The US-China trade negotiations face a fundamental difference in approach. As known, the United States accuses China of increasing the trade deficit, violating WTO rules and misappropriating intellectual property. On the third point, the Trump administration conducted a special investigation, which resulted in China's accusation of a whole range of violations, from discriminatory licensing restrictions to cyber attacks to steal intellectual property.
Does it really look that way? It turns out that this position of the United States is not absolutely confirmed by the facts. The Federal Reserve Bank of St. Louis, analyzing data from the Organization for Economic Cooperation and Development, received a different picture as a result - Chinese royalty payments rose from $ 1.4 billion in 1999 to $ 27.2 billion in 2017. According to this indicator, China ranks fourth in the world immediately after the United States and two tax offshore companies - Ireland and the Netherlands.
Payments for the use of US intellectual property increased over the same period from $ 755 million to $ 8.3 billion, while the growth rate of payments noticeably outpaced China's GDP growth.
Since Chinese companies do not suffer from a shortage of capital, for them the main motive for attracting foreign direct investment is access to new technologies. This approach is completely natural and in time will lead China to the possession of all the key modern technologies, which the United States do not want to allow.
We are talking exclusively about the containment of China's development, this is the essence of the US position on trade negotiations. Any reports of "emerging success" indicate improved prospects for US GDP growth and help strengthen the dollar and reduce risky assets, failure will accelerate the approach of recession. The seriousness of the situation received confirmation from Japan - as stated yesterday by the head of the Bank of Japan Kuroda, speaking in parliament, "The Bank of Japan will consider additional easing if the growth of the yen is threatening." Models of the development of the situation point to an early resumption of growth in a panic on the background of a slowdown in world trade, which will lead to an increase in the demand for defensive assets and the need for regular emergency measures to support business activity.
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ECB officials have increased their activity in preparing markets to change the direction of monetary policy. Following Benoit Coeure, Peter Praet, chief economist at the ECB, confirmed the likelihood of launching the TLTRO package, and Francois Villeroy de Galhau, member of the ECB board of governors and head of the Bank of France, said that the regulator could change the forecast for key interest rates if it turns out that the current slowdown in the eurozone is not is temporary.
On Tuesday, the ZEW Institute added a bit of optimism - the February economic sentiment index rose to -13.4 p against -15 a month earlier, for the eurozone -16.6 p against -20.9 p, both figures were slightly better than expected.
The European Commission has threatened a tough response if the United States imposes tariffs on car imports. The European car industry has just begun to recover from the failure due to the transition to new environmental standards, and another blow could lead to additional multi-billion losses.
Today, the euro will try to update yesterday's maximum of 1.3057, the medium-term target of 1.1440 / 50, its achievement is possible at the end of the week.
GBPUS
The employment report was able to give the pound a positive impetus, as wages continue to grow faster than inflation, which indicates income growth not only in nominal terms but also in real terms.
The wage growth with premiums in October / December remained at 3.4% year-on-year, which was slightly worse than the forecast of 3.5%. Unemployment has remained at a minimum level of 4% since 1975, and in general, the labor market in the UK is still one of the few strong indicators amid weak economic growth.
The question of a civilized exit from the EU is in the first place, as it prevents Britain from deciding on the terms of trade agreements with key partners. Last week, a trade agreement was concluded with Switzerland, but a number of other countries, in particular, Japan and South Korea, will await the outcome of the Brexit. The pause will not allow expecting an improvement in the investment climate.
Nevertheless, as of Wednesday, the pound has good prospects for further growth and will try to get to the border of the channel 1.3145 / 50. A correctional pullback to 1.3020 / 25 is likely and is likely to be bought back with the expectation of renewed growth.
