trustworthy of them all?” he said. Guo was referring to a mass U.S. foreign-surveillance operation called Prism that was disclosed by former NSA contractor Snowden. The barb drew laughter from the audience.

Europeans pushed back, too. During one closed-door session, senior representatives from European telecom operators pressed a U.S. official for hard evidence that Huawei presented a security risk. One executive demanded to see a smoking gun, recalled the U.S. official.

The American official fired back: “If the gun is smoking, you’ve already been shot. I don’t know why you’re lining up in front of a loaded weapon.”

(Reporting by Cassell Bryan-Low, Colin Packham, David Lague, Steve Stecklow and Jack Stubbs. Additional reporting by Charlotte Greenfield in Wellington; Yoshifumi Takemoto in Tokyo; Jonathan Weber; Sijia Jiang; Ben Blanchard and Gao Liangping in Beijing. Edited by Peter Hirschberg and Richard Woods.)

U.S., China bicker over ‘extravagant expectations’ on trade deal

A surveillance camera is seen next to containers at a logistics center near Tianjin Port, in northern China, May 16, 2019. REUTERS/Jason Lee

By Ben Blanchard and David Lawder

BEIJING/WASHINGTON (Reuters) – China accused the United States on Monday of harboring “extravagant expectations” for a trade deal, underlining the gulf between the two sides as U.S. action against China’s technology giant Huawei began hitting the global tech sector.

Adding to bilateral tension, the U.S. military said one of its warships sailed near the disputed Scarborough Shoal claimed by China in the South China Sea on Sunday, the latest in a series of “freedom of navigation operations” to anger Beijing.

Alphabet Inc’s Google has also suspended business with China’s Huawei Technologies Co Ltd that requires the transfer of hardware, software and technical services, except those publicly available via open source licensing, a source familiar with the matter told Reuters on Sunday, in a blow to the company that the U.S. government has sought to blacklist around the world.

Shares in European chipmakers Infineon Technologies, AMS and STMicroelectronics fell sharply on Monday amid worries the Huawei suppliers may suspend shipments to the Chinese firm due to the U.S. blacklisting of it last week.

The Trump administration’s addition of Huawei to a trade blacklist on Thursday immediately enacted restrictions that will make it extremely difficult for it to do business with U.S. counterparts.

In an interview with Fox News Channel recorded last week and aired on Sunday night, Trump said the United States and China “had a very strong deal, we had a good deal, and they changed it. And I said ‘that’s OK, we’re going to tariff their products’.”

In Beijing, Chinese Foreign Ministry spokesman Lu Kang said he didn’t know what Trump was talking about.

“We don’t know what this agreement is the United States is talking about. Perhaps the United States has an agreement they all along had extravagant expectations for, but it’s certainly not a so-called agreement that China agreed to,” he told a daily news briefing.

The reason the last round of China-U.S. talks did not reach an agreement is because the United States tried “to achieve unreasonable interests through extreme pressure”, Lu said.”From the start, this wouldn’t work.”

China went into the last round of talks with a sincere and constructive attitude, he said.

“I would like to reiterate once again that China-U.S. economic and trade consultation can only follow the correct track of mutual respect, equality and mutual benefit for there to be hope of success.”

No further trade talks between top Chinese and U.S. trade negotiators have been scheduled since the last round ended on May 10 – the same day Trump raised the tariff rate on $200 billion worth of Chinese products from 10 percent.

Trump took the step after the United States said China backtracked on commitments in a draft deal that had been largely agreed to.

STERNER TONE

Since then, China has struck a sterner tone, suggesting that a resumption of talks aimed at ending the 10-month trade war between the world’s two largest economies was unlikely to happen soon.

Beijing has said it will take “necessary measures” to defend the rights of Chinese companies but has not said whether or how it will retaliate over the U.S. actions against Huawei.

The editor of the Global Times, an influential tabloid run by the ruling Communist Party’s People’s Daily, tweeted on Monday that he had switched to a Huawei phone, although he said his decision did not mean that he thinks it is right to boycott Apple and said he was not throwing away his iPhone.

“While the U.S. spares no efforts to subdue Huawei, out of personal belief, I chose to support the well-respected company by using its product,” Hu Xijin tweeted.

Trump, who said the interview with Fox News host Steve Hilton had taken place two days after he raised the tariffs, said he would be happy to simply keep tariffs on Chinese products, but said that he believed that China would eventually make a deal with the United States “because they’re getting killed with the tariffs”.

But he said that he had told Chinese President Xi Jinping before the most recent rounds of talks that any deal could not be “50-50” between the two countries and had to be more in favor of the United States because of past trade practices by China.

(Reporting by David Lawder and Ben Blanchard; Writing by Tony Munroe; Editing by Richard Borsuk, Robert Birsel and Nick Macfie)

Apple sees its mobile devices as platform for artificial intelligence

An Apple employee showcases the augmented reality on an iPhone 8 Plus at the Apple Orchard Shop in Singapore September 22, 2017. REUTERS/Edgar Su

By Jess Macy Yu

TAIPEI (Reuters) – Apple Inc  sees its mobile devices as a major platform for artificial intelligence in the future, Chief Operating Officer Jeff Williams said on Monday.

Later this week, Apple is set to begin taking pre-orders for its new smartphone, the iPhone X – which starts at $999 and uses artificial intelligence (AI) features embedded in the company’s latest A11 chips.

The phone promises new facial recognition features such as Face ID that uses a mathematical model of a person’s face to allow the user to sign on to their phones or pay for goods with a steady glance at their phones.

“We think that the frameworks that we’ve got, the ‘neural engines’ we’ve put in the phone, in the watch … we do view that as a huge piece of the future, we believe these frameworks will allow developers to create apps that will do more and more in this space, so we think the phone is a major platform,” Williams said.

He was speaking at top chip manufacturer Taiwan Semiconductor Manufacturing Company’s 30th anniversary celebration in Taipei, which was attended by global tech executives.

Williams said technological innovations, especially involving the cloud and on-device processing, will improve life without sacrificing privacy or security.

“I think we’re at an inflection point, with on-device computing, coupled with the potential of AI, to really change the world,” he said.

He said AI could be used to change the way healthcare is delivered, an industry he sees as “ripe” for change.

Williams said Apple’s integration of artificial intelligence wouldn’t be just limited to mobile phones.

“Some pieces will be done in data centers, some will be on the device, but we are already doing AI in the broader sense of the word, not the ‘machines thinking for themselves’ version of AI,” he said referring to the work of Nvidia Corp, a leader in AI.

Global tech firms such as Facebook, Alphabet Inc, Amazon, and China’s Huawei are spending heavily to develop and offer AI-powered services and products in search of new growth drivers.

Softbank Group Corp, which has significantly invested in artificial intelligence, plans a second Vision Fund that could be about $200 billion in size, the Wall Street Journal reported on Friday.

At Monday’s event, TSMC Chairman Morris Chang described his company’s relationship with Apple as “intense.”

Williams said the relationship started in 2010, the year Apple launched the iPhone 4, with both parties taking on substantial risk.

He credited Chang for TSMC’s “huge” capital investment to ramp up faster than the pace the industry was used to at the time. Apple decided to have 100 percent of its new iPhone and new iPad chips for application processors sourced at TSMC, and TSMC invested $9 billion to bring up its Tainan fab in a record 11 months, he said.

 

(Reporting by Jess Macy Yu, additional reporting by Eric Auchard, Editing by Miyoung Kim and Adrian Croft)