Trump took the gloves off on trade, the South China Sea, and investment just hours after he left Beijing

• Alex Lockie
 

• 4h
• 9,912

President Donald Trump leaves Beijing for Vietnam on Air Force One. Thomson Reuters

• President Donald Trump just left China after a pleasant, uncontroversial visit.
• But as soon as he landed in Vietnam, he slammed China on key issues.
• China openly seeks to unseat the US as the most powerful influence in Asia.
• Trump laid out some strategies to counter that, and he played up intra-Asian disputes in ways that are sure to anger Beijing.

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President Donald Trump left China on Friday and arrived in Vietnam with a shocking change in tone.

While in China, Trump actually gave credit to Chinese President Xi Jinping for the country's protectionist trade practices, which Trump said it used to "take advantage of another country for the benefit of its citizens."

Trump and Xi spoke little, if at all, about the South China Sea, a contentious point in which China's view of its territory conflicts with international laws and the maritime claims of its neighbors.

Instead the pair focused on signing largely nonbinding trade agreements and on overt displays of friendship.

The gloves come off on trade

Trump at an event with US veterans in Danang, Vietnam. REUTERS/Jonathan Ernst

But in Trump's first speech in Vietnam, the gloves came off.

"When the United States enters into a trading relationship with other countries or other peoples, we will from now on expect that our partners will faithfully follow the rules," Trump said in Danang, Vietnam.

"We expect that markets will be open to an equal degree on both sides and that private investment, not government planners, will direct investment," he added, perhaps alluding to China's recent announcement that it would open up its companies to more foreign investment.

Trump's speech clashed with statements from Xi, who said on Friday that globalization was an irreversible trend. Though Xi has long advocated free trade with the US and other countries, the country's policies protect Chinese companies, as Trump hinted at.

Trump plays to the home crowd bashing Beijing's aggressive South China Sea policy

Reuters

Perhaps the sorest issue Trump touched on was the South China Sea, where he stressed a need to maintain "freedom of navigation and overflight, including open shipping lanes."

Under Trump, the US Navy has increased so-called freedom-of-navigation patrols in the South China Sea, whereby destroyers sail within miles of disputed islands to press the point that, though China may claim 80% of the vital shipping lane, the US does not recognize its unilateral claims.

Trump even mentioned "territorial expansion," a phrasing sure to irk Beijing, which sees the South China Sea as its historical territory. But in Danang, a resort town on Vietnam's coastline, the message was most likely a hit as Vietnam is one of six nations disputing territory in the South China Sea.

Trump is coming for Xi's crown jewel

Trump at a welcoming ceremony with Chinese President Xi Jinping in Beijing. REUTERS/Thomas Peter

In another chop at China, Trump seemed to offer an alternative to Beijing's massive "one belt, one road" infrastructure push, saying the US would "provide strong alternatives to state-directed initiatives that come with many strings attached."

That was likely a reference to China's policy of extending huge loans and infrastructure projects to developing nations that cannot pay for them.

In Sri Lanka, China built the world's emptiest airport for the island nation. The airport makes about $300,000 a year, while Sri Lanka has to repay China $23.6 million for its investments. With no other options, Sri Lanka gave China control of its deepwater port in exchange for $1.1 billion in debt relief, according to The New York Times.

The one-belt, one-road project is a key factor in Xi's strategy to propel China onto the stage of world powers, and it is an element of "Xi Jinping Thought," his recent enshrinement into China's constitution. A swipe at this program resembles a swipe at the man himself, a man whom Trump heaped praise on just a day earlier.

While Trump was happy to oblige China's goal of presenting a choreographed, harmonious visit, the US may now look to show its teeth on some of the bigger disputes in the two countries' relationship.

After Vietnam, Trump will head to the Philippines, a country whose leader has asked Beijing to clarify its intentions in the South China Sea.

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The UK will grow slower than every other major European economy in the coming years

• Will Martin
 

• 4h
• 365

Reuters/Phil Noble

• European Commission says UK growth will drop to just 1.1% in 2019, well behind most major EU economies.
• Growth estimates are below those provided by the likes of the IMF and the Bank of England.
• Even the stricken Greek economy will be stronger than Britain going forward.

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LONDON — The UK's growth will lag behind virtually every other major European nation for the next handful of years, as the booming eurozone overtakes Britain's Brexit stricken economy, according to estimates from the European Commission.

The commission's figures suggest that by 2019, UK economic growth will have slowed to just 1.1%, slower than Italy, Spain and Greece.

"The European Commission’s latest set of forecasts does not make for particularly pleasant reading for UK policymakers, showing as it does a continued slowdown in UK GDP growth," said Commerzbank’s top UK economist Peter Dixon.

Growth, the commission points out, has already slowed significantly in the UK in the last couple of years, falling from 2.3% in 2017, to just 1.8% in 2016. By the end of 2017, growth will likely be around 1.4%-1.5%. That will get even worse in 2018 and 2019, as continued uncertainties surrounding the shape of Brexit take hold.

"Given the ongoing negotiation on the terms of the UK withdrawal from the EU, projections for 2019 are based on a purely technical assumption of status quo in terms of trading relations between the EU27 and the UK. This is for forecasting purposes only and has no bearing on the talks underway in the context of the Article 50 process," the European Commission's forecasts note.

"Under this assumption, GDP growth is still expected to remain subdued at 1.1%. Lower consumer price inflation in 2019 is expected to support private consumption but this may be partially offset by a marginal increase in the household savings rate.

"Business investment is projected to remain subdued following a period of heightened uncertainty, while net export growth is forecast to moderate marginally, in line with export markets."

Here's the chart:

European Commission

These forecasts are more pessimistic than those provided by the vast majority of well-respected economic organisations and research houses, including the likes of the IMF and the Bank of England.

By contrast to the slowing UK economy, the rest of Europe will continue to grow robustly, carrying on the strong levels of economic expansion seen over the last year or so. It will, however, moderate a little from this year's performance.

"Growth has surpassed expectations but is forecast to ease somewhat," the Commission writes.

"The European economy has performed significantly better than expected this year, propelled by resilient private consumption, stronger growth around the world, and falling unemployment."

"The euro area economy is on track to grow at its fastest pace in a decade this year, with real GDP growth forecast at 2.2%. This is substantially higher than expected in spring (1.7%)," the Commission noted.

The map below illustrates the Commission's forecasts for all European economies in 2017:

European Commission

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