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You can find the current article at its original source at https://www.theguardian.com/business/live/2019/may/23/trade-war-china-us-fight-panasonic-huawei-business-live
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| Trade war: China vows to 'fight to the end' as Panasonic ditches Huawei - business live | Trade war: China vows to 'fight to the end' as Panasonic ditches Huawei - business live |
| (32 minutes later) | |
| Back in the City, shares in holiday firm TUI have now slumped by 5% to the bottom of the FTSE 100 leaderboard. | |
| Brexit fears are partly to blame. The slump in the pound in recent days may be deterring people from heading to Europe this summer, and a no-deal Brexit would disrupt its operations. | |
| TUI is also suffering from a new survey showing that more Britons will choose to stay at home this summer. | |
| A survey of 2,006 domestic tourists from Barclays found that 31% said they were likely to spend more time on holiday in the UK this year, compared to just 8% who said they would spend less time. | |
| Some cited concern over the impact that Brexit could have on foreign travel and family finances..... | |
| A staycation it is then... pic.twitter.com/IzKbDaFsJE | |
| Newsflash: European companies continue to suffer from the trade war. | |
| Data firm Markit has reported that eurozone factory sector is shrinking again this month. Output fell for the fourth month in a row, while new orders shrank for the 8th consecutive month. | |
| This dragged Markit’s manufacturing PMI down to 47.7 for May, below the 50-point mark that shows stagnation. | |
| Worryingly, factory bosses are now laying off staff -- manufacturing jobs fell for the first time since August 2014, lost at the fastest rate since November 2013. | |
| In better news, the service sector (which makes up the bulk of the economy) continued to grow, keeping the overall eurozone PMI in growth territory. | |
| Chris Williamson, chief business economist at IHS Markit, fears that the eurozone will only grow by a sickly 0.2% in the current quarter, compared with 0.4% in Q1. | |
| “A renewed deterioration in optimism about the year ahead suggests that the business situation could deteriorate further in coming months. | |
| Worries reflected concerns over lower economic growth forecasts, signs of weaker sales and rising geopolitical uncertainty, with escalating trade wars and auto sector woes commonly cited as specific causes for concern. | |
| South-East Asian countries such as Vietnam are emerging as unlikely winner from the US-China trade war. | |
| Some Chinese manufacturers are reportedly moving parts of their production abroad, to avoid US tariffs. | |
| Paul Donovan of UBS Wealth Management explains: | |
| Vietnam is benefitting from the US tax increases; exports to the US surged. Anecdotal evidence suggests Chinese companies are shifting part of their production to Vietnam, Indonesia and Thailand. | |
| The shift may be small, but if it is the final stage of production the boxes are labelled “made in Vietnam” and trade taxes are evaded. | |
| European stock markets are taking a bath too, as investors worry about a full-blown trade war. | European stock markets are taking a bath too, as investors worry about a full-blown trade war. |
| Germany’s DAX has slumped by 1%, with nearly every share in the red. It’s being dragged down by major exporters such as steel maker Thyssenkrupp, chemicals firm BASF and carmaker Volkswage and Daimler. | Germany’s DAX has slumped by 1%, with nearly every share in the red. It’s being dragged down by major exporters such as steel maker Thyssenkrupp, chemicals firm BASF and carmaker Volkswage and Daimler. |
| Britain’s FTSE has shed more than 50 points, or 0.75%. Companies vulnerable to a no-deal Brexit, such as holiday firm TUI (down 4.6%) are leading the selloff. | Britain’s FTSE has shed more than 50 points, or 0.75%. Companies vulnerable to a no-deal Brexit, such as holiday firm TUI (down 4.6%) are leading the selloff. |
| Connor Campbell of SpreadEx says: | Connor Campbell of SpreadEx says: |
| With the Tory party in turmoil, and Huawei waving goodbye to another supplier, the markets were in a bad way after the bell. | With the Tory party in turmoil, and Huawei waving goodbye to another supplier, the markets were in a bad way after the bell. |
| Panasonic become the latest company to deal a blow to the Chinese tech giant, joining EE, Vodafone, Qualcomm, Intel and, most importantly, ARM on the list of firms scaling back or outright severing their relationship with Huawei following the US blacklisting. | Panasonic become the latest company to deal a blow to the Chinese tech giant, joining EE, Vodafone, Qualcomm, Intel and, most importantly, ARM on the list of firms scaling back or outright severing their relationship with Huawei following the US blacklisting. |
| Whatever relief was generated by the announcement a 90-day grace period earlier in the week has completely dissipated, as investors fret over the damage this nascent tech Cold War is doing to the chance of a positive outcome to the US-China trade battle. | Whatever relief was generated by the announcement a 90-day grace period earlier in the week has completely dissipated, as investors fret over the damage this nascent tech Cold War is doing to the chance of a positive outcome to the US-China trade battle. |
| It’s taken a while, but City economists do seem to have woken up to the fact that the US and China are in a trade war. | It’s taken a while, but City economists do seem to have woken up to the fact that the US and China are in a trade war. |
| Many analysts had confidently expected a deal by now. But those hopes have faded since negotiations all-but-collapsed earlier this month. | Many analysts had confidently expected a deal by now. But those hopes have faded since negotiations all-but-collapsed earlier this month. |
| Now, economists are calculating the impact if president Trump triggers his threat to impose tariffs on all remaining Chinese imports - including mobile phones and laptops. | Now, economists are calculating the impact if president Trump triggers his threat to impose tariffs on all remaining Chinese imports - including mobile phones and laptops. |
| Bloomberg is reporting that a full-blown trade war is now looking more likely - almost a ‘base case’ scenario, not a tail risk: | Bloomberg is reporting that a full-blown trade war is now looking more likely - almost a ‘base case’ scenario, not a tail risk: |
| After months of predicting a trade deal between the world’s two largest economies, economists at some of the biggest financial institutions are growing increasingly pessimistic. | After months of predicting a trade deal between the world’s two largest economies, economists at some of the biggest financial institutions are growing increasingly pessimistic. |
| Goldman Sachs Group Inc., Nomura Holdings Inc. and JPMorgan Chase and Co. are among those that have rewritten their forecasts as U.S. President Donald Trump threatens to impose a 25% tariffs on around $300 billion of additional Chinese imports..... | Goldman Sachs Group Inc., Nomura Holdings Inc. and JPMorgan Chase and Co. are among those that have rewritten their forecasts as U.S. President Donald Trump threatens to impose a 25% tariffs on around $300 billion of additional Chinese imports..... |
| Goldman Sachs economists warned that without signs of progress over coming weeks, implementation of the further tariffs could easily become their base case. “While we still think an agreement is more likely than not, it has become a close call,” they wrote. | Goldman Sachs economists warned that without signs of progress over coming weeks, implementation of the further tariffs could easily become their base case. “While we still think an agreement is more likely than not, it has become a close call,” they wrote. |
| A full-blown trade war is quickly shifting from tail risk to the "baseline" scenario. China calls US a threat to the world. Relations are so strained that a Chinese company wouldn’t be able to buy a "trash can" in the US right now, JPM quipped. https://t.co/I9VtSNQYzC pic.twitter.com/WQPMOFciuB | A full-blown trade war is quickly shifting from tail risk to the "baseline" scenario. China calls US a threat to the world. Relations are so strained that a Chinese company wouldn’t be able to buy a "trash can" in the US right now, JPM quipped. https://t.co/I9VtSNQYzC pic.twitter.com/WQPMOFciuB |
| Shares in many Chinese firms have fallen sharply today. | Shares in many Chinese firms have fallen sharply today. |
| The CSI 300 index has slumped by 1.8% in late trading. The technology sector led the selloff, down 3.3% on average, following the news that Panasonic was freezing Huawei out. | The CSI 300 index has slumped by 1.8% in late trading. The technology sector led the selloff, down 3.3% on average, following the news that Panasonic was freezing Huawei out. |
| Consumer-focused firms and telecoms operators are also among the big fallers. | Consumer-focused firms and telecoms operators are also among the big fallers. |
| This has dragged Asian stocks down to a four-month low this morning. Hong Kong is down 1.8%, while Australia has dipped by 0.3%. | This has dragged Asian stocks down to a four-month low this morning. Hong Kong is down 1.8%, while Australia has dipped by 0.3%. |
| Neil Wilson of Markets.com says anxiety over a trade war is building. | Neil Wilson of Markets.com says anxiety over a trade war is building. |
| Trade is still front and centre for equity markets with the mood looking increasingly downbeat. | Trade is still front and centre for equity markets with the mood looking increasingly downbeat. |
| It rather seems the US and China are hunkering down for the long haul – a new long march, to borrow the phrase from yesterday. | It rather seems the US and China are hunkering down for the long haul – a new long march, to borrow the phrase from yesterday. |
| Panasonic’s decision to ditch Huawei shows that a ‘tech cold war’ is breaking out, says my colleague Martin Farrer. | Panasonic’s decision to ditch Huawei shows that a ‘tech cold war’ is breaking out, says my colleague Martin Farrer. |
| “We’ve stopped all business transactions with Huawei and its 68 group companies ... that are subject to the US government ban,” Joe Flynn, a Panasonic spokesman, said. | “We’ve stopped all business transactions with Huawei and its 68 group companies ... that are subject to the US government ban,” Joe Flynn, a Panasonic spokesman, said. |
| Panasonic joins Google, Intel, Qualcomm and Lumentum among the leading companies to turn their backs on Huawei in what is beginning to shape up as a tech cold war between the US and China. | Panasonic joins Google, Intel, Qualcomm and Lumentum among the leading companies to turn their backs on Huawei in what is beginning to shape up as a tech cold war between the US and China. |
| Markets slide as Panasonic joins list of firms walking away from Huawei | Markets slide as Panasonic joins list of firms walking away from Huawei |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Tensions between Beijing and Washington continue to deteriorate, as the crackdown on Huawei adds fuel to their ongoing trade war. | Tensions between Beijing and Washington continue to deteriorate, as the crackdown on Huawei adds fuel to their ongoing trade war. |
| Overnight, Japan’s Panasonic has become the latest tech firm to cut back on its business with Huawei. It’s a response to the White House’s move to ban Huawei from buying technology from US companies without its approval. | Overnight, Japan’s Panasonic has become the latest tech firm to cut back on its business with Huawei. It’s a response to the White House’s move to ban Huawei from buying technology from US companies without its approval. |
| Panasonic says: | Panasonic says: |
| Panasonic announced in [an] internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government. | Panasonic announced in [an] internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government. |
| This latest blow to Huawei comes after two UK mobile operators, EE and Vodafone, decided to launch their new 5G networks without its handsets. Even more seriously, UK chip designer ARM (whose products are used right across the tech sector) has frozen Huawei out. | This latest blow to Huawei comes after two UK mobile operators, EE and Vodafone, decided to launch their new 5G networks without its handsets. Even more seriously, UK chip designer ARM (whose products are used right across the tech sector) has frozen Huawei out. |
| Foreign minister Wang Yi has hit back against the flurry of attacks on Huawei, accusing the US of “typical economic bullying”, and trying to undermine Chinese firms. | Foreign minister Wang Yi has hit back against the flurry of attacks on Huawei, accusing the US of “typical economic bullying”, and trying to undermine Chinese firms. |
| In a hard-hitting statement, he says: | In a hard-hitting statement, he says: |
| “Some people in the United States do not want China to enjoy the legitimate right to develop, and seek to impede its development process. | “Some people in the United States do not want China to enjoy the legitimate right to develop, and seek to impede its development process. |
| “This extremely presumptuous and egocentric American approach is not able to gain the approval and support of the international community.” | “This extremely presumptuous and egocentric American approach is not able to gain the approval and support of the international community.” |
| Wang also insisted that Beijing will not back down, declaring: | Wang also insisted that Beijing will not back down, declaring: |
| “If the United States is willing to negotiate on an equal footing, then on the Chinese side, the door is wide open. But if the United States opts for a policy of maximum pressure, then China will take them on and fight to the end.” | “If the United States is willing to negotiate on an equal footing, then on the Chinese side, the door is wide open. But if the United States opts for a policy of maximum pressure, then China will take them on and fight to the end.” |
| Investors are getting rattled by the belligerence from both sides. Most Asian markets have dropping overnight - led by a sharp selloff in Shanghai. | Investors are getting rattled by the belligerence from both sides. Most Asian markets have dropping overnight - led by a sharp selloff in Shanghai. |
| Weak sentiment across Asia this afternoon: KOSPI -0.02%, ASX200 -0.2%, Nikkei -0.7%, Shanghai -0.84%, Hang Seng -1.41%. | Weak sentiment across Asia this afternoon: KOSPI -0.02%, ASX200 -0.2%, Nikkei -0.7%, Shanghai -0.84%, Hang Seng -1.41%. |
| Europe is expected to open lower, ahead of new PMI surveys of the eurozone private sector and a healthcheck on German businesses. | Europe is expected to open lower, ahead of new PMI surveys of the eurozone private sector and a healthcheck on German businesses. |
| City traders will also be watching Westminster closely, as Theresa May tries desperately to cling on as prime minister. | City traders will also be watching Westminster closely, as Theresa May tries desperately to cling on as prime minister. |
| And we thought the front pages were brutal yesterday for Theresa May... pic.twitter.com/jQoMAOej7i | And we thought the front pages were brutal yesterday for Theresa May... pic.twitter.com/jQoMAOej7i |
| Sterling has already fallen against the euro for 13 days on the trot, and is weaker again this morning. | Sterling has already fallen against the euro for 13 days on the trot, and is weaker again this morning. |
| Pressure grows on May to quit as Leadsom resigns over Brexit deal | Pressure grows on May to quit as Leadsom resigns over Brexit deal |
| The agenda | The agenda |
| 9am BST: Eurozone flash PMI for April | 9am BST: Eurozone flash PMI for April |
| 9am BST: IFO survey of German business expectations | 9am BST: IFO survey of German business expectations |
| 1.30pm BST: US weekly jobless claims | 1.30pm BST: US weekly jobless claims |
| 3pm BST: US flash PMI for April | 3pm BST: US flash PMI for April |