Aurelia Butler

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TAIPEI/BEIJING (Reuters) -Taiwan on Thursday accused China of economic coercion and election interference after Beijing announced the end of tariff cuts on some chemical imports from the island, saying Taipei violated a trade agreement, just ahead of Taiwanese elections.Taiwan’s Jan. 13 presidential and parliamentary elections are taking place as China, which views the island as its own territory, has sought to force Taiwan to accept Chinese sovereignty claims.Taiwan’s government and the ruling Democratic Progressive Party (DPP) have repeatedly said China is trying to interfere in the vote, whether by military means or co-opting Taiwanese politicians, to ensure an outcome favourable to Beijing.China’s Finance Ministry said that starting Jan. 1, tariff cuts will be suspended for 12 products, including acrylic and p-xylene, citing “discriminatory prohibitions and restrictions” Taiwan imposed on Chinese exports in violation of a 2010 trade deal.”It is hoped that Taiwan will take effective measures to lift trade restrictions on the mainland,” it said.China last week said it had determined Taiwan had put up trade barriers in contravention of both World Trade Organization (WTO) rules and the 2010 trade deal.Taiwan’s Office of Trade Negotiations, in a statement after a weekly Cabinet meeting on Thursday, said China was carrying out “typical economic coercion” and that it should stop its “one-sided political manipulation” and have talks under the World Trade Organization, of which both are members. China’s investigation process has been unfair, opaque and not in line with international norms, it said.”Our government was deliberately skipped over during the investigation process, showing that (the probe’s) political aims were greater than their economic ones.”Taiwan’s China-policy making Mainland Affairs Council said that China had many different ways to interfere in the election, and the trade probe was one of them.”The election is the Chinese communists’ short-term political goal, but its economic coercion against Taiwan will not end with the election, and will continue for a long time,” spokesperson Jan Jyh-horng told reporters.However, National Development Council Minister Kung Ming-hsin said the tariff move would not affect Taiwan’s economic outlook.”We won’t change next year’s economic growth (forecast) because of this. It will still exceed 3%,” Kung said. China’s Taiwan Affairs Office laid the blame on Taiwan’s government, saying the ruling Democratic Progressive Party’s (DPP) “stubborn adherence to Taiwan independence” had made it hard to properly resolve problems.China detests the DPP and its presidential candidate, current Vice President Lai Ching-te, who is leading in the polls, believing they are separatists.Lai says only Taiwan’s people can decide their future and has repeatedly offered talks with China but been rebuffed. More

China’s vehicle exports have grown in recent years, fuelled by overcapacity and slowing domestic demand in the world’s biggest auto market, and are expected to rise 25% next year to 5.3 million units, China Merchants Bank International says.The Journal report follows a request to the administration by a bipartisan group of U.S. lawmakers last month to hike tariffs on Chinese-made vehicles and investigate ways to prevent Chinese firms from exporting to the United States from Mexico.Chinese automobiles currently face a 25% levy introduced during the administration of former President Donald Trump and extended by his successor.The U.S. government is debating Trump-era duties on roughly $300 billion of Chinese goods, aiming for early next year to wrap up a long-running review of the tariffs, the paper added. The Biden administration is also considering lowering tariffs on some Chinese consumer products that officials do not see as strategically important, in addition to the potential increases on clean-energy products, the paper said. Foreign automakers including Tesla (NASDAQ:TSLA) also use China as a major export hub.Lawmakers have said earlier that U.S. automakers are exporting Chinese-made vehicles to the United States, a sign that current import tariffs are insufficient.China will follow developments closely and take necessary measures to safeguard its legitimate interests, a spokesperson of its foreign ministry told a daily briefing on Thursday. The office of the U.S. Trade Representative and the National Security Council did not immediately respond to a Reuters request for comment. More

The increase is the smallest in two decades as authorities prioritise fiscal discipline in a U-turn from expansionary expenditure made during the coronavirus pandemic, according to the nation’s finance ministry.By restraining spending, President Yoon Suk Yeol’s administration plans to bring the ratio of fiscal deficit to GDP back below 3% from 2025. The 656.6 trillion won of fiscal expenditure penciled in for next year will widen the deficit-to-GDP to 3.9% from an estimated 2.6% this year. ($1 = 1,304.0700 won) More

Users in Canada, Britain, France and other countries reported issues with accessing both X and X Pro, earlier known as TweetDeck.Over 7,000 users in Canada and Britain experienced issues with the platform, according to Downdetector data. Downdetector tracks outages by collating status reports from several sources including users.The cause of the outage, which began a little after 12 am ET(0500 GMT), is not yet known, and emails to X’s communications and support teams bounced back. Users on X, owned by billionaire Elon Musk, experienced an inability to view posts, receiving a “Welcome to X!” message. X Pro users encountered a message that said “Waiting for posts.” The social media platform faced upheaval and uncertainty following Musk’s $44 billion acquisition, leading to layoffs, including numerous engineers responsible for fixing and preventing service outages, sources have previously told Reuters.Users took to rival Meta (NASDAQ:META)’s app, Threads, to discuss the outage, citing difficulties in accessing posts, replies and profiles on X. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is head of macro research at BNP Paribas Asset ManagementInflation remains the number one topic for investors. Understanding what is happening to inflation is the key to forecasting what central banks will do, and hence how bonds and equities will perform. But we do not all look at inflation in the same way and right now that makes a big difference to the conclusions drawn about the economy, monetary policy and markets.National statisticians publish data on consumer prices at a monthly frequency. That much is common. In Europe, when we talk about inflation, we compare how prices have changed over the past year, and for a very simple reason. Many prices exhibit a clear seasonal pattern which can obscure the underlying rate of inflation that we are interested in. It does not make much sense to say we start each year in deflation just because there are always sales after Christmas and the prices of many items tend to fall between December and January.Comparisons against a year ago circumvent this problem. However, they do so at a cost. Macroeconomic circumstances can change over the course of the year, and hence so too can the underlying rate of inflation. The change on a year ago measure will inevitably be slow to capture a sudden, significant change in that underlying trend. They do things differently in the US. The statisticians estimate and then remove the seasonal trend from the data. Now we can track the underlying rate of change of prices from one month to the next. We can assess whether prices are consistently rising too fast each month or not — or, in the jargon, whether high inflation is proving persistent.We could do the same in Europe. Seasonal adjustment can be as simple as a click of a button in a software package. The European Central Bank publishes seasonally adjusted data for those who do not want to get their hands dirty.Nevertheless, the focus in Europe remains on how unadjusted prices have changed over the past year. From this perspective, inflation is falling but is still too high. No surprise then that many commentators insist that interest rates must stay high to squeeze inflation out of the system.You get a completely different impression if you focus on the recent trend in the seasonally adjusted data. The pace of disinflation is more dramatic, and the current rate of inflation looks far less worrisome. Indeed, the ECB data suggest that core inflation turned negative in the eurozone in the last month for which we have data. Even if the latest data turns out to be erratically weak, the trend is clear. It is a similar story in the UK. Prices are rising at a much more manageable rate from one month to the next, but the punchy pace of increases earlier in the year means that the change on a year ago measure is still elevated. Core consumer prices were up 5.1 per cent on a year ago in November, well below consensus forecasts. More importantly, seasonally adjusted core prices were essentially flat on a month agoWe have a similar story with wages. The Bank of England’s favourite measure of private sector pay was increasing at an extremely rapid rate in the spring. Wages are up a lot relative to where they were a year ago. But the rate at which wages are rising from one month to the next has slowed dramatically since the spring. In fact, pay actually fell in the last month for which we have data. Again, that could be noise, but the signal is clear.  It is not hard then to understand why investors are increasingly confident that the hiking cycle is complete and rate cuts are coming soon. Prices are a lot higher than where they were a year ago. But the period of rapidly rising prices is retreating in the rear-view mirror. Inflation has not proved persistent. On the contrary, underlying inflation has cooled significantly in recent months. If you look at how wages and prices have changed over the past month, rather than over the past year, you will conclude that the inflation genie is already back in the bottle.It would take a brave economist to rule out the possibility of a reacceleration in wages and prices after the chastening experience of recent years. However, a significant and sustained pick up looks less likely now.  For now, interest rates will seemingly stay high as an insurance against that possibility. But with interest rates in restrictive territory, the question is increasingly whether the underlying trend in inflation will continue to cool in the coming months. It is not impossible that inflation will soon be too low for comfort. In that case, investors are still underestimating how many rate cuts are coming.  More