And finally, here’s our latest take:
Carlos Ghosn, the chairman of Nissan and one of the world’s most powerful automotive executives, has been arrested by Japanese prosecutors in a move that sent shockwaves through the industry.
The 64-year-old French-Brazilian is suspected of having understated his income on financial statements and was exposed by a whistleblower. Nissan said it will fire him this week as the company admitted it had left him in control for too long.
Ghosn is regarded as one of the leading figures in the global car industry, having forged an alliance between France’s Renault, Nissan and Mitsubishi that created the world’s second-largest car manufacturer. As well as chairing Nissan, Ghosn is chief executive and chairman of Renault and chairman of Mitsubishi.
In a statement, Nissan said that “over many years” Ghosn and another senior executive, Greg Kelly, had been “reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation”....
Goodnight! GW
Here’s more reaction to the Ghosn story:
#Ghosn’s arrest in Tokyo on “misconduct” allegations an extraordinary end to a storied career. “Ghosn shock” all the greater in #Japan given his role in saving near bankrupt Nissan from 1999. Raises questions over future of Renault-Nissan-Mitsubishi alliance. #ゴーン会長逮捕
— Robert Ward (@RobertAlanWard) November 19, 2018
#CarlosGhosn is unsurprising example of corporate greed, says Arthur Wheaton @cornellilr @workerinstitute #Nissan, full comments here: https://t.co/VhW8w3NdHk
— rebecca valli (@rebzvalli) November 19, 2018
ET TU BRUTE? The toppling of Carlos Ghosn at @Nissan Looks a Lot Like a Palace Coup. 'The downfall of kings is bloody & swift' @davidfickling https://t.co/3D08svaEYr @bopinion
— Keith Naughton (@KeithNaughton) November 19, 2018
Renault’s shares never really recovered from the shock of Carlos Ghosn’s arrest and imminent dismissal from Nissan.
After a wild day’s trading, they have closed down over 8% at €59.06, as traders worry that the Nissan-Renault alliance could be in jeopardy.
Tim Hubbard, assistant professor of management in the University of Notre Dame’s Mendoza College of Business, argues Nissan has learned the perils of giving one executive too much power:
“Carlos Ghosn’s arrest and, soon to be, dismissal over financial misconduct is yet another—all too frequent—example of a top executive being dismissed for misconduct in the executive suite.
Ghosn was one of the car industry’s most prominent executives who has been responsible for breathing life back into Nissan. Ghosn’s arrest complicates a highly interconnected set of relationships between Nissan, Renault and Mitsubishi Motors. The equity stakes that they have between each other may be at risk. This has widespread implications for a large portion of the auto industry as these alliances have become more critical in the increasingly interconnected design, manufacturing, and support of auto customers worldwide.
Ghosn’s arrest is another unfortunate example of the perils of having too much power concentrated in one individual within—and across—corporations.”
My colleague Jasper Jolly has written a neat profile of Nissan’s Ghosn, and his sudden fall from grace.
Here’s a flavour:
Carlos Ghosn was, until Monday, a titan of the global car industry. The first person to lead two Fortune 500 companies at the same time, he also enjoyed an almost unique position as a foreign chief executive of a major Japanese company – even gaining the honour of a manga comic book version of his life and rice sculptures of his face in bento lunchboxes sold to Japanese businessmen.
Yet in a remarkable development which has shocked the automotive industry, Ghosn will now be dismissed by Nissan on Thursday after alleged financial irregularities. Nissan did not hold back in its statement on Ghosn, accusing him and a senior colleague of “significant acts of misconduct” including understating his pay to regulators and misusing company assets. Renault and Mitsubishi Motors, both of which Ghosn also chairs, have yet to respond.
The ousting leaves the Renault-Nissan-Mitsubishi alliance – the maker of one in every nine cars manufactured worldwide last year – without its totemic leader as the electric and autonomous car revolutions threaten to upend the business models of established car manufacturers.
Born in Brazil in 1954 to Lebanese immigrants, Ghosn’s ascent to the pinnacle of the global car industry began in France, where he studied at the prestigious École Polytechnique in Paris before joining Michelin, the French tyre manufacturer. At 27 he was manager of a Michelin factory in France; at 36 he was chief executive of the firm’s North American operations.
In 1996 Ghosn (which rhymes with “cone”) was poached by Renault, where he made his mark with a deep restructuring – earning a reputation for a sleek but ruthless management style, and a nickname, “Le Cost Killer”....
Carlos Ghosn: Nissan scandal slams brakes on cost killer's career https://t.co/S9legiVHR7
— Guardian Business (@BusinessDesk) November 19, 2018
Update: Nissan President and CEO Hiroto Saikawa did give the media a bow as he exited today’s press conference, as these photos show:
The FT’s Peter Campbell watched Nissan’s press conference, and was stuck by the way that Nissan CEO Hiroto Saikawa deeply criticised chairman Carlos Ghosn:
Saikawa says he finds it hard to find words to express how he feels. "Despair, indignation, resentment”.
— Peter Campbell (@Petercampbell1) November 19, 2018
Adds: "I will identify all the issues and take necessary countermeasures."
Saikawa: "This is the negative aspect of the long regime of Mr Ghosn. This is a fact that we need to admit."
— Peter Campbell (@Petercampbell1) November 19, 2018
Saikawa says current Alliance structure "concentrates power on one individual, this is not the only cause but it is one of the factors or drivers".
— Peter Campbell (@Petercampbell1) November 19, 2018
"Because one individual was powerful for years, this has a big significant impact."
Conference ended.
— Peter Campbell (@Petercampbell1) November 19, 2018
In total, an extraordinary, extraordinary, performance by Saikawa with the seeming intention of putting clear water between Nissan and Ghosn.
Nissan’s dramatic press conference in Tokyo ended with another apology from Saikawa, this time for not being able to answer many of the media’s questions.
However, I don’t believe he gave the traditional bow of contrition, which we’ve seen in previous Japanese corporate scandals.
Very unusual Nissan press conference is over: CEO Saikawa – speaking alone with no bow of apology – spoke frankly of what he saw as an over-concentration of power in the hands of Ghosn
— Sam Nussey (@SamNusseyRTRS) November 19, 2018
IN a 90 minute press conference at Nissan headquarters, Hiroto Saikawa, CEO of Nissan, did not bow in apology. In Japan, that’s rare
— Motoko Rich (@motokorich) November 19, 2018
Over in France, a union official has welcome the news that Ghosn is in hot water over his pay and alleged misuse of Nissan assets.
Associated Press have the details:
Ali Kaya, who heads the CGT union at a Renault factory in Flins outside Paris, said “the most shocking thing is that these people were not arrested well before this.”
He lamented that the public has grown inured to “astronomical sums” paid to Ghosn and other executives. The powerful, hard-left CGT has long campaigned to cap executive pay.
Nissan CEO Saikawa is still being quizzed by Japanese reporters, desperate for more details about Carlos Ghosn’s impending sacking.
He says that Nissan’s internal investigation into the misconduct is almost complete, but won’t comment on whether any other people are involved.
Saikawa also explains that representative member Greg Kelly was a close advisor to Ghosn.
Saikawa is really putting the boot into Carlos Ghosn now, claiming that the chairman’s long reign had a “negative impact” on business operations
He does concede, though, that Ghosn had implemented valuable reforms and restructuring in his early days at Nissan.
Some instant reaction to the Nissan press conference:
Crisis Comms 101 at Nissan press conference. No company logo visible. https://t.co/oTQVNCWi1R pic.twitter.com/4u3KrwM30h
— Alex Webb (@atbwebb) November 19, 2018
Nissan says corporate and investment funds misused by Ghosn
— Mari Saito (@saitomri) November 19, 2018
Reporter calls news of misconduct investigation of Ghosn a coup d’etat
— Mari Saito (@saitomri) November 19, 2018
#Nissan CEO says concentration of power of Ghosn led to this misconduct, this is not a coup d’etat by “other forces”
— Mari Saito (@saitomri) November 19, 2018
This Nissan press conference is absolutely extraordinary.
— David Fickling (@davidfickling) November 19, 2018
The Nissan press conference is getting increasingly tense.
One reporter tells CEO Saikawa that people who love Nissan cars will be shocked by today’s news.
Another asks whether Nissan has actually carried out a coup to remove chairman Ghosn.
Saikawa says he can’t comment on whether chairman Carlos Ghosn and board member Greg Kelly will face criminal charges.
Journalists in Toyko are demanding more details about Carlos Ghosn’s serious misconduct.
Nissan CEO Saikawa, though, is refusing to give much away.
He does say that Nissan’s top executives only learned about the the probe earlier today.
Saikawa also suggests that the misconduct went on “for a long period”, before an unnamed whistleblower brought it to light.
Nissan are now questions from the media in Tokyo:
Q: Is it correct that Carlos Ghosn was arrested when he arrived at an airport in Japan today?
Nissan CEO Hiroto Saikawa confirms that Ghosn had been due to arrive in Tokyo today, but he can’t give any more details about the investigation.
Carlos Ghosn’s “serious misconduct” fell into three parts, according to Nissan:
- He misrepresented his compensation (pay) in the report to the Tokyo Stock Exchange
- He misrepresented the purpose of spending the company’s investment
- He used the company’s assets for personal use.
Updated
Hiroto Saikawa, CEO of Nissan about Carlos Ghosn bombshell: “I feel a big disappointment, frustration, despair, indignation and resentment” pic.twitter.com/FhvsNphD9G
— Motoko Rich (@motokorich) November 19, 2018
Nissan CEO Hiroto Saikawa says too much power was concentrated in one executive (as explained earlier, Carlos Ghosn has been the driving force at both Nissan and Renault for almost 20 years)
He pledges that efforts will be made to prevent the Ghosn scandal hurting the Renault-Nissan alliance (easier said than done, I fear)
An emotional-sounding Hiroto Saikawa adde that he is “disappointed and frustrated” by the actions of Chairman Ghosn and Representative Director Kelly.
On behalf of the company, we offer a deep apology to shareholders, Nissan’s CEO says.
Saikawa also apologises to Nissan’s employees and suppliers around the world for causing them “commotion and anxiety”
Updated
Nissan: Ghosn and Kelly have been arrested
Nissan are holding a press conference in Toyko now.
President and chief executive Hiroto Saikawa says that his understanding is that chairman Carlos Ghosn and Representative Director Greg Kelly have both been arrested today.
Saikawa says he cannot give full details of the pair’s actions, due to the ongoing investigations underway by the Japanese prosecutors office.
He says auditors discovered a series of misconducts by Ghosn and Kelly; Nissan’s “specialist evaluation” is that the act is a serious misconduct that merits dismissal
Nissan will organise a board meeting later this week to formally propose the removal of Ghosn as chairman, says Saikawa, who also calls Greg Kelly the “mastermind” of the scheme.
More to follow.....
Updated
Macron: We're being extremely vigilant about Renault
French president Emmanuel Macron has now weighed in, saying the state will be “extremely vigilant” about the stability of Renault, and its alliance with Nissan.
During a trip to Brussels, Macron told reporters that:
“It’s too early to comment on the reality or materiality of the accusations, about which I have no further information.
“As a shareholder, however, the French government will remain extremely vigilant regarding the stability of the alliance, the group and ... its employees, who have the full support of the state.”
Here’s a clip:
Arrestation Carlos Ghosn : "Il est trop tôt pour se prononcer (...) l'Etat en tant qu'actionnaire sera extrêmement vigilent à la stabilité de l'alliance et au groupe" réagit Emmanuel Macron lors d'une conférence de presse en Belgique pic.twitter.com/enFKYUkPVU
— franceinfo (@franceinfo) November 19, 2018
The French government owns a 15% stake in Renault, making it the largest shareholder, and providing significant leverage over the alliance.
Earlier this year it was pushing Nissan and Renault to integrate their operations more closely. It has also put pressure on Ghosn to invest more in France and create more jobs.
Indeed, Macron and Ghosn visited a Renault plant in Maubeuge, Northern France, earlier this month to announce plans to build new vans there.
Updated
Ana Nicholls, analyst at the Economist Intelligence Unit, says Carlos Ghosn’s shock ousting puts the entire future of the Nissan-Renault alliance under question.
The strong bond between the French and Japanese carmakers depends partly on cross-shareholdings but even more on Ghosn’s huge personal influence. He built his reputation as the man who turned around first Renault and then Nissan. This helped to maintain the trust between the two companies as their fortunes wax and wane, usually in a way that balanced each other out. His keen eye for cost-cutting underpinned the alliance’s success in combining supplier networks, vehicle development and other central tasks in order to generate synergies. Ghosn also made it his personal mission to bring AvtoVAZ and Mitsubishi into the alliance, and had made (some) progress in turning them around too.
“In an interview with The Economist Intelligence Unit in mid-November, Mr Ghosn seemed confident that this combination of diversity and synergy could survive his departure - that it wasn’t just based on what he called “the human factor”. Even so, his successor will face questions about whether to invest money in increasing the company’s cross-shareholdings in order to cement the relationships, or risk the alliance falling apart. He or she may also be under pressure to show how the alliance can stop Tesla and GM from eroding its early lead in electric vehicles - and how the somewhat sporadic recent investment in mobility and connected car technology can be harnessed to help the alliance as a whole.”
Economics professor Thomas Piketty (an expert in inequality) has tweeted that Ghosn’s alleged misconduct shows the perils of granting top bosses pay “without limits”....
Voici à quoi conduit l'idéologie des premiers de cordée et des rémunérations sans limite... Et si le gouvernement se souciait enfin de justice fiscale, en revenant sur ses mesures ISF/flat tax?
— Thomas Piketty (@PikettyLeMonde) November 19, 2018
https://t.co/gGBMoEMu2s
There’s massive media interest in Japan over the crisis gripping Nissan tonight.
Journalists have gathered outside the Tokyo Regional Prosecution Office in Tokyo, awaiting fresh details on the investigation into Carlos Ghosn .
Rumours of Carlos Ghosn’s alleged ‘serious misconduct’ are flying around Japan.
The Kyodo newswire is reporting that Ghosn is suspected of understating income by 5 billion yen over five years -- that’s almost £35m.
Renault’s shares are continuing to be pummelled; now down 14%.
The news that Carlos Ghosn has ben arrested on suspicion of violating financial trading has “rocked investor confidence in the Paris-listed stock”, says David Maddon of CMC Markets.
Why Ghosn's fall has shocked car industry
The news that Carlos Ghosn is being ousted from Nissan is causing massive shockwaves in the car industry.
For years, Ghosn has managed the seemingly impossible job of running one carmaker in Japan, and another in France. He’s known for a ferocious work ethic, and charismatic leadership style that has helped him to turn Nissan and Renault around over the last two decades
He was initially known as a ‘cost-killer’ in the 1990s, cutting tens of thousands of jobs and closing factories in Japan and Europe.
That made him understandably unpopular, but over time his reputation in Japan swelled as Nissan returned to profitability. The Nissan-Renault alliance now makes one in nine cars sold worldwide.
As Fortune magazine wrote in 2014, the Brazilian-Lebanese-French business chief was seemingly indispensable:
Ghosn seems to be built for the job: He has the ability to connect with strangers instantly and to compartmentalize, no discernible private life outside his family, and a willingness to travel 300,000 miles a year (that’s 11 circumnavigations).
The question is, Who will run this leviathan, which he calls the Renault-Nissan Alliance, after the 60-year-old retires, or if, God forbid, something happens to him?
It is such a demanding, bone-crunching job that Ghosn himself has said that after he leaves no one person should replace him. In fact, on numerous occasions he has said to a close former colleague: “Who would want this job?”
He was even paid the rare accolade of having his face represented in sushi, in a “Carlos Ghosn bento lunchbox”.
It is a measure of the extraordinary rise of Mr Ghosn in Japan that he should be deemed worthy enough to eat. The Japanese take their food seriously and do not welcome foreign intrusions. As such, the “Ghosn bento” could be seen as a Japanese way of bestowing acceptance upon him.
I’ve only interviewed Ghosn once, at the World Economic Forum in Davos in 2016. Well I say interviewed -- I basically grabbed him walking in a corridor. Some CEOs aren’t prepared to chat like that, but Ghosn was happy to explain how Nissan would cope with Brexit if it happened, without breaking stride as he marched briskly to his next meeting.
Japanese newspaper Yomiuri is now reporting that Carlos Ghosn has been arrested by prosecutors in Tokyo. That’s not been confirmed yet (obviously it’s a fast-moving story...)
Nissan Ghosn: Has Been Arrested – Yomiuri
— LiveSquawk (@LiveSquawk) November 19, 2018
Nissan Chairman Carlos Ghosn has now been arrested, according to one report in Japan https://t.co/WSRCJ4ebxV
— Bloomberg (@business) November 19, 2018
Nissan apologises, says Ghosn has committed 'serious misconduct'.
Nissan has now issued a statement, accusing chairman Carlos Ghosn and ‘representative’ Greg Kelly of ‘serious misconduct’.
The carmaker says the two men both under-reported Ghosn’s salary, and also accuses its chairman of “numerous” other acts of misconduct, including using Nissan’s assets for personal use.
Nissan has confirmed that it proposes removing both men from their positions, and has been working with Japanese prosecutors.
Here’s the full statement:
Regarding serious misconduct by Nissan Chairman and one representative director
Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company’s Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly.
The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation.
Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.
Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so.
As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan’s Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director.
Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures.
Ghosn and Kelly are two of the three members of Nissan’s ‘representative board’, alongside president Hiroto Saikawa.
Updated
Blimey: Renault’s shares have now plunged by over 10%.
Traders in France are understandably shocked by the news that chairman Ghosn faces arrest in Japan for allegedly under-reporting his income.
That wiping some €2bn off Renault’s market capitalisation, taking its value down from €19bn to €17bn.
Nissan proposes terminating Ghosn from chairmanship
Newsflash: We’re getting more details from Japan about the shock investigation into Nissan/Renault chairman Carlos Ghosn.
According to Japanese press agency Jiji:
- The Nissan Board will propose that Ghosn is “terminated” from its chairmanship.
- Nissan say Ghosn has used company money for “personal use” and committed “several other serious acts”
- Nissan says it has been “investigating possible improper practices” for several months, and has “fully cooperated” with investigators:
NISSAN SAYS GHOSN USED COMPANY MONEY FOR PERSONAL USE AND COMMITTED SEVERAL OTHER SERIOUS ACTS - JIJI
— Peter Campbell (@Petercampbell1) November 19, 2018
NISSAN SAYS ITS BOARD TO PROPOSE THAT GHOSN BE TERMINATED FROM CHAIRMAN POST SWIFTLY - JIJI
What a snap: NISSAN SAYS ITS BOARD TO PROPOSE THAT GHOSN BE TERMINATED FROM CHAIRMAN POST SWIFTLY
— Guy Faulconbridge (@GuyReuters) November 19, 2018
Renault shares hit three-year low as 'Ghosn faces arrest'
Boom! Shares in Renault are sliding following a report that auto magnate Carlos Ghosn faces arrest in Japan.
According to the Asahi newspaper, Ghosn is being probed by prosecutors for allegedly violating Japan’s financial instruments and exchange act.
Ghosn is apparently suspected of understating his own income on financial statements and had agreed to voluntarily speak to prosecutors. He is chairman of Japan’s Nissan, and also chairman and chief executive of France’s Renault.
A Nissan spokesman said the company was making checks on the report, and will hold a press conference later today.
The news has rocked the car sector, sending Renault’s shares sliding by almost 6% to their lowest since 2015.
Housebuilder shares hit by falling prices
Shares in UK builders are dropping this morning, following a report that house prices have fallen 1.7% this month.
Online estate agent Rightmove reported that the average house price fell by £5,000 in November, with wealthy parts of the South East suffering the biggest reversal.
It appears that the ‘ripple effect’ of rising prices flowing outward from London is now reversing, as Brexit worries hit the economy.
Miles Shipside of Rightmove says:
“Higher-end, former hotspot towns are now among the biggest annual fallers with Rickmansworth (-7.1%), Esher (-6.4%) and Gerrards Cross (-6.0%) now cold spots following price rises of nearly 40% over the seven preceding years.”
This has sent housebuilders into the list of FTSE 100 big fallers. Barratt Developments are down 1.4%, followed by Berkeley Group (-0.7%) and Persimmon (-0.6%).
Pound rallies despite Brexit plotting
The pound has risen in early trading, shaking off some of last week’s losses.
Sterling is up 0.25% at $1.287 against the US dollar, as Theresa May continues to show impressive sticking power.
Despite widespread criticism of her Brexit deal, Conservative MPs haven’t yet mustered the 48 letters of no confidence needed to trigger a leadership contest.
One critic, Simon Clarke MP, is trying to persuade fellow Brexiteers to demand a new leader, arguing:
“This is absolutely the day at which we stand at the bar of history on this.....
“It is quite clear to me that the captain is driving the ship at the rocks.
However, other members of the European Reform Group - who demand a clean break from the EU - seem reluctant to do the deed, even though there’s unhappiness about the terms of the transition deal and backstop negotiated between London and Brussels.
Our political editor Heather Stewart says the ERG rebellion could fizzle out, unless they get to the 48-letter mark soon....
...and Theresa May will continue to present herself as the only grownup in the room, selling her deal to businesses while her MPs plot. https://t.co/mzYa3MFU66
— Heather Stewart (@GuardianHeather) November 19, 2018
Will we get to those 48 no confidence letters? 🤷♀️ But if it doesn’t happen within a day or two, many at Westminster may conclude the ERG’s rebel leaders are all 👄 and no 👖.
— Heather Stewart (@GuardianHeather) November 19, 2018
Despite the war of words between the US and China, European stock markets have opened higher.
In London, the FTSE 100 is up around 0.5%, with similar gains in other major markets:
Hussein Sayed, Chief Market Strategist at FXTM, warns that trading will probably be volatile, thanks to trade war worries and Brexit upheaval:
U.S. Vice President Mike Pence didn’t give the bulls what they wanted over the weekend. At the Asia-Pacific Economic Cooperation Summit, Pence said there would be no end to U.S. tariffs on Chinese goods until China changes its ways. His comments suggest that a deal between President Trump and President Xi is unlikely to see the light when the leaders meet at the G20 Summit later this month.
Given that we are near the end of the earnings season and the U.S. economic calendar has only tier 2 data to release, expect markets to trade on thin volumes. Political headlines will likely dominate, and thus expect volatility to remain high.
China’s Global Times, the state-sponsored newspaper, is often a good guide to Beijing’s thinking.
And today’s editorial argues that it’s “not a big deal” that the APEC summit ended without a joint communique for the first time in a quarter of a century.
It also takes a pop at the White House, saying:
“It’s delusional of some US elites to think that China is the largest beneficiary of the international system since they mistakenly blame China for the US’ own problems. China has realized its development through hard work, not by taking advantage of the international system.”
Analysts at ING are also concerned that Mike Pence and Xi Jinpeng failed to mend any fences, saying:
The risk to global economies and markets from the Sino-US trade war is elevated after an impasse between two countries at the APEC summit
The discord between America and China over trade loomed over last weekend’s APEC gathering in Papua New Guinea, says Royal Bank of Canada’s Sue Trinh:
She writes:
The Sino-US discord was palpable at the APEC Summit in PNG, so much so that the confab ended with members unable to agree on a communiqué, for the first time ever.
Aside from this being further evidence of a growing anti-China alliance in the APAC region (watch out for Taiwan’s referendum this Saturday to remove “China” from the Olympic team name), the rhetoric is sharpening between the key players.
Introduction: US and China fall out over trade again
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Fears of an escalating US-China trade war are weighing on the markets this morning, after the two powers clashed at a major summit over the weekend.
US vice-president Mike Pence challenged Beijing’s trade practices at the Asia-Pacific Economic Cooperation (APEC) in Papua New Guinea, criticising China for engaging in forced technology transfer and intellectual property theft.
He told delegates that:
The United States . . . will not change course until China changes its ways.
“We have great respect for President Xi and China, but as we all know, China has taken advantage of the United States for many, many years and those days are over.”
Chinese President Xi Jinping was equally combative, criticising Washington’s aggressive actions on trade. He argued:
Unilateralism and protectionism will not solve problems but add uncertainty to the world economy.
History has shown that confrontation, whether in the form of a cold war, a hot war or a trade war, produces no winners.”
But in an unprecedented move, the APEC leaders actually failed to sign off the traditional end-of-summit communique; a sign that cooperation was in short supply.
One insider told CNN that Chine baulked at a line in the statement that read “We agree to fight protectionism including all unfair trade practices”, taking it as a deliberate attack at China.
Economists has hoped that the APEC meeting might have thawed relations between the two major powers. That could have helped to de-escalate the trade wars, paving the way for a formal breakthrough at this month’s G20 meeting of world leaders.
Instead, there’s a growing risk that president Trump imposes further tariffs on Chinese exports to America, which would have a further chilling impact on trade and global growth.
Mike Pence sounded far more aggressive on the trade issue over the weekend, where the differences between the US and China was laid bare at the Asia Pacific Economic Co-operation meeting, as Xi and Pence, sparred over trade and security.
— Arjun K Lakhanpal, MSTA, CFTe (@ArjunKLakhanpal) November 19, 2018
It appears that #Trump and #China are pretty far apart on Trade issues based on speeches by China Xi and Vice President Pence over the weekend. #Index #futures open lower with the S&P in many downed 12 points. There’s probably no miracles coming out of the G 20. $ES_F $SPY pic.twitter.com/2LntWjq3Ow
— Steve Miller (@askslim) November 18, 2018
Also coming up today
Investors will be glued to the latest developments in Westminster, as Theresa May continues to face down critics of her Brexit deal.
The PM is due to speak at the CBI’s annual conference today, where UK business leaders may warn of the perils of leaving the Eu without a transition arrangement.
The agenda
- All day: CBI conference in London
- 10:00am GMT: Eurozone construction output for September
Updated
