Prominent Chinese diplomat Liu Jianchao taken for questioning, sources say
Liu, 61, was detained after returning from a work trip to Singapore, South Africa and Algeria, which ended on July 30, according to the sources. His house was searched by authorities in early August, two of the people said.
The people did not know why the authorities questioned Liu. They could not be named for safety reasons. Liu's detention was first reported by the Wall Street Journal.
Liu's detention marks the highest-level disappearance of a diplomat since China ousted its former foreign minister and President Xi Jinping's protégé, Qin Gang, in 2023 following an unexplained public absence.
Since 2022, Oxford-educated Liu has led the International Department of the Communist Party, the body in charge of managing ties with foreign political parties. His profile remains on the department's website.
He was widely viewed by diplomats in Beijing and analysts as a likely candidate to succeed veteran Wang Yi as foreign minister but was not promoted to the role at a recent annual government reshuffle.
"If true, Liu Jianchao's downfall will lead to further power vacuum at the top of China's foreign affairs portfolio," said Wen-Ti Sung, a fellow at the Atlantic Council's Global China Hub.
"It removes a frontrunner to succeed Wang Yi and deprives China of a potential next steward for China's foreign policy."
China's State Council Information Office, which handles media queries for the Chinese government, and the Chinese Communist Party International Department did not immediately respond to Reuters' requests for comment.
At an annual forum at Beijing's Tsinghua University in early July, Liu said he was optimistic about the future of U.S.-China relations and that it was "unimaginable that China and the U.S. will ever go to war".
Liu was known for the unusual frequency and intensity of his overseas travel unlike his more low-profile predecessors.
Foreign diplomats in Beijing praised his confident and relaxed manner, fluent English and ability to engage spontaneously without pre-prepared talking points.
"He knows how to shape Chinese narratives in a way that's engaging and appealing to foreigners," said one who met him in late 2023. Another diplomat who met his aides around that time said they were very confident that he would soon be promoted to foreign minister.
During a high-profile 2024 trip to the United States, which was widely viewed by analysts as a foreign minister trial run, he met a wide range of counterparts, including then-Secretary of State Antony Blinken.
Born in the northeastern province of Jilin, Liu majored in English at Beijing Foreign Studies University and studied international relations at Oxford before taking up his first post as a translator with the foreign ministry.
He has served in China's mission to Britain and later as ambassador to Indonesia and the Philippines.
Unusually for a Chinese diplomat, he served two successive postings in China's anti-corruption bureaucracy between 2015 and 2018, when he helped track down corrupt officials who fled overseas.
During his time as ministry spokesman, he was known for humorous, spontaneous comments while making a robust defence of China's position.
A person familiar with China's foreign ministry said that Liu was liked and well-respected by Chinese diplomats for his outstanding ability and warm, friendly demeanour.
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Reuters
2 hours ago
- Reuters
TRADING DAY Tariffs, CPI nerves soften sentiment
ORLANDO, Florida, Aug 11 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist World markets got the week off to a subdued start on Monday, although the Nasdaq nudged a new high, as a light earnings and data calendar allowed investors to digest the latest tariff-related news and look ahead to Tuesday's U.S. inflation figures. More on that below. In my column today I look at the blizzard of U.S. labor market data - often conflicting, sometimes distorted - and ask which number best shines a light through the fog. Could it now be continuing jobless claims? If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Tariffs, CPI nerves soften sentiment Wall Street closed lower on Monday, even as the Nasdaq touched fresh highs, with the latest news related to U.S. President Donald Trump's tariff war generally sapping risk appetite rather than strengthening it. Trump signed an executive order on Monday extending the China tariff deadline for another 90 days, with only hours to go before U.S. tariffs on Chinese goods were due to snap back to triple-digit rates. This came after a U.S. official told Reuters over the weekend that chip companies Nvidia and Advanced Micro Devices have agreed to give the U.S. government 15% of revenue from sales of advanced chips to China. The news was surprising and confusing. "It's wild," said Geoff Gertz, a senior fellow at Center for New American Security, an independent think tank in Washington, D.C. "Either selling H20 chips to China is a national security risk, in which case we shouldn't be doing it to begin with, or it's not a national security risk, in which case, why are we putting this extra penalty on the sale?" A rise for Nvidia shares this week would mark a record-breaking 12 consecutive weekly gains. The stock now accounts for 8% of the entire S&P 500 market cap, the biggest weight of any individual stock in the wider index since the data began in 1981, according to Apollo's Torsten Slok. The so-called "Magnificent Seven" megacap stocks, of which Nvidia is one, now account for a record 35.3% of the S&P 500's total market cap. The top 10 stocks make up a record 40% of the index's market cap. This concentration risk is nothing new, of course, but the steady advance deeper into uncharted territory is bound to unnerve some investors. Meanwhile, U.S.-Brazil relations show no sign of improving. Brazil's Finance Minister Fernando Haddad said on Monday that his virtual meeting with U.S. Treasury Secretary Scott Bessent scheduled for later this week has been canceled, a blow to Brasilia as it attempts to get the 50% tariff on many Brazilian exports to the U.S. reduced. Speculation continues to swirl around who Trump will nominate to replace Fed chair Jerome Powell, whose term officially ends next May. As of Monday, no fewer than eight names appear to be under consideration, according to media reports. The main economic indicators on Monday were from China, which showed producer prices fell more than expected in July and no change in consumer prices. Deflation still stalks China, in contrast to the U.S. where tariffs are putting upward pressure on prices. Attention on Tuesday turns to Australia, where the central bank is expected to reduce its cash rate by a quarter point to 3.60%, and then to CPI inflation figures for July from the U.S. Which data point may shine light through U.S. jobs fog? Amid a blizzard of contradictory signals, it's becoming increasingly difficult to get any visibility on the U.S. labor market. But of all the numbers that feed into the all-important unemployment rate, the one worth paying most attention to may be continuing weekly jobless claims. Federal Reserve Chair Jerome Powell has said that while he and his colleagues look at the "totality" of the data, the best gauge of the health of the labor market is the unemployment rate. That's currently 4.2%, low by historical standards, and consistent with an economy operating at full employment. But it is a lagging indicator, meaning that once it starts to rise sharply, the economy will probably already be in a very precarious position. And it is also being depressed by labor demand and supply factors unique to the U.S.'s current high tariff, low immigration era. Economic growth is slowing. Broadly speaking, it is running at an annual rate of just over 1%, half the pace seen in the last few years. Unsurprisingly, firms' hiring is slowing too. The latest Job Openings and Labor Turnover Survey, or JOLTS, showed hiring in June was the weakest in a year, while July's nonfarm payrolls report and previous months' revisions were so disappointing that President Donald Trump fired the head of the agency responsible for collecting the data. But the unemployment rate isn't rising, largely because firms aren't firing workers. Why? Perhaps because they are banking on tariff and inflation uncertainty lifting in the second half of the year. It's also possible that firms are still scared from the post-pandemic labor shortages. Whatever the reason, the pace of layoffs simply has not picked up, the monthly JOLTS surveys show. Layoffs in June totaled 1.6 million, below the averages of the last one, two and three years. Meanwhile, lower immigration, increased deportations, and fewer people re-entering the labor force are offsetting weak hiring, thus keeping a lid on the unemployment rate. The labor force participation rate in July was 62.2%, the lowest since November 2022. And what about weekly jobless claims, another key variable in the labor market picture? In previous slowdowns, rising layoffs would be reflected in a spike in the number of people claiming unemployment benefits for the first time. That's not happening either. Last week's 226,000 initial claims were right at the average for the past year, and only a few thousand higher than the averages over the past two and three years. "It's a low fire, low hire economy," notes Oscar Munoz, U.S. rates strategist at TD Securities. One high-frequency number that has gone under the radar, but which merits more attention is continuing jobless claims, which measures the number of workers continuing to file for unemployment benefits after losing their jobs. Rising continued claims suggest people actively looking for a job are struggling to get one, a sign that the labor market could be softening. That figure spiked last week to 1.97 million, the highest since November 2021, which in theory should put upward pressure on the unemployment rate. Using the 'stock' versus 'flow' analogy, continuing claims are the 'stock,' and weekly claims are the 'flow'. Everyone will have their own view on what's more important, but right now initial claims are offering no guidance while continuing claims are pointing to softening in the job market. Fed officials are on alert, but what would move them to cut rates? Munoz and his colleagues at TD Securities estimate that continuing claims of around 2.2 million would be consistent with an unemployment rate of 4.5%, a level of joblessness most economists agree would prompt the Fed to trim rates. That's also the year-end unemployment rate in the Fed's last economic projections from June, a set of forecasts which also penciled in 50 bps of easing by December. An unemployment rate of 4.4% would probably tip the balance on the Federal Open Market Committee, while 4.3% would make it a much closer call, perhaps a coin toss. Further muddying the picture, other indicators suggest the labor market is ticking along nicely. July's payrolls report showed that average hourly earnings last month rose at a 3.9% annual rate, consistent with the level seen in the past year. And the average number of hours worked was 34.3 hours, right at the mean for the past two years. These numbers and the JOLTS data are released monthly, and there will be one more of each before the Fed's September 16-17 policy meeting. But if the increased focus on the unemployment rate means investors want a more regular labor market temperature check, they should keep a close eye on weekly continuing claims. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
The Guardian
3 hours ago
- The Guardian
Trump is losing his foolish trade war. This will cost ordinary Americans greatly
The ever-bombastic Donald Trump has boasted repeatedly of his trade victories, while White House news releases trumpet his 'historic trade wins'. The Wall Street Journal echoed Trump's triumphalism with a headline saying, 'Trump is Winning His Trade War', and last week the New York Times used the exact same words in a headline. That must have been music to the president's ears. Forgive me for being a spoilsport, but I don't see where the victory is or how Trump is winning. I keep reading how Trump's trade war and tariff machinations have pushed up inflation, slashed US job gains, slowed economic growth and caused the manufacturing sector to sputter. The rate of job growth plunged by over 70% in the three months after Trump unveiled his 2 April 'liberation day' tariffs that filled corporate executives with uncertainty and dread. Trump is palpably impatient for the Federal Reserve to cut interest rates, but the higher prices resulting from his tariffs are likely to delay the rate cuts he desperately wants. So can someone please tell me where is the victory here? Trump further proclaims that his tariffs are wondrous because, he says, they will generate trillions of dollars in revenue for the US Treasury. But those revenues will come out of the hides of tens of millions of American consumers who will pay Trump's taxes on imports. The Yale Budget Lab estimates that the price increases caused by Trump's tariffs will cost the typical US household $2,400 in 2025. As a result of the tariffs, the budget lab says, apparel prices will soar 37% and shoe prices 39%. What Trump boasts as a win is a loss for millions of typical Americans. Some economists are warning that Trump's tariffs will bring back stagflation, a dangerous combination of rising prices and slowing growth last seen in the 1970s. Pointing to signs of stagflation, BMO Economics wrote: 'Economic activity and job growth are sputtering under the weight of higher tariffs, increasing inflation and rising economic policy and trade uncertainty.' Doesn't look as if Trump's trade war is winning there. Trump recently said on CNBC's Squawk Box that 'people love the tariffs', but evidently the people he's talking about aren't the American people. A recent Fox News poll of registered voters found that Americans overwhelming disapprove of Trump's tariff policies by 62% to 36%. Ben May, a forecaster at Oxford Economics, said his tariffs will hurt US families because 'they are obviously raising prices … and squeezing household incomes'. Many days it seems that Trump tries to dominate the news cycle with some tariff announcement or other: 50% on Brazil, double India's tariffs to 50%, impose a 100% tariff on semiconductors. (Even some Maga folks probably think he uses tariff announcements to distract from the Jeffrey Epstein scandal.) This week the White House dismayed the world by announcing that Trump would impose tariffs, ranging from 15% to 50%, on 90 countries effective Thursday. As a result of Trump's tariff craze, the average effective tariff rate on imports into the US will be 18%, up from 2.3% last year – the highest level since the infamous Smoot-Hawley tariffs of 1930 worsened the Great Depression. Remember when Trump's trade adviser Peter Navarro predicted last Apil that the administration would negotiate 90 deals in 90 days. That didn't come close to happening. But Trump did pressure the EU, Japan and South Korea into reluctantly accepting trade deals that call for tariffs of 15% – a compromise down from the 25% and 30% levels Trump had been demanding. Even though the EU, Japan and South Korea have long been among America's closest allies, Trump used nasty threats to get them to accept those tariffs, which will hurt those countries' manufacturers, while also hurting US consumers. Here's one way to look at Trump's strong-arm tactics: When a bully demands that a person do something that that person doesn't want to do and that something will hurt not just that person, but also the bully's family – and probably the bully, too, long-term – how is that winning, rather than bull-headed destructiveness? Some headline writers might lazily conclude that Trump is winning his trade war (a war of headstrong destructiveness), but in that war, everyone and everything, except Trump's limitless ego and a handful of US industries, are losers. There are many other reasons Trump's trade deals shouldn't be viewed as victories. Trump's main motivation for tariffs is arguably to increase manufacturing in the US, but factory activity has actually declined in recent months, according to the Institute for Supply Management. Harley-Davidson says it has reduced production because of tariff-induced uncertainty and higher expenses. Ford, which assembles more cars in the US than any other automaker, complains that Trump's tariff mess caused its profits to fall by $800m in the second quarter. Trumps's mishmash of tariffs, including steep import taxes on steel, aluminum and auto parts, have made Ford's production more problematic and expensive. Trump's trade war has pushed relations with many countries to their worst point in decades. Acting more like a mob boss than a dealmaker, Trump has told various nations that if they promise to cough up several hundred billion dollars in investment in the US, he'll make nice and lower their tariff rate. Or else. One economist called this 'a global shakedown'. Many officials in Europe, Asia, Latin America and Canada are no doubt seething. Trump seems to treat Washington's trading partners as punching bags—that's not a winning strategy for the US or the world. Another motivation behind Trump's tariffs is his desire to erase the huge US trade deficit. That deficit has certainly been a problem, helping lead to myriad factory closings and job losses across blue-collar America. But even with that its record trade deficits, the US has, by many measures, the world's richest, most successful economy. Trump boasts that his tariffs are already bringing back some manufacturing—and there's no denying that there are several examples, Last Wednesday, Apple vowed to invest $100bn in advanced manufacturing in the US, and GM plans to increase production of its Chevrolet Silverado and GMC Sierra trucks in Indiana while trimming output in Canada. Nonetheless, there's a huge question mark as to whether Trump's tariffs will inspire a major manufacturing rebound in the US. Many experts say the 15% tariffs imposed on the EU, Japan and other places are too low to persuade companies to move production to the US. For corporations to build a new $500m factory in the US, they will want solid assurances of what economic conditions will be four and five years from now. But does anyone actually think that the mercurial Mr Trump won't issue new tariff threats or order tariff changes within four or five weeks? Perhaps the newspaper headline should be, 'Trump Has Already Lost a Pivotal Part of His Trade War.' All the months of Trump's on-again, off-again, up-and-down tariffs may mean he has so spooked and alienated corporate planners that he will never achieve his goal of bringing back far more factories, notwithstanding other countries' often-vague pledges of billions in investments Even beyond that, in this age of AI, algorithms and a thriving service economy, it seems that Trump's trade war – with the tremendous pain and disruption it is causing – might have made far more sense to help the economy of 50 or 75 years ago than the AI and information economy of today. Steven Greenhouse is a journalist and author, focusing on labour and the workplace, as well as economic and legal issues
The Guardian
3 hours ago
- The Guardian
Why Peak China may finally have arrived
Proclamations about the inevitability of China's dominance of the global economic system, or the so-called Chinese century, were made long before Donald Trump's attempts to stymie its trade with the US. Common concerns about coercive politics and human rights aside, some notions of China as an unstoppable economic, technological and military behemoth sit alongside others focused more on an increasingly sclerotic, over- centralised political economy, that depends on wasteful economic stimulus, and features poor governance and institutions. The fusion of these notions suggests that we may already have reached 'peak China'. At the time of the 2008 financial crisis, China's official, and probably exaggerated, GDP was about $14tn (£10.4tn), or about a third of that of the US. By 2021, it had risen to three-quarters of America's $23.7tn, and there was widespread talk about in which year of the 2020s China would overtake the US. By 2024, however, China's $18tn economy had fallen back to just over 62% of the almost $30tn of the US. In GDP per head terms, China is still no more than 20% of the US. A rising China uniquely lifted its share of global GDP between 2000 and 2021 from 3.5% to 18.5%, but since then it has slipped back to about 16.5%. There is no question that China's rise is at least stalling. The working age and total population are now in relentless decline. The urbanisation rate, just over 60%, is flattening out. Productivity growth has stalled. The long surge in China's share of global manufacturing exports and production has levelled off, and the external environment for China is now much harder and more hostile. A 90-day pause in the US-China tariff war is due to expire on Tuesday, and it is unclear whether it will be extended. Part of the problem is that China has reached the end of extrapolation. The past really is another country. Some of its growth engines could only ever fire once: for example, enrolling children in primary and secondary schools; improving basic healthcare; reaping the demographic dividend of falling dependency rates; and moving people from the countryside to higher-productivity, urban jobs. Some growth also flowed from a number of highly effective policy initiatives such as those captured by the era of reform and opening-up, inspired by Deng Xiaoping: joining the World Trade Organization; creating a genuine market in housing, and exploiting globalisation. None of these can happen again. China's growth model, moreover, based on unrealistically high growth targets and uniquely high investment and savings rates, is becoming swamped by stagnant productivity, debt service difficulties and misallocation of capital. At the Central Economic Work Conference in December last year, China's premier, Li Qiang, summarised his country's condition by saying candidly that the foundation for sustained economic recovery and growth was not strong, demand was weak, and there were pressures on job creation and 'fiscal difficulties' among several local governments. Although consumption has been made a top priority, actual policy measures to make it so have been underwhelming, partly because redistributing economic power to companies and citizens also entails changes in political power, which are anathema to the Communist party. The structural downturn in the property sector, which at one stage accounted for more than a quarter of the economy, is likely to shrink for the foreseeable future, dogged by lower rates of household formation and smaller cohorts of first-time buyers, linked to demographics as well as a chronic oversupply of unsold and uncompleted real estate. The government has softened its approach to private enterprises and approved a new private economy promotion law to bolster AI, technology clusters and hubs, and reduce regulatory barriers. Low business confidence, though, is not really about regulations but about political interference, and weak demand and profits. The super-globalisation from which China benefited is pretty much over, and the world's biggest export nation is now confronted by a fragmenting and fracturing trade and investment environment in which commerce within blocs is holding up better than trade between them. China's bloc includes a majority of the world's population, but very small proportions of world GDP, investment and wealth. At the same time, developed and middle-income economies, as well as emerging nations, are pushing back against what they perceive to be predatory trade policies by a mercantilist China. Peak China does not stem from doubts about China's industrial prowess and pedigree. It is, though, about two things that can be simultaneously true: China can have world-class companies and trendsetters such as Alibaba, Tencent, BYD, CATL, Huawei and DeepSeek, as well as an economy with systemic imbalances, debt capacity limits, and political and economic contradictions. Put another way, China has islands of technological excellence and leadership in a sea of macroeconomic turbulence and trouble. This characterised Peak Japan 40 years ago, and China is shaping up for the encore. George Magnus is a research associate at Oxford University's China Centre and at Soas University of London. He is the author of Red Flags: Why Xi's China is in Jeopardy
