Japan PM Ishiba says disagreements remain with US on tariff talks
Japanese Prime Minister Shigeru Ishiba listens during a working session at the G7 Summit in Kananaskis. (AP pic)
CALGARY : Japan's Prime Minister Shigeru Ishiba said his country has not reached a comprehensive tariff agreement with the US as some disagreements persist between the two nations.
Ishiba, talking to reporters after the Group of Seven leaders' summit in Canada on Tuesday, emphasised the importance of securing a trade deal that benefits both countries while safeguarding Japan's national interests.
Ishiba, who was at his first G7 summit as prime minister, held tariff talks with US President Donald Trump on Monday, but the meeting ended without an agreement to lower or eliminate the 25% tariff Trump has imposed on Japanese auto imports.
Ishiba said US tariff measures were impacting the earnings of many Japanese companies, including those in the automobile sector, while causing a significant impact on the global economy.
'Both Japan and the US have continued sincere discussions, exploring the possibility of an agreement until the last moment,' he said. But Ishiba added there still remain points of disagreement between the two sides.
Ishiba's news conference in Calgary, Canada was held following a gathering of G7 leaders at the nearby Kananaskis mountain resort in the Canadian Rockies.
Ishiba also met other leaders for bilateral talks, including his first meeting with German Chancellor Friedrich Merz. The Japanese leader also discussed security relations with South Korean President Lee Jae-myung before heading back to Tokyo.
The summit ended without a joint statement of support from the group for Ukraine after Trump expressed support for Russian President Vladimir Putin and left the event a day early to address the Israel-Iran conflict.
On the Middle East, Ishiba said he had told G7 leaders that Iran's nuclear development was 'never tolerable' while stressing the importance of diplomatic efforts through dialogue.
Ishiba will participate in the Nato summit in the Netherlands next week, he added.
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The Star
an hour ago
- The Star
Overcapacity: the economic buzzword fuelling Europe's clash with China
In a soulless conference room in Brussels in November, officials and experts from around Europe and the United States were locked in a technical debate over a cryptic bit of economic jargon: global non-market overcapacity. Beneath the geography-free legalese so common in Brussels, China was undoubtedly the subject. The conference, organised by the European Commission, was designed to thrash out solutions to the problem of overcapacity in China's economy and the second-order effects Europe fears. Decades of overinvestment and state subsidies in China, weak domestic consumption, an addiction to manufacturing, crashing corporate profits, zombie companies that the state does not let die and a superpower trade war have, the EU believes, created a perfect storm. China's industrial overflows must go somewhere, Brussels thinks, probably at a discount, and the only logical destination is Europe. Governments fear companies that make everything from industrial machinery and chemicals to hydrogen electrolysers and wind turbines will be eaten alive, industries decimated and jobs lost forever. They worry about a wave that could sweep populist parties to power in Europe's hollowed-out manufacturing heartlands. They insist that Beijing should worry too, or face a European anti-China backlash similar to the one that has coursed through the United States over the last decade. 'We are seeing a new 'China shock' – as China's economy slows down, Beijing floods global markets with subsidised overcapacity that its own market cannot absorb,' European Commission President Ursula von der Leyen said at the G7 meeting in Canada this week. Back at the Brussels forum on global non-market overcapacity last year, the discussion was becoming bogged down in terminology – 'decreasing profit margins', 'returns on capital', 'underutilised assets' – when an arm shot up in the middle of the room. 'I have to make some remarks, because China is the elephant in the room, and everything is about China on the agenda,' a Chinese diplomat said. Stirring the dozing room to life, the diplomat angrily disputed speakers' remarks that there was deflation in China – despite official government data showing a 31st successive monthly fall in producer prices in May – and flatly denied that China's industrial success was because of subsidies. The diplomat rejected the argument that overcapacity in China's giant industrial economy could be a problem for anyone, particularly in cleantech industries at a time of climate emergency. 'There is no country which produces as they consume ... otherwise, there will be no need for global trade ... the challenge we're facing in new energy sectors is not overcapacity, but undercapacity,' he said. Xi Jinping doesn't like overcapacity, hence it doesn't exist The word 'overcapacity' has become a battleground in China's rivalry with the West, and the episode in Brussels shows that the two sides have started airing their dirty laundry in public. After years of complaints, Europe has grown frustrated by Beijing's lack of response. Chinese officials brush off EU grievances, pointing out that Germany exports more cars than Germans can drive, while Belgians could not possibly eat all the chocolate made there. A running joke in Brussels is that the official Chinese term for the trend is 'so-called overcapacity'. 'Western politicians and press have repeatedly hyped up the so-called Chinese 'overcapacity',' wrote Peng Gang, minister for economic and trade affairs at China's mission to the EU, in an article for Euractiv, a Brussels media outlet. 'Some Western countries, in order to protect their vested market shares and dominant positions ... hype up the 'Chinese economic threat' or Chinese 'overcapacity' by all means.' In a highly polarised world, a seemingly innocuous economic term has become, in itself, a geopolitical tinderbox. Any mention of 'overcapacity' is enough to get eyes rolling in some quarters, and not just in Beijing. Prominent Western critics insist it is an ideological stick with which to beat China. 'We're seeing the emergence, from the standpoint of the West, at least, of a country that is from outside the West, from the South, an economic threat. I definitely think there's an ideological element behind these accusations of overcapacity,' said Jostein Hauge, an expert in development economics at Cambridge University, on a recent episode of the Sinica Podcast. Adam Tooze, a noted economic historian, told the South China Morning Post late last year it was 'significant that the debate has come up at this moment, because it provides a kind of justification for industrial policy in the West'. He asked: 'Why would you not simply take advantage of the subsidy that Chinese taxpayers effectively have provided to give us all really cheap vehicles?' Part of the problem could lie with the imprecise nature of the term 'overcapacity'. In Western discourse, the phrase has become a Frankenstein's monster, a catch-all criticism for many of the structural issues critics do not like in China. Trey McArver, co-founder of the Trivium China consultancy, said it 'has become a byword for either angst or anger regarding the Chinese economy'. 'It's applied in a lot of different instances, and it's not applicable in every context in which it's used. It is such a broad and abused term that it doesn't help further productive discussions from a policy perspective about what the EU wants to achieve,' he said. Those gripes include opaque subsidies, zombie companies kept alive by local governments, an unwillingness to turbo-boost consumption, a proliferation of industrial policies throughout the country and, latterly, a group of highly competitive companies, many of which struggle to turn a profit in China. 'The way China does industrial policy leads to overcapacity,' said Bert Hofman, adjunct professor at the East Asian Institute at the National University of Singapore. 'More importantly, it leads to inefficiencies – just look at profitability. Even BYD, the greatest success in electric vehicles, can barely make ends meet amid strong price competition. In the automotive industry, one-third of companies is making a loss,' said Hofman, who was previously World Bank country director in China. Even some overcapacity believers admit that the word does not quite capture the extent of the grievances they have with China's economic model. 'There's no formal definition for overcapacity and so that's what makes it such a fraught, complicated term to use,' said Agatha Kratz, a China specialist at Rhodium Group, a research house whose work on the topic has been cited widely by Western officials pushing for China to change, and for Europe to act. Kratz pushed back strongly against the idea that an endless supply of Chinese cleantech products would be good for the world, even during a climate emergency, since it would kill European industries. 'This is going to sound simplistic, but I really, truly believe this. You cannot buy a solar panel if you don't have a salary. You can't invest in the green transition if you don't have a taxable base,' she said. Jens Eskelund, chair of the EU Chamber of Commerce in China, has for years advocated moving away from the term since it strikes such a nerve in Beijing. Instead, he points to nearly three years of producer price deflation in China as an official metric that the government cannot really shoot down. '[Premier] Li Qiang calls it 'involution' [ neijuan ]. I'm fine with calling it involution,' said Eskelund. He was referring to a term most often associated with a Chinese societal trend described by the journal Economics & Human Biology as 'a state of intense, internal competition and overwork without significant progress or improvement'. 'But when you have China producing four times more electrolysers than the world can absorb, then it's overcapacity. When you have battery factories that only produce at 65 per cent capacity, then it's overcapacity. But you can call it something else if you want,' Eskelund said. Chinese leaders have used the term 'overcapacity' before, but in a different context understood by most to refer to real estate-related sectors. During the Central Economic Work Conference in December 2023, President Xi Jinping said that 'some difficulties and challenges must be tackled to achieve further economic recovery. Those include a lack of effective demand, overcapacity in some industries, weak social expectations and many hidden risks'. The same meeting in 2024 pledged to 'comprehensively address 'involution-style' competition and regulate the behaviour of local governments and corporations'. The chairman of auto giant Geely, Li Shufu, said last week that 'the global automotive industry is mired in severe overcapacity woes, [so] we have decided to stop building new car plants'. Yao Yang, dean of the National School of Development at Peking University, in a recent interview with the Post said: 'From a domestic perspective, overcapacity in China is a reality. We have to acknowledge that. It's a factual, scientific issue, which is precisely why we're talking about countering involution – it happens because of overcapacity,' But he added that it was a result of an excess of capital instead of government policies and, in the case of EVs, the private sector played the dominant role. So why the strong pushback from Chinese officials? Eskelund at the EU chamber believes it is because 'China doesn't like finger-pointing', but he senses some level of acceptance in Beijing. 'China is beginning to realise it's out of balance and comes at a cost to China. Like changing any habit, it starts with recognising there's an issue,' he said. Some EU officials complain about 'semantics'. They believe Beijing is trying to distract from what they consider to be serious problems by poking holes in the terminology. 'Even if we used another term, the response would be the same,' said one official. Joerg Wuttke, a partner at DGA-Albright Stonebridge Group and formerly Europe's top lobbyist in China, described the debate as an 'echo chamber' that took its lead from the top. 'It reflects the messaging in the system. Xi Jinping doesn't like overcapacity, hence it doesn't exist,' said Wuttke, who said senior Chinese government figures had told him a decade ago there would be across-the-board overcapacity in hi-tech industries. 'There are similarities in DC and Beijing about delusional language. When you meet someone in DC now, they say 'we had the best 100 days ever'. The same in China: we have an echo chamber there that actually comes out with Xi's messages and people who should know better will parrot this, despite the fact it's not the truth.' In the West, some official documents have started referring to 'non-market policies and practices', with overcapacity a subcomponent of that, perhaps recognising the fraught nature of the term, but also the challenge in defining unprecedented developments in China's economy. Others are looking for more innovative language. The economist Arthur Kroeber uses the term a 'venture capital state' to describe Beijing's hydra of policies designed to boost labour productivity, upgrade its technology base and boost self-sufficiency. Like a venture capital fund, the state identifies high-return sectors and pumps them full of money, producing a few winners and many failures. The difference is that in China, the failures are not allowed to die, according to Kroeber. In a contribution to a book published last month, Not Just Another Cold War: The Global Implications of the US-China Rivalry , Kroeber said 1.8 per cent of China's GDP was pumped into funds supporting these sectors – which were all geared towards manufacturing hi-tech goods, 'a feature, not a bug of Chinese policy under Xi' – from 2017 to 2019, 'three to four times higher than comparable spending in other countries'. The funds, 'superficially modelled on venture capital funds, are basically dressed-up subsidy channels', Kroeber wrote, adding that the 'market exit and reallocation of resources is essentially zero'. On June 17, the Anji Soundness car-carrying ship set sail on its maiden voyage from Taicang Port in Suzhou, bound for Europe. With capacity for 9,500 vehicles that could fill 20 football fields, the world's largest methanol-ready cargo ship is the stuff of EU policymakers' nightmares – a floating emblem of overcapacity and of Beijing's unwillingness to change gear. For others, it is a more benign symbol. 'The Chinese model involves ferocious competition – and that doesn't sit well with the classic Brussels mindset, that this is all down to market-distorting subsidies,' said Simon Evenett, the founder of Global Trade Alert, a policy tracker. 'What the Chinese have done is take subsidies and combine [them] with ferocious competition. And in Europe, I'm not sure we're ready for such levels of ferocious competition.' -- SOUTH CHINA MORNING POST
The Sun
an hour ago
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Iran vows retaliation after US strikes on nuclear sites
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In a sign of possible nervousness about the conflict spilling into a wider regional war, oil prices jumped by more than four percent in early trading on Monday. US Secretary of State Marco Rubio urged China to help deter Iran from shutting down the Strait of Hormuz, a crucial trade route through which one-fifth of global oil output passes. With Iran threatening US bases in the Middle East, the State Department issued a worldwide alert cautioning Americans abroad. 'The conflict between Israel and Iran has resulted in disruptions to travel and periodic closure of airspace across the Middle East. There is the potential for demonstrations against US citizens and interests abroad,' the department's security alert said. It made no mention of the US strikes on a key underground uranium enrichment site at Fordo, along with nuclear facilities in Isfahan and Natanz. 'Regime change' In central Tehran on Sunday, protesters waved flags and chanted slogans against US and Israeli attacks. In the province of Semnan east of the capital, 46-year-old housewife Samireh told AFP she was 'truly shocked' by the strikes. 'Semnan province is very far from the nuclear facilities targeted, but I'm very concerned for the people who live near,' she said. Iran's President Masoud Pezeshkian said the US strikes revealed Washington was 'behind' Israel's campaign against the Islamic republic and vowed a response. After the Pentagon stressed that the goal of American intervention was not to topple the Iranian government, Trump openly toyed with the idea. 'It's not politically correct to use the term, 'Regime Change,' Trump posted on his Truth Social platform. 'But if the current Iranian Regime is unable to MAKE IRAN GREAT AGAIN, why wouldn't there be a Regime change??? MIGA!!!' Hours later he doubled down on emphasising the success of his strikes. 'Monumental Damage was done to all Nuclear sites in Iran, as shown by satellite images. Obliteration is an accurate term!' 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Nine members of the Revolutionary Guards were killed Sunday in Israeli attacks on central Iran, local media reported, while three people were killed after an ambulance was struck. Israeli strikes on Iran have killed more than 400 people, Iran's health ministry said. Iran's attacks on Israel have killed 24 people, according to official figures. Rafael Grossi, director of the International Atomic Energy Agency (IAEA), told an emergency meeting of the UN Security Council that craters were visible at the Fordo facility, but it had not been possible to assess the underground damage. He added that 'armed attacks on nuclear facilities should never take place and could result in radioactive releases with grave consequences within and beyond the boundaries of the State which has been attacked.' The United Arab Emirates, Qatar and Oman, which had been mediating Iran-US nuclear talks, criticised the US strikes and called for de-escalation, while France, Germany and Britain called on Tehran 'not to take any further action that could destabilise the region.' North Korea, which is also at odds with Washington over its own nuclear weapons, condemned the US strikes as a violation of the United Nations charter. Iran's Foreign Minister Abbas Araghchi accused the United States of deciding to 'blow up' nuclear diplomacy with its intervention in the war. He headed to Moscow on Sunday for talks with Russian President Vladimir Putin. On Sunday, Russia, China and Pakistan circulated a draft resolution with other Security Council members that calls for an 'immediate ceasefire' in Iran.
The Sun
an hour ago
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Belgium wants NATO flexibility following Spain's ‘noisy' outburst
BRUSSELS: Belgium on Monday said it was seeking 'maximum flexibility' from NATO on ramped-up defence spending targets to be agreed at a summit this week after fellow laggard Spain insisted it had won an exception. Madrid said on Sunday it would not need to hit the five percent of GDP demanded by US President Donald Trump, setting up a potential clash at a two-day gathering starting on Tuesday in The Hague. On Monday Belgian Foreign Minister Maxime Prevot told local media that while Brussels had to show 'willingness to get back in line' after years of underspending, the target was beyond its 'budgetary reach'. 'We may not have done so by making a noisy statement like Spain, but I can assure you that for weeks our diplomats have been working hard to obtain the flexibility mechanisms... that could help to lighten the burden of the Belgian effort,' he told RTBF radio. 'We're asking for maximum flexibility'. Under a deal greenlit by NATO countries Sunday, allies promise to reach 3.5 percent on core military needs over the next decade, and spend 1.5 percent on a looser category of 'defence-related' expenditures such as infrastructure and cybersecurity. The pledge is seen as key both to satisfying Trump -- who has threatened not to protect allies spending too little -- and helping NATO build up the forces it needs to deter Russia. Multiple diplomats at NATO said the agreement -- set to be unveiled at the summit -- had gone through with the approval of all 32 nations and that there was no exemption for Madrid. But Spanish Prime Minister Pedro Sanchez contended he had struck an accord that would see his country keep respecting its commitments 'without having to raise our defence spending to five percent of gross domestic product'. The centre-left leader later posted online a letter from NATO chief Mark Rutte confirming the agreement 'will give Spain the flexibility to determine its own sovereign path' for reaching the alliance's military capability requirements. But a NATO diplomat speaking on condition of anonymity Monday said there was 'no opt-out'. 'It is always the case that Allies have the sovereign right to determine how they'll deliver on their commitments,' the diplomat told AFP. Belgium, like Spain, has been one of the lowest-spending NATO countries on defence in relative terms. It currently spends 1.3 percent of GDP on defence, well below the current target of two percent that the government has pledged to reach.
