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The U.S. and China ended the second day of high level talks Friday aimed at avoiding a possible trade war.

The U.S. delegation, headed by Treasury Secretary Steven Mnuchin, will brief President Donald Trump Saturday and “seek his decision on next steps,” the White House said in a statement, adding that the administration had “consensus” for “immediate attention” to change the U.S.-China trade and investment relationship.

“We will be meeting tomorrow to determine the results, but it is hard for China in that they have become very spoiled with U.S. trade wins!” Trump said in a Twitter post late Friday.

“Both sides recognize there are still big differences on some issues and that they need to continue to step up their work to make progress,” China said in a statement released by Xinhua state news agency.

An editorial Saturday by China’s ruling Communist Party newspaper, the People’s Daily, however, said that “in the face of the U.S.’s fierce offensive of protectionism, China resolutely defends its national interest,” adding that Beijing “will never trade away its core interests and rejects the U.S.’s demand for an exorbitant price.”

The announcement followed comments by Mnuchin earlier in the day that the two sides were having “very good conversations.”

Trump has threatened to levy new tariffs on $150 billion of Chinese imports while Beijing shot back with a list of $50 billion in targeted U.S. goods.
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President Trump reveled in the 3.9 percent U.S. unemployment rate Friday, following the release of figures by the Bureau of Labor Statistics. But some say that these numbers don’t tell the whole story. From Washington, VOA’s Jill Craig has more.
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The Trump administration has drawn a hard line in trade talks with China, demanding a $200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said Friday.

The lengthy list of demands was presented to Beijing before the start of talks Thursday and Friday between top-level Trump administration officials and their Chinese counterparts to try to avert a damaging trade war between the world’s two largest economies.

A White House statement did not mention specific demands, but said the U.S. delegation “held frank discussions with Chinese officials on rebalancing the United States-China bilateral economic relationship, improving China’s protection of intellectual property, and identifying policies that unfairly enforce technology transfers.”

The statement gave no indication that U.S. President Donald Trump would back off on his threat to impose tariffs on up to $150 billion in Chinese goods over allegations of intellectual property theft.

​Trump, delegation to meet Saturday

The delegation was returning to Washington to brief Trump and “seek his decision on next steps,” the White House said, adding that the administration had “consensus” for “immediate attention” to change the U.S-China trade and investment relationship.

Trump said he would meet with the delegation Saturday.

China’s state-run Xinhua news agency described the talks as “constructive, candid and efficient” but with disagreements that remain “relatively big.”

Tariff threats have roiled stock markets in recent weeks, but the inconclusive outcome of the Beijing talks did little to stop a rally in U.S. shares prompted by jobs data that eased fears of faster Federal Reserve rate hikes. Stocks in Shanghai ended 0.5 percent lower while they fell 1.3 percent in Hong Kong.

Trump told reporters in Washington that he was determined to bring fairness to U.S.-China trade.

“We will be doing something one way or the other with respect to what’s happening in China,” Trump said. He added that he had “great respect” for China’s President Xi Jinping. “That’s why we’re being so nice, because we have a great relationship.”

​Intellectual property

China during the meetings asked that the United States ease crushing sanctions on Chinese telecom equipment maker ZTE Corp, people with knowledge of the matter said.

Washington’s demand for a $200 billion cut from China’s U.S. goods trade surplus doubles Trump’s previous request for a $100 billion cut. China had a record U.S. goods trade surplus of $375 billion in 2017.

Trump has also demanded “reciprocity” between U.S. and Chinese tariffs, frequently complaining about China’s 25 percent car tariff while the U.S. equivalent is 2.5 percent.

The U.S. team, led by U.S. Treasury Secretary Steven Mnuchin, demanded that China lower tariffs to levels no higher than those imposed by the United States, two people familiar with the demands said. The delegation also asked China to halt subsidies for advanced technology linked to its “Made in China 2025,” the sources said.

At the heart of the dispute are U.S. allegations that Chinese joint venture requirements and other policies force American companies to turn over their intellectual property, costing them billions of dollars annually and giving China’s state enterprises an edge in the race to develop new industries crucial to future growth.

China denies such coercion. Its 2025 industrial plan seeks to upgrade China’s manufacturing sector to more advanced products, including information technology, semiconductors and aircraft.

“I think the U.S. is asking for the impossible. Reducing the deficit by $200 billion by 2020 is quite an unrealistic demand, but it may also be a negotiation tactic to start high first,” said Tommy Xie, economist at OCBC Bank in Singapore.

Beijing offers

China offered to increase U.S. imports and lower tariffs on some goods, including cars, according to the sources.

But Beijing asked the United States to treat Chinese investment equally under national security reviews, refrain from new restrictions on investments and halt a proposal to impose 25 percent tariffs under its “Section 301” intellectual property probe.

China also offered to reconsider anti-dumping duties on U.S. sorghum, according to a proposal it submitted.

Xinhua said there had been exchanges of opinion on intellectual property protections, expanding U.S. exports and bilateral services trade. It gave no indication of what actions might be taken but said the two sides committed to resolve their trade disputes through dialogue.

U.S. negotiators agreed to bring up the ZTE sanctions with Trump after new representations from the Chinese side, Xinhua said. ZTE was hit last month with a seven-year ban on American companies’ selling components and software to it after the U.S. Commerce Department found ZTE failed to comply with an agreement to settle breached U.S. sanctions on Iran.

“My impression was that (the talks) didn’t go well given the rhetoric,” said Kevin Lai, senior economist at Daiwa Capital markets in Hong Kong. “I think the divide is still very big.”
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The Central Bank of Nigeria (CBN) and Peoples Bank of China (PBoC) have agreed on a currency swap worth $2.5 billion to reduce their reliance on the U.S. dollar in bilateral trade.

CBN Governor Godwin Emefiele led Nigerian officials, while the PBoC governor, Yi Gang, led the Chinese team to the signing ceremony in Beijing last week.

The agreement is aimed at providing sufficient local currency liquidity for Nigerian and Chinese industrialists and other businesses and to reduce difficulties as they search for a third currency.

The deal, purely an exchange of currencies, also will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain naira, the Nigerian currency, from Chinese banks to pay for their imports.

According to Nigerian economist Yusha’u Aminu, excluding United States in the agreement would help to lower the exchange rates between both countries.

This report originated in VOA’s Hausa service.
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U.S. employers stepped up hiring modestly in April, and the unemployment rate fell to 3.9 percent, evidence of the economy’s resilience amid the recent stock market chaos and anxieties about a possible trade war.

Job growth amounted to a decent 164,000 last month, up from an upwardly revised 135,000 in March. The unemployment rate fell after having held at 4.1 percent for the prior six months largely because fewer people were searching for jobs.

The overall unemployment rate is now the lowest since December 2000. The rate for African-Americans — 6.6 percent — is the lowest on record since 1972.

Many employers say it’s difficult to find qualified workers. But they have yet to significantly bump up pay in most industries. Average hourly earnings rose 2.6 percent from a year ago.

The pace of hiring has yet to be disrupted by dramatic global market swings, a recent pickup in inflation and the risk that the tariffs being pushed by President Donald Trump could provoke a trade war.

Much of the economy’s strength, for the moment, comes from the healthy job market. The increase in people earning paychecks has bolstered demand for housing, even though fewer properties are being listed for sale. Consumer confidence has improved over the past year. And more people are shopping, with retail sales having picked up in March after three monthly declines.

Workers in the private sector during the first three months of 2018 enjoyed their sharpest average income growth in 11 years, the Labor Department said last week in a separate report on compensation. That pay growth suggests that some of the momentum from the slow but steady recovery from the 2008 financial crisis is spreading to more people after it had disproportionately benefited the nation’s wealthiest areas and highest earners.

The monthly jobs reports have shown pay raises inching up. At the same time, employers have become less and less likely to shed workers. The four-week moving average for people applying for first-time unemployment benefits has reached its lowest level since 1973.

The trend reflects a decline in mass layoffs. Many companies expect the economy to keep expanding, especially after a dose of stimulus from tax cuts signed into law by Trump that have also increased the federal budget deficit.

Inflation has shown signs of accelerating slightly, eroding some of the potential wage growth. Consumer prices rose at a year-over-year pace of 2.4 percent in March, the sharpest annual increase in 12 months. The Federal Reserve has an annual inflation target of 2 percent, and investors expect the Fed to raise rates at least twice more this year, after an earlier rate hike in March, to keep inflation from climbing too far above that target.

The home market, a critical component of the U.S. economy, has been a beneficiary of the steady job growth. The National Association of Realtors said that homes sold at a solid annual pace of 5.6 million in March, even though the number of houses for sale has plunged. As a result, average home prices are rising at more than twice the pace of wages.
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Venezuela said on Thursday it would take over the country’s leading private bank, Banesco, for 90 days and announced the arrest of 11 top executives for “attacks” against the country’s rapidly depreciating bolivar currency.

The detentions came on the heels of last month’s shock arrests of two Venezuelan executives working in the country for U.S. oil company Chevron Corp.

Oil-rich Venezuela is suffering from hyperinflation and a steady collapse of the bolivar currency, which President Nicolas Maduro has attributed to an “economic war,” but critics blame on incompetence and failed socialist policies.

Maduro’s foes say he is cracking down on the business sector to try to shore up support and halt price increases ahead of a controversial May 20 presidential election, which key opposition parties have boycotted as a sham.

Chief Prosecutor Tarek Saab announced the arrests in a televised press conference, but did not provide evidence of wrongdoing or take any questions.

“We have determined the [executives’] presumed responsibility for a series of irregularities, for aiding and concealing attacks against the Venezuelan currency with the aim of demolishing the Venezuelan currency,” said Saab, a former ruling party governor.

State television late on Thursday broadcast a statement announcing the temporary takeover of Banesco, which the government said was designed to ensure the bank continues operating.

The government also said it would be appointing a board of directors led by the country’s vice finance minister, Yomana Koteich.

Banesco’s president, Juan Carlos Escotet, who lives in Spain, earlier blasted the arrests as “disproportionate” and said he was flying to Venezuela to try to free the 11 executives, who include Chief Executive Oscar Doval.

“In the next few hours, I’m taking a plane for Venezuela. We’re going to knock on every door so that this problem is cleared up and they are freed as they deserve to be,” Escotet, who was born in Venezuela to Spanish parents and holds both nationalities, said in a video posted on Twitter.

Escotet has been a frequent target of criticism by ruling party heavyweight Diosdado Cabello, who recently announced that the government was buying Banesco. Escotet denied any sale.

Escotet temporarily excused himself from his role as chairman of Galicia-based bank ABANCA, the bank said in a statement to Spain’s stock market regulator on Thursday.

‘More crisis and misery’

Venezuela’s opposition said the arrests were another sign of Maduro’s turn to authoritarianism.

“The irresponsible government … continues to deny its responsibility in the destruction of our bolivar. Now they’re attacking Banesco. [This] … will only spawn more crisis and misery,” tweeted opposition lawmaker Carlos Valero.

Venezuela maintains exchange controls under which the government is meant to provide hard currency at a steadily weakening official rate, currently 69,000 bolivars per dollar.

But the dollar is fetching around 800,000 bolivars in unofficial trade, which government officials have for years harshly criticized but broadly tolerated.

Hyperinflation has turned once-powerful banks into warehouses of unwanted and mostly useless cash worth a total of only $40 million, according to a recent Reuters analysis of regulatory data.
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A federal grand jury in Detroit has indicted former Volkswagen CEO Martin Winterkorn with conspiracy and wire fraud in the car builder’s scheme to rig diesel emissions tests.

“If you try to deceive the United States, then you will pay a heavy price,” Attorney General Jeff Sessions said Thursday. “The indictment unsealed today alleges that Volkswagen’s scheme to cheat its legal requirements went all the way to the top of the company.”

Winterkorn is alleged to have conspired with other top Volkswagen bosses to defraud the U.S. government and consumers with false claims that the company was complying with the Clean Air Act.

Volkswagen already admitted it installed devices on diesel models designed to turn on pollution control devices during emissions tests and turn them off when the car is driven on actual highways.

Volkswagen was fined $2.5 billion and ordered to recall the affected cars.

Winkerton is the ninth Volkswagen executive or employee to be charged. However, he currently lives in Germany, which has no extradition treaty with the United States, and is unlikely ever to see the inside of the U.S. courtroom.
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The U.S. trade deficit narrowed sharply in March as exports increased to a record high amid a surge in deliveries of commercial aircraft and soybeans, bolstering the economy’s outlook heading into the second quarter.

While other data on Thursday showed a modest increase in new applications for jobless benefits last week, the number of Americans receiving unemployment aid fell to its lowest level since 1973, pointing to tightening labor market conditions.

Wage growth is also rising, with hourly compensation accelerating in the first quarter, more evidence that inflation pressures are building.

“The good news is that we are exporting more, but with the labor markets incredibly tight, labor costs are accelerating as well,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “The rise in labor costs will undoubtedly factor into policymakers’ thinking when they meet again in June.”

The Federal Reserve on Wednesday left interest rates unchanged. The Fed said policymakers expected “economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong.”

The Commerce Department said the trade deficit tumbled 15.2 percent to $49.0 billion in March, the lowest level since September. The trade gap widened to $57.7 billion in February, which was the highest level since October 2008.

March’s decline ended six straight monthly increases in the trade deficit. Economists polled by Reuters had forecast the trade gap narrowing to $50.0 billion in March.

The politically sensitive goods trade deficit with China dropped 11.6 percent to $25.9 billion, which will probably do little to ease tensions between the United States and China.

U.S. President Donald Trump has threatened tariffs on up to $150 billion worth of Chinese goods to punish Beijing over its joint-venture requirements and other policies Washington says force American companies to surrender their intellectual property to state-backed Chinese competitors.

China, which denies it coerces such technology transfers, has threatened retaliation in equal measure, including tariffs on U.S. soybeans and aircraft. A U.S. trade delegation arrived in China on Thursday for trade talks.

Trump, who claims the United States is being taken advantage of by its trading partners, has already imposed broad tariffs on imported solar panels and large washing machines. He recently slapped 25 percent import duties on steel and 10 percent on aluminum.

The Trump administration argues that the perennial trade deficit is holding back economic growth. The government reported last week that trade contributed 0.20 percentage point to the first quarter’s 2.3 percent annualized growth pace. The economy grew at a 2.9 percent rate in the fourth quarter.

Brightening prospects

Prospects for the economy are brightening. In a separate report, the Labor Department said initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 211,000 for the week ended April 28.

Claims remained near a more than 48-year low of 209,000 touched during the week ended April 21. The labor market is considered to be near or at full employment. The unemployment rate is at a 17-year low of 4.1 percent, close to the Fed’s forecast of 3.8 percent by the end of this year.

The number of people receiving benefits after an initial week of aid dropped 77,000 to 1.76 million in the week ended April 21, the lowest level since December 1973. With labor conditions tightening, wage growth is picking up.

A second report from the Labor Department showed hourly worker compensation accelerated at a 3.4 percent rate in the first quarter after rising at a 2.4 percent pace in the October-December period. It increased at a 2.5 percent rate compared to the first quarter of 2017.

Prices for U.S. Treasuries were trading higher, while the dollar was little changed against a basket of currencies. U.S. stocks were lower.

In March, exports of goods and services increased 2.0 percent to an all-time high of $208.5 billion, lifted by a $1.9 billion increase in shipments of commercial aircraft. There were also increases in exports of soybeans, corn and crude oil. Real goods exports were the highest on record.

Exports to China jumped 26.3 percent in March.

Imports of goods and services fell 1.8 percent to $257.5 billion, in part as the boost from royalties and broadcast license fees related to the Winter Olympics faded. Imports of capital goods fell by $1.5 billion, weighed down by declines in imports of computer accessories, telecommunications equipment and semiconductors.

Imports of consumer goods decreased by $0.9 billion. Crude oil imports dropped by $0.5 billion in March. Imports from China fell 2.1 percent.

Another report from the Commerce Department showed factory goods orders rose 1.6 percent in March after a similar increase in February. The department, however, revised March orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, to show them falling 0.4 percent instead of dipping 0.1 percent as reported last month.

Orders for these so-called core capital goods rose 1.0 percent in February. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, declined 0.8 percent in March instead of the 0.7 percent drop reported last month.

March’s drop in core capital goods orders and shipments suggest business spending on equipment is slowing.
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