Chinese ambassador warns U.S. not to drag Latam into trade dispute

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Xi's speech Tuesday lifted stocks in Asia and USA equity futures.

Xi will fly to the Philippines after attending the Asia-Pacific Economic Cooperation Leaders' Meeting, according the spokesman of President Rodrigo Duterte.

Likening investment environment to air, Xi said that only fresh air can attract more investment from the outside.

The first China International Import Expo to be held in Shanghai this November is not just another expo in an ordinary sense, but a major policy initiative and commitment taken of our own accord to open up the Chinese market, Xi said. Xi also used the speech to address global security and development, saying that "Cold War mentality and zero-sum games are becoming increasingly obsolete and outdated".

Chinese investment into the US slumped a year ago to $29 billion from $46 billion, as the Asian nation restricted outbound capital and the Trump administration took a tough stance on deals, according to the report Tuesday from New York-based research firm Rhodium Group and the National Committee on US-China Relations.

But, he added, it "has nothing to do with China's trade friction with the US" and "we hope some people in the United States don't misjudge the situation". Big dividend stocks like utilities and household goods companies fell, as investors see them as an alternative to bonds and they are less interested in buying them when yields rise.

Xi added Beijing will "significantly lower" tariffs on auto imports this year and ease restrictions on foreign ownership in the auto industry as soon as possible. It's still unclear when that will happen. Stocks rallied across Asia on Tuesday and European shares rose in morning trading. Beijing, which has issued a $3 billion list of US goods including pork and apples for possible retaliation, requested 60 days of consultations. "Even so, with Xi's speech positioning China as conciliatory, the chances of a damaging trade war appear a shade lower".

"President Xi's speech appears to have struck a relatively positive tone and opens the door to potential negotiations with the United States in our view".

Gao once again struck down market hopes that the world's two largest economies have been negotiating on trade issues.


Also Tuesday, China filed a challenge with the World Trade Organization against Trump's earlier tariff increase on steel and aluminum in a separate dispute.

China is the largest buyer of American soybeans in the world, accounting for nearly 60 percent of US soy exports worth $12.4 billion in revenue for the year that ended on August 31.

There's only so much slack that other big importers like Japan can take up.

"This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products", Xi said.

Dallas Federal Reserve Bank President Robert Kaplan, on a visit to Beijing, said he was optimistic that very few if any of the proposed tariffs by the United States and China announced in recent weeks will actually be implemented. I don't blame China; I blame our representatives, frankly.

More broadly, Xi repeated official promises to expand imports and to narrow China's trade surplus, another irritant for Washington. "No, it sounds like STUPID TRADE - going on for years!"

The speech "underdelivers after all the hype from Beijing", Eurasia Group's Evan Medeiros and Michael Hirson wrote in a research note.

Since Xi's Davos debut, China has abolished terms limits so he can stay in power indefinitely. Yet below the surface, there are deep concerns in China on the fallout.

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