What China could do to counter US tariffs

BUSINESS

Amid intensifying trade friction between Washington and Beijing, a new round of US tariffs took effect on Monday, raising the stakes for both sides. China seems to have several tools up its sleeve to counter US tariffs.

    
Symbolbild Handelskrieg USA und China mit Dollar- und Yuan-Geldschein (picture-alliance/chromorange/C. Ohde)

Escalating trade tensions between the world’s two most powerful economies have cast a dark shadow over the global economic climate. On Monday, the United States and China imposed fresh tariffs on each other’s goods, with the US levying import taxes on $200 billion (€169.64 billion) worth of Chinese goods and Beijing retaliating with tariffs on $60 billion worth of US products.

Donald Trump has already hinted at the possibility of slapping tariffs on all US imports from China.

Read more: WTO: Weary Trade Organization?

Trump’s latest tariffs come in addition to those he has imposed on over $100 billion of imports already, including on steel, aluminum, solar panels, washing machines, and the initial volley of $50 billion on products from China.

China has asserted that it won’t back down and will retaliate against Trump’s tariffs by matching them dollar for dollar with its own. But Chinese exports to the US are nearly four times the amount of US exports to China.

In 2017, goods and services traded between the two giants totaled an estimated $710.4 billion, according to the Office of the United States Trade Representative. While exports from the US to China were worth about $187.5 billion, imports to the US from China were as high as $522.9 billion and resulted in a massive trade deficit amounting to some $335.4 billion.

Watch video02:05

No sign of resolution in US-China trade war

Given the deficit, the Trump administration’s thinking seems to be that Beijing might not be able to engage in a tit-for-tat escalation on tariffs as it would eventually “run out” of products to target with tariffs long before the United States does.

But some observers believe that China has other options to impose pain on the US.

Regulatory harassment

Experts like Nicholas Lardy of the Washington-based Peterson Institute for International Economics, for instance, point out that Beijing could target American businesses operating in China and harass them with regulatory hurdles. This might take the form of delays issuing clearances for US products at Chinese ports, lengthy customs and safety inspections as well as visa rejections.

Read more: Opinion: Let’s just call it by its name — a winnable trade war

The Chinese government could also promote consumer boycotts of US goods as has happened with Japanese and South Korean products in previous geopolitical disputes.

Such a move could prove devastating to some American firms that have large exposure to the Chinese market. “Apple’s $40 billion market in China for iPhones, the largest in the world, could quickly collapse,” Lardy wrote in a research note in June. “Similarly, General Motors sells more cars in China than in the United States, sales that could easily be disrupted by the Chinese government.”

Another way China could hurt US interests is by withholding regulatory approvals that are critical for ensuring the commercial future of American firms.

US tech multinational Qualcomm offers a case in point. The company was recently forced to call off its $44 billion effort to buy NXP Semiconductors, a Dutch chip maker, after Chinese regulators withheld approval of the transaction.

Renminbi and US bonds

Beijing could also allow the renminbi, the Chinese currency, to depreciate further against the US dollar, making Chinese goods cheaper in the United States and partly offsetting the tariffs.

Read more: US growth revised up on investment and export spurt

The renminbi’s value against the US dollar has already declined by 8.5 percent since April, estimates Capital Economics. This depreciation “gives exporters leeway to lower dollar export prices to offset the tariffs’ impact (the new batch of tariffs will only be 10 percent initially),” Mark Williams, Chief China Economist at the London-based research consultancy, wrote in a report. “It should also help make exports more competitive globally.”

Watch video03:32

Trump’s trade war is a dangerous game

But currency depreciation is a double-edged sword. Experts say a weaker renminbi could make China’s imports more expensive, raise inflationary pressures and result in capital flight out of the country. Furthermore, any deliberate move to depreciate the renminbi is likely to draw an angry response from the Trump administration.

Analysts say China could also sell US assets, particularly Treasury bonds, in a bid to pressure Washington. Beijing holds over $1 trillion of US government bonds, but has been cutting back on its holdings over the past several years. China has slashed its Treasury holdings by 10.2 percent since late 2013.

But if China continues to reduce its holdings and abruptly sells US debt, it would not only hurt Washington but also Beijing as it would lead to a loss in value of an asset that China holds a lot of. If the US bonds sold by China are bought by other countries and private investors, then the impact of such a move by Beijing would be limited on Washington.

“Beijing wields considerable power as the United States’ biggest creditor and could decide to shed some of its US government bonds. Yet that’s an unlikely course of action given the risks to the Chinese currency and the entire financial system,” according to Max J. Zenglein, senior economist at the Berlin-based Mercator Institute for China Studies (MERICS).

Watch video02:58

Europeans to profit from US-China tariff conflict?

Economic restructuring

Some argue that China’s best option for responding to a trade war is by focusing on reforming and reconfiguring its domestic economy.

“While the Chinese government may try to respond to American tariffs by depreciating its currency or using regulations to discriminate against US companies, those measures have little guarantee of success,” Michael Pettis, finance professor at Peking University and a senior associate at the Carnegie Endowment, wrote in Barron’s. “The better approach would be to focus on raising the incomes of ordinary Chinese so they can spend more.”

MERICS expert Zenglein thinks that the new tariffs put extra pressure on the Chinese economy. “The Chinese government is currently trying to tackle problems such as rising debt, industrial overcapacities and environmental degradation. Thus the new tariffs come at a time when the government can ill afford economic growth to slow too quickly.”

COURTESY: DW

China strikes back by going after America’s energy companies

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The United States has an abundance of natural gas that pollution-riddled China badly needs to wean itself off coal.

Eying China’s voracious demand, Cheniere Energy, ExxonMobil (XOM) and other American energy companies are racing to build more than two dozen expensive facilities to export liquefied natural gas, which is super-cooled natural gas that can be transported by ship.

China even marked President Donald Trump’s visit to Beijing last fall by agreeing to invest as much as $43 billion into an LNG project in Alaska.

But this pairing of an able buyer and well-supplied seller no longer looks like a slam dunk. As part of the escalating trade warChina on Tuesday said it will impose a 10% tariff on $60 billion of US products — including LNG.

The trade tensions could make it more difficult for the next wave of LNG export facilities to get the financing needed to get off the ground.

“It’s obviously very concerning. The potential for some projects to get delayed is very real,” said Charlie Riedl, executive director of the Center for Liquefied Natural Gas, a trade group that represents Exxon, Chevron (CVX) and other energy companies.

The shale boom created an excess of natural gas in the United States. In a bid to get rid of the glut, the United States began exporting LNG in 2016 when Houston-based Cheniere (LNG)opened the Sabine Pass terminal in Louisiana. Earlier this year, Dominion Energy (D) opened Cove Point in Maryland, the nation’s second export facility .

China is the big elephant in the room. China’s appetite for LNG is growing rapidly. And it’s on the verge of overtaking Japan as the biggest buyer of LNG in the world.

That’s one major reason why the United States is planning to quadruple its export capacity by building at least 25 new facilities. LNG is a centerpiece of Trump’s energy dominance agenda.

china lng tariffs chart

In the 12 months leading up until June 2018, China was the second-largest buyer of US LNG, according to energy consulting firm Wood Mackenzie. Shell, the US subsidiary of Royal Dutch Shell (RDSA), was the largest seller.

However, China has dialed back its US LNG purchases in recent months as trade tensions have ratcheted up, according to ClipperData. Beijing is instead turning more to LNG powerhouses Qatar, Australia and Russia.

“China has been able to find willing sellers closer to its own backyard,” said Matt Smith, ClipperData’s director of commodity research.

Tariffs less than feared

Now, the tariffs will likely price US LNG out of the Chinese market, according to S&P Global Platts.

“There are other suppliers around the world that would gladly supply China — and they don’t have a 10% tariff,” said Riedl.

Kyle Isakower, vice president for economic policy at the American Petroleum Institute, said in a statement that the trade situation “works against US energy sector growth and counter to the administration’s stated goal of ‘energy dominance.'”

The good news is that China had threatened an even bigger tariff — 25% — on US LNG. Cheniere’s share price rallied 2% on Tuesday in response to the lower-than-feared rate.

In any case, analysts don’t believe that overall US LNG exports will be dramatically hurt in the short run. There are plenty of other buyers, including Japan, South Korea, Taiwan and Latin America. And Washington has been pushing Europe to break its addiction to natural gas from Russia.

“If China buys less, someone else will buy more,” said Pavel Molchanov, an energy analyst at Raymond James. “It doesn’t matter if it’s a Chinese buyer, a European buyer or a Latin American buyer. Revenue is revenue.”

lng tanker

Will projects get shelved?

The real fallout of the US-China trade war could be felt in that next wave of LNG projects that’s in the works.

Due to the enormous cost to build each facility, financing hinges on the ability to sign a long-term buyer to a contract. And the obvious buyer had been China. Until now, that is.

For instance, Cheniere announced plans in May to expand its Corpus Christi export terminal in Texas. The expansion was backstopped in part by a contract with PetroChina (PTR).

Cheniere did not respond to a request for comment on the impact of the tariffs from China.

In August, Cheniere CEO Jack Fusco told analysts that threatened tariffs from China may slow down talks with counterparts in China about future growth.

However, Fusco said that the tariffs won’t impact existing contracts. And he emphasized that the US-China energy relationship has been beneficial to both sides, including by creating thousands of direct and indirect American jobs.

“China is an important growth market for Cheniere,” Fusco said. “We expect to sell meaningful amounts of LNG into China over the long term.”

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Kim Jong Un hugs Moon Jae-in as inter-Korean summit starts

South Korean president arrives in North Korea

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South Korean president arrives in North Korea 01:57

Seoul, South Korea (CNN)North Korean leader Kim Jong Un greeted South Korean President Moon Jae-in on his arrival in Pyongyang Tuesday for their third summit this year, as the two countries look to establish peace on the Korean Peninsula.

The two leaders smiled and hugged at the foot of Moon’s plane at Sunan International Airport, amid crowds of cheering North Koreans waving flowers and national flags, including those symbolizing a unified Korean Peninsula.
Moon and Kim and their wives then shook hands with various officials, before reviewing a North Korean ceremonial guard. The highly choreographed scene, set to military music, lasted around 15 minutes.
It was the first time Kim had greeted visitors at the airport since the young North Korean leader took power in 2011, according to South Korean officials.

South Korean President Moon Jae-in, second from left, and his wife Kim Jung-sook, left, are greeted by Kim Jong Un and his wife, Ri Sol Ju.

Later in the day, the two rode in an open-topped car through the streets of Pyongyang, waving to thousands of onlookers who had lined the streets.
The historic three-day-trip marks the first time since 2007 that a South Korean president has traveled North.The two leaders will discuss a host of likely issues, including economic cooperation, North Korea’s nuclear weapons program and formally ending the Korean War.
“What I want to achieve is peace. Not a tentative change which could be volatile dependent on international situation, but irreversible, permanent and unwavering peace, regardless of what might happen on the global arena,” Moon said on Twitter ahead of his departure.

Moon Jae-in and Kim Jong Un hug as their wives shake hands.

Moon and Kim vowed to bring an end to the Korean War during their first summit meeting. Though fighting ended 65 years ago, the war has never been formally ended with a peace treaty.
While a formal peace regime officially ending the Korean War would need buy in from the US and China — the other participants in the conflict — experts agree that there is nothing to stop the two Koreas declaring an end to the war themselves, or signing a bilateral peace treaty.

US remains wary

Moon arrived in North Korea with an entourage that includes K-pop stars and nearly a dozen business leaders, including Jay Y. Lee, the head of Samsung.
Though Pyongyang will likely relish the opportunity to court South Korean investors, ongoing nuclear talks between North Korea and the United States are also expected to feature prominently on the agenda.
The third meeting comes as the diplomatic efforts to get North Korea to give up its nuclear weapons and ballistic missiles appear to have hit an impasse. It’s been three months since US President Donald Trump met Kim in Singapore — the first-ever summit between the sitting leaders of their two countries — but there have been no visible steps made by North Korea to suggest it has stopped the development of its nuclear arsenal.

Trump and Kim Jong Un's ups and downs

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Trump and Kim Jong Un’s ups and downs 03:02
The United Nations’ head of political affairs, Rosemary di Carlo, said Monday there are signs North Korea is “still maintaining and developing its nuclear weapons and ballistic missile programs.”
Trump’s national security adviser, John Bolton, delivered a similar assessment last month when he said the Trump administration does not feel North Korea was living up to its end of the agreement reached between Trump and Kim in Singapore, a page-and-a-half document that critics assailed as too short on specifics.
The problem, analysts say, is that North Korea will likely never give up its nuclear weapons unless it has a peaceful and productive relationship with the United States.
Washington is likely only willing to fundamentally change its relationship with Pyongyang if Kim were to give up his nuclear weapons and the ballistic missiles he needs to deliver them.
“I am willing to talk candidly with Chairman Kim Jong Un to find a balance between the US’ demands for denuclearization and North Korea’s request for dropping hostile policies and enforcing measures to secure their safety,” Moon said Monday.
“I believe that the denuclearization issue can be progressed at a rapid pace if the two leaders face each other again and talk.”

South Korean President Moon Jae-in, center left, waves as North Korean leader Kim Jong Un, center right, applauds upon Moon's arrival at Sunan International Airport in Pyongyang Tuesday.

Trump and Secretary of State Mike Pompeo have preached patience in recent weeks, with Pompeo telling reporters Friday that the US will continue to use a strategy that involves negotiation while also enforcing the stringent sanctions levied on Pyongyang by the United States and the United Nations.
“The United States is as committed as ever to continuing to enforce those UN Security Council resolutions,” Pompeo said.
“We believe they are central to President Trump’s efforts to convince Chairman Kim that full, final denuclearization of the Korean Peninsula is necessary.”

Kim Jong Un and Donald Trump shake hands during their summit in Singapore on June 12.

Rolling out the red carpet

If history is any precedent, North Korea will continue to pull out all the stops for Moon and his entourage.
The previous two South Korean Presidents who visited North Korea, President Roh Moo-hyun in 2007 and President Kim Dae-jung in 2000, were both given a hero’s welcome.
Kim, the first South Korean leader ever to travel North, won a Nobel Peace Prize for his efforts, but his legacy was tainted after it was revealed that South Korea secretly funneled nearly $200 million dollars to the the North Koreans through the Hyundai corporation just days before the talks.

Kim Jong Un and Moon Jae-in, top; Kim Dae-jung and Kim Jong Il, bottom left; and Kim Jong Il and Roh Moo-hyun, bottom right.

Like Kim and Roh before him, Moon was also greeted on arrival in Pyongyang by scores of cheering civilians, many in colorful traditional dress. Moon’s office said he will also stay at the same venue where Kim Jong Il, the late North Korean leader, hosted Kim Dae-jung and Roh, the Paekhwawon State Guesthouse.
Photos of the luxury property emerged in June after Kim Jong Un hosted Russian Foreign Minister Sergey Lavrov there. The guesthouse was surrounded by well manicured grass and colorful flowers — “Paekhwawon” means “garden of a hundred flowers.”
But beyond the pomp and circumstances, it’s unclear if this summit will end in any sort of formal agreement. Moon’s office insists that its important for the two Korean leaders to continue meeting on a regular basis in order to work toward peace.
“We don’t mean to add another declaration or another agreement,” Yoon Young-chan, a spokesman for Moon, said Tuesday. “We’re moving towards a new era.”
COURTESY: CNN

Dozens dead in Philippines, now Typhoon Mangkhut pummels China

NEWS

Hong Kong and Macau are battening down the hatches as the super typhoon hits southern China. Mangkhut left at least 66 people dead in the Philippines, as it smashed property, tore down power lines, and caused landslides.

    
A woman runs in the rainstorm in Shenzhen (Reuters/J. Lee)

After leaving a trail of destruction through the Philippines, Typhoon Mangkhut was battering China on Sunday, with Hong Kong and Macau bearing the brunt of its force. Officials in Manila said that the storm had claimed at least 64 lives in their countries, while two were confirmed dead in Hong Kong.

Hong Kong authorities issued their highest storm signal, No. 10, despite the typhoon weakening slightly as it moved across the South China Sea.

Freelance reporter James Ross told DW that “furiously-high winds, torrential rain, and storm surges are hitting all the coastal areas” of Hong Kong.

He said the territory had already seen major flooding in low-lying areas, roads and highways blocked by fallen trees and debris, and damage to buildings with windows smashed by the winds.

China Central Television also reported surges as high as 3 meters (10 feet).

Worst in many years

“This seems like the worst typhoon I’ve experienced in 15 years here,” Ross added.

The South China Morning Post tweeted videos showing the intensity of the winds as they hit the city and nearby Lantau Island.

SCMP News

@SCMPNews

Typhoon hits Whampoa in http://buff.ly/2My3zdc  🎥: Andy Yeung pic.twitter.com/NWJCV8OTIc

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Ma Wan, off the eastern edge of ‘s Lantau Island, feels the force of http://buff.ly/2My3zdc  🎥: Sian Loh pic.twitter.com/UHRQq0bKKU

Matt Bossons, Editor-in-Chief at the @thatsshenzhen website, tweeted a video of his Shenzhen hotel being flooded by coastal waters.

Hong Kong international airport canceled most flights on Sunday, leaving tens of thousands of travelers stranded.

Macau, meanwhile, shut all 42 casinos as the territory braced for a bad hit. Authorities there faced criticism last year, when Typhoon Hato left nine people dead and caused widespread damage.

Elsewhere in China, tens of thousands of people were being evacuated to safer areas, amid predictions of severe storm surges along the coast.

Read more: The world’s deadliest hurricanes, typhoons and cyclones

On Saturday, at least 48 people were killed as the typhoon tore through the Philippines’ northern Luzon island, leaving floods and landslides in its wake.

Police said at least 40 people, mostly gold miners, were feared trapped in a landslide, The Associated Press (AP) reported.

A police official told AP that part of a mountain slope collapsed on the miners’ bunkhouses in a small town in Benguet province.

Seven bodies have been dug out by rescuers and an eighth body has been located but not yet retrieved.

Mangkhut made landfall over the town of Baggao, 382 kilometers (237 miles) north of Manila, lashing Cagayan province and nearby areas with maximum winds of 205 kilometers per hour (km/h) and gusts of up to 285 km/h – the equivalent to a Category 5 “intense hurricane” in the Atlantic.

Deadly landslides

Philippine authorities said most of the dead got caught up in landslides in mountainous areas.

Baguio City flooded by typhoon (Reuters/Jordan Rae Salinas)Raging flood waters struck Baguio City as Typhoon Mangkhut hit the Philippines on Saturday

The heavy rains and fierce winds knocked out electricity and communication lines, while thousands of homes and business premises were torn down.

“The landslides happened as some residents returned to their homes after the typhoon,” disaster response coordinator Francis Tolentino told DZMM Radio, adding that 5.7 million people had been affected.

Read more: Philippine’s Duterte orders opposition senator be arrested

Philippine President Rodrigo Duterte conducted an ariel inspection of the worst affected region on Sunday.

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LOOK: President Duterte conducts an aerial inspection of Cagayan (📷: SAP Bong Go) | via @pia_gutierrez

The Philippines, which is hit by about 20 typhoons a year, is considered one of the world’s most disaster-prone countries. In 2013, Typhoon Haiyan left more than 7,300 people dead or missing.

mm,es/jm (AFP, AP, dpa, Reuters)

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Hong Kong raises typhoon alert to highest level as Mangkhut closes in

Hong Kong (CNN)Hong Kong’s storm alert was lifted to its highest level Sunday as Typhoon Mangkhut swirled off the coast, shutting down the city and forcing residents to huddle inside as rain pelted windows and strong winds sent debris flying.

The Hong Kong Observatory (HKO) raised the storm signal to T10 Sunday morning local time, hours before the storm was expected to make landfall near the city, as it carves its path from the Philippines towards mainland China.
Fierce winds have already torn off roofs and caused partial building collapses, as authorities warn of the threat of storm surges and flooding from torrential rain.
Mangkhut is already the most powerful storm of 2018, and is currently packing sustained winds of 165 kilometers per hour (103 miles per hour), with gusts up to 205 kilometers per hour (127 miles per hour).
Earlier on Saturday, it plowed into the Philippines, killing two people and flattening homes in small towns and villages on the northern island of Luzon.
Mangkhut is now some 220 kilometers (136 miles) south-southeast of the city, and heading for the surrounding Pearl River Delta, home to 120 million people.
The storm is expected to be one for Hong Kong’s record books. It’s only the 15th time in the last 60 years that a T10 has been hoisted; the last was for Super Typhoon Hato last year.
The city’s famed Victoria Harbor is expected to see a storm surge of 3.5 meters later Sunday (11.5 feet). Hong Kong’s iconic skyline, filled with massive buildings jutting up from the hill, was almost completely obscured as squalls roared through.
More than 550 flights have been canceled at airports in Hong Kong, Shenzhen and Guangzhou, and more than 200 have been delayed, according to Flightaware.com. Most of Hong Kong’s public transport has been suspended.
Hong Kong authorities have been warning residents about the storm for days, and come Saturday, grocery stores were packed with people stocking up on goods. Buildings across the city were either boarded up or had their windows taped in order to mitigate the damage of broken glass.

The storm is currently moving 30 kilometers per hour (19 miles per hour) toward the coast of western Guangdong, mainland China, according to the HKO.
It’s expected to pass about 100 kilometers (62 miles) south of the Pearl River Delta — an area in southern China that includes the cities of Hong Kong, Guangzhou, Shenzhen, Zhuhai and Macau — at about noon Hong Kong time Sunday, according to the the HKO.
However, the storm has weakened and is now classified by the HKO as a severe typhoon rather than a super typhoon. But officials in Hong Kong are still warning residents to be cautious.
A man uses his umbrella while crossing a road as  Mangkhut edges closer to Hong Kong Sunday

The most severe damage came in Luzon’s north, a sparsely populated region that’s considered the breadbasket of the Philippines, though areas as far away as Manila — more than 340 km (200 miles) from the eye of the storm — were hit with heavy rains that caused flooding in urban areas.
Though the storm system has moved on, extent of the damage has been difficult to asses Sunday as fierce winds were replaced by flood waters, blocking access and aid to affected areas.
Mangkhut is expected to make another landfall late Sunday night, hitting the Chinese province of Guandong near the cities of Yangjiang and Zhanjiang.
From there the system will continue to move westward and will rain itself out over northern Vietnam, which could lead to some flooding there early next week.
COURTESY: CNN

What will keep China and Russia from building a new world order?

ASIA

Russia and China are forming closer economic and strategic relations in the face of increasing pressure from Washington. Although a Sino-Russian bloc sounds ominous to the West, there are big obstacles to an alliance.

    
 Russland | Vladimir Putin und Xi Jinping auf dem Eastern Economic Forum in Vladivostok (Reuters/ASS Host Photo Agency/Pool/S. Bobylev)

Russia’s geopolitical show in eastern Siberia this week with special guest China combined a dramatic display of military hardware with diplomatic trappings, summit pageantry and an executive-level cooking show.

In two separate events – the Eastern Economic Forum (EEF) being held in Vladivostok and the Vostok (East) 2018 military games – Russia and China signaled to the West that they are working closer together to counterbalance US “unilateralism.”

Read more: Russia and China to reduce use of US dollar in trade

The American tariff showdown with China and continued sanctions on Russia have pushed Beijing and Moscow closer together. And US President Donald Trump’s protectionist course for the US also gives Chinese and Russian presidents, Xi Jinping and Vladimir Putin, the chance to portray themselves as heroes of bilateral cooperation and globalization.

Ahead of this week’s events, China’s ambassador to Russia, Li Hui, told China’s official Xinhua news agency that Sino-Russian relations were at their “best in history.” The report also touted Chinese President Xi as a proponent of regional cooperation amid “anti-globalism and protectionist trends,” while ushering in a new age of diplomacy with Russia.

Xi reportedly told China’s CCTV on Tuesday that Russia and China needed to “oppose unilateralism and trade protectionism and build a new type of international relations and shared human destiny.”

Putin and Xi already met twice over the summer in Beijing and in Johannesburg. During his first-ever appearance at the EEF on Tuesday, Xi spoke about the “uniqueness” of China’s bilateral relationship with Russia and that both countries gave “top priority” to preserving good diplomatic ties. The EEF has been held annually since 2015 as part of Russia’s diplomatic efforts to develop ties with the Asia-Pacific.

 Russland | Vladimir Putin und Xi Jinping auf dem Eastern Economic Forum in Vladivostok (picture-alliance/dpa/Photoshot/mcg/X. Huanchi)Xi and Putin meet at the EEF on September 11

Bear hugs?

Xi’s bonhomie with Putin at the EEF, and the direct participation of the People’s Liberation Army in Vostok-2018, the largest Russian war games since the height of the Cold War, are a signal that the leaders of Russia and China are redefining their relationship – at least on the surface.

In the West, closer ties between Russia and China have previously been thought of as superficial alliances of convenience, frayed by history and tensions over regional hegemony. But in the current geopolitical climate, the incentive structure looks to have changed, with Beijing and Moscow having more to gain by working together.

Read more: Russia and China make show of unity as US relations falter

“Russia and China do have some differences and competition in the former Soviet Central Asia. However, the importance of these differences, as well as the importance of the past conflicts between Moscow and Beijing, should not be exaggerated,” Vassily Kashin, an East Asia expert at the Russian Academy of Sciences, told DW.

“What is much more important is the shared opposition of both countries to the US-led global order. Russia has irreversibly fallen out of this order after the Ukrainian crisis in 2014. By now China is also in systemic conflict with this order which is the cause for the current trade war,” added Kashin.

Russland Vostok 2018 War Games | Flagge Russland, China, Mongolei (picture-alliance/AP Photo/S. Grits)The Vostok-2018 war games from September 11-17 include some 300,000 Russian troops, 1,000 aircraft and 36,000 tanks

From Crimea to Beijing

A major turning point for Sino-Russian relations was in 2014, when Russia’s relationship with the West began to deteriorate after the annexation of Crimea. Russia initiated deals to sell China advanced weaponry, including fighter jets and surface-to-air missiles. In May 2014, Russia and China signed a joint declaration on “new stages of comprehensive partnership and strategic cooperation.”

Read more: Opinion: Crimea reflects Russia’s fate

US foreign policy expert Angela Stent wrote in a 2016 report published by the US-based German Marshall Fund that China protects Russia from the full impact of sanctions and gives it legitimacy while the West tries to isolate it.

However, James D.J. Brown, an associate professor in political science at Temple University in Tokyo, told DW that the Sino-Russian relationship is limited by national interests. “Each side will support the other as long as it remains in their national interest to do so,” said Brown.

Read more: EU leaders extend Russian sanctions over Ukraine for six more months

“When Russia annexed Crimea in 2014, China did not explicitly offer support. Doing so would have attracted criticism from the West and, while China is willing to endure international censure when necessary, it will only do so when it decides that it is beneficial to do so,” he said, adding that China neither approved nor disapproved of Russia’s action.

Stent wrote that even as both China and Russia reject the global order, they “do not agree on what a future world order should look like.”

Watch video26:00

America backs off – China steps in?

Economically, China is currently Russia’s second-largest trade partner after the EU. Russian analyst Kashin points out that Sino-Russian trade is projected to rise further in the coming years. “This year, the annual trade will break the $100 billion mark for the first time,” he said.

Russia and China are also mulling over ways to cooperate more closely in Central Asia, a region Moscow views as its backyard. Furthermore, there’s talk of both countries working together to advance their key geopolitical projects – Beijing’s “Belt and Road Initiative” and Moscow’s “Eurasian Economic Union.”

Read more: As G7 argues, Russia’s Vladimir Putin and China’s Xi Jinping show SCO friendship

Despite the warm words at the EEF about deepened economic integration, there have yet to be any binding measures connecting these two major initiatives.

Feng Yujun, a Russia affairs expert at Fudan University in Shanghai, told DW that although there is strong political will on both sides to bring the trading routes closer together, major roadblocks remain.

“Because Russia is subject to Western sanctions, it is economically eager to get China’s investment, technology, and market access,” said Feng. “Russia needs to show a high degree of enthusiasm for the Belt and Road.”

“Although China has long proposed an agreement to sign free trade zones with the Eurasian Economic Union countries, these agreements are nowhere in sight,” he added.

Watch video01:09

BRICS nations for free trade

A ‘quasi-alliance’

Pragmatism remains a major limitation to the formation of a permanent alliance between China and Russia, which could consolidate into a bloc similar to NATO. But this doesn’t mean that the alliance isn’t growing stronger.

“It is likely that this relationship will still prove enduring,” said Brown.

“This is because China and Russia are being driven together by their shared tensions with the United States, encouraging them to put aside their reservations about each other,” said Brown, adding that the increased strategic cooperation between Russia and China is a “quasi-alliance,” which lacks elements indicating a true merging of strategic interests.

“For a relationship to be a true alliance, there must be some level of commitment to collective defense,” said Brown.

“At present, there is no such security commitment between Russia and China,” he said, noting that even as bilateral security cooperation deepens to unprecedented levels, the relationship couldn’t be described as a true alliance.

“At present, this still seems unlikely since neither country wants to risk becoming entangled in the other’s conflicts.”

Read more: As G7 argues, Russia’s Vladimir Putin and China’s Xi Jinping show SCO friendship

Germans skeptical of Russia and China, pessimistic on US

Who needs who more?

Both China and Russia have different incentives for working together. While both can provide the other some solace from international isolation, the common economic and strategic pressure from the US is also subject to change.

“Although Russia might be regarded as the current troublemaker for the United States, most US strategists view China as the greater threat in the longer term,” said Brown. “Their concern therefore is the extent to which Russia can play a role in assisting China’s rise to regional predominance.”

But for the US, enticing Russia away from China in the era of Ukraine, Crimea and Syria, does not look realistic. As Russia’s foreign policy continues to antagonize the West, there is little prospect of sanctions relief in exchange for cooperation against Chinese interests.

“With the assistance of Russia, China is a much stronger power. Without Russia, China is a country without powerful allies,” said Brown.

And on the other side, China can help ease some economic pain for Russia, but Russians are still anxious about the shift in power that dependence brings.

“In the long history of Sino-Russian relations, this change in power relations will undoubtedly cause concern in Russia,” said Feng.

Additional reporting contributed by Fang Wan 

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COURTESY: DW

Super Typhoon Mangkhut: Alerts issued as huge storm nears Philippines

Hong Kong (CNN)Countries across east and southeast Asia are issuing emergency alerts and ordering evacuations as two typhoons barrel down on the region.

Around 12,000 people have been evacuated from low-lying parts of China’s Guangdong province and shipping halted ahead of the arrival of Typhoon Barijat Thursday, according to state media.
But the real concern is Super Typhoon Mangkhut, which is still gathering strength as it nears the northern Philippines.
The storm is expected to make landfall on Luzon island Saturday. Current wind speeds are up to 285 kilometers per hour (180 mph), equivalent to a Category 5 Hurricane and stronger than Hurricane Florence which is currently lashing the US East Coast.
Satellite images from Wednesday show the comparative sizes of Florence and Mangkhut.

“All things being equal, Mangkhut is a bigger, stronger and more dangerous storm” than Florence, said CNN Meteorologist Brandon Miller. “Any land hit directly would see more significant and destructive impacts from the Super Typhoon due to its size and intensity.”
However, he added that the extent of the destruction caused by a hurricane or typhoon depends on what it hits, and the US east coast is “much more populated with significantly more infrastructure to damage.”
“Therefore Florence will almost certainly be a more ‘damaging hurricane’ — but Mangkhut presents a more serious threat to life considering it will hit with stronger winds, over a larger area, and have higher storm surge,” Miller said.
Mangkhut has already torn through Guam and the Marshall Islands in the Pacific, causing widespread flooding and power loss, with parts of Guam still without electricity Thursday morning.
Sixteen provinces across Luzon and the Visayas Islands have issued tropical cyclone warningsfor Mangkhut — known as Ompong locally — with the threat level expected to rise, according tothe Philippine Atmospheric, Geophysical and Astronomical Services Administration.
Philippines President Rodrigo Duterte will hold a meeting Thursday of the National Disaster Risk Reduction and Management Council, as the government considers extra emergency procedures ahead of the storm.
Mangkhut is currently on track to be as strong as Super Typhoon Haiyan, which left more than 6,000 people dead in the Philippines in 2013, though that storm hit a more populated part of the country.
Northern Luzon was also devastated in 2016 by Super Typhoon Haima — known as Lawin locally — with 14,000 houses destroyed and 50,000 homes damaged, according to CNN Philippines.
The Red Cross said it had put teams on the highest level of alert across the island, warning that high winds and torrential rains could cause widespread damage to islands and coastal areas of Luzon.
“We’re worried for the 10 million people in the Philippines living in the path of this destructive storm, including those who have been displaced several times due to the monsoon rains last July and August,” Richard Gordon, chairman of the Philippines Red Cross, said in a statement. “We are preparing our emergency assets and relief items. Our staff and volunteers are on high alert for possible deployment.”
The Global Disaster Alert and Coordination System said it expected a “high humanitarian impact based on the storm strength and the affected population in the past and forecasted path.”
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‘Widespread damage’ expected

As it passes through the Luzon Strait between the Philippines and Taiwan, southern parts of that island are also due to suffer the effects of Mangkhut, and officials have put some areas on alert, with the potential to issue more severe warnings.
The worst of the storm will be borne by Hong Kong and Macau however, which are currently in the storm’s path. Per current projections, Mangkhut could be one of the strongest storms to hit Hong Kong in over six decades.
As of early Thursday morning, both cities still had warning signals raised for the comparatively small Typhoon Barijat, as it passed over the Pearl River Delta into mainland China.
Officials in Hong Kong held emergency meetings Wednesday, in which all departments were warned to have “their deployment and emergency response plans ready for the possible threats that may be brought to Hong Kong by Super Typhoon Mangkhut.”
Last year, 10 people died in Macau as a result of Typhoon Hato, the strongest storm to hit the city in over five decades, which also caused widespread flooding and damage to property.
“As Mangkhut crosses the South China Sea, widespread wind damage will be likely in southern China and around Hong Kong by late in the weekend, especially in coastal locations,” AccuWeather Senior Meteorologist Adam Douty said in a statement.
Multiple Hong Kong airlines, including flag carrier Cathay Pacific, have announced they will waive charges for rebooking or re-routing flights arriving or departing the city during the worst of the storm.
Queenie Lam, a senior scientific officer at the Hong Kong Observatory, told CNN that Mangkhut was “expected to pose a considerable threat to the coast of Guangdong” in southern China and would bring gale force winds to Hong Kong.
She said HKO expects to lift the T8 warning signal as the storm nears the city, the second highest in severity.
Macau’s Meteorological and Geophysical Bureau warned that Manghkut would “pose a serious threat to the Pearl River Delta,” in which the city is located.
COURTESY: CNN