Illustration for Rana Foroohar for Monday October 4 2018.
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The current tariff tit-for-tat between the US and China is more than an expression of one man’s animus towards Beijing, argues Rana Foroohar in her column this week. President Donald Trump is supported by a cadre of White House advisers who seek not just a recalibration of the terms of Sino-American trade, but a thoroughgoing reset of relations between the US and China.

The key figures in the administration, Rana agues, are Mr Trump’s trade adviser, Peter Navarro, and Robert Lighthizer, the US trade representative. And neither will be pacified by Chinese concessions on tariffs. They believe it is in America’s long-term interest to decouple economically from China.

The implications for US businesses will be profound – particularly for companies that have outsourced their supply chains to China. But hawks like Messrs Lighthizer and Navarro have little sympathy for corporations which they believe have sold out to a rising authoritarian power for short-term gain.

Shinzo Abe, the prime minister of Japan, writes that unprecedented rain, heat, landslides and hurricanes show that time for far-reaching action on climate change is running out.

Wolfgang Münchau argues that the likelihood of a “no-deal” Brexit has increased after a Salzburg summit at which UK prime minister Theresa May and the leaders of the EU27 misread each others’ intentions.

Huw van Steenis, adviser to the governor of the Bank of England, contends that cryptocurrencies like bitcoin fail each of the five key tests that any genuine financial innovation should pass.

What you’ve been saying

Post-crisis measures damaged stability of emerging markets— letter from Duvvuri Subbarao, Singapore:

Merryn Somerset Webb’s article (“ A post-crisis cure that has stored up economic pain”, FT Weekend, September 15-16), is interesting if only because she makes assertions and draws inferences that a reasonable person can disagree with … Hers is an entirely rich country perspective, totally ignoring the heavy toll the crisis and the solutions pursued had on emerging and developing countries. Just to cite one example — the liquidity unleashed by QE, instead of being absorbed in home countries as was intended, flooded the global system and found its way into emerging markets in pursuit of quick returns. Because emerging markets had no absorptive capacity, these capital flows impaired their macroeconomic stability and eroded their export competitiveness. Yes, we need to learn the lessons of every crisis to prevent, or at any rate, minimise the probability of another crisis. That objective will not be served if global policymakers and analysts persist in not reckoning with the forces of financial globalisation.

Comment on “ Jeremy Corbyn’s Labour looks poised to shake up the status quo” from Bluesky21:

With all respect to Lord O’Neill, he is far too generous to the Corbyn/McDonnell-dominated Labour Party. Identifying the main problems facing our time is quite different from having found solutions to them, and many of Labour’s proposals (such as nationalising entire industries) fall into “the remedy is worse than the disease” category.

Britain needs to shake off high pension charges— letter from Peter Nellist, Devon, UK:

The Works and Pensions Committee in the House of Commons is currently undertaking an inquiry into transparency (or, in reality, the lack of it) around pension scheme charges. This is against a background of evidence supplied some time ago by David Pitt-Watson that if a typical Dutch and British pension saver made the same contributions over their working life, the Dutch pension saver would receive a 50 per cent higher pension income. This result is because of higher charges in British pension schemes. Esther McVey’s department submitted an illustrative charges pack to the House of Lords in 2013. This showed that a 1 per cent charge can reduce a pension pot by 24 per cent over their working life. The repercussions of high pension costs are profound. Pots are reduced, savers wonder if it is worthwhile and are deterred from investing, and investment risk is increased significantly in pension drawdown if withdrawals come effectively from capital. How is the secretary of state for work and pensions going to tackle this fundamental longstanding problem?

Today’s opinion

Five reasons why bitcoin fails the innovation test
Crypto-assets are impractical and do little for financial inclusion

No-deal Brexit is the most likely outcome of the Salzburg summit
EU leaders’ rejection of May’s plans have increased the chance of failure

US trade hawks seize their chance to reset China relations
Latest tariffs look more like the start of a cold war than a trade war

Shinzo Abe: Join Japan and act now to save our planet
Unprecedented rain, heat, landslides and hurricanes show that time is running out

Office smokers were the original smart networkers
Opinion: The demise of smoking has ended surprising and productive connections between people

FT View

The FT View: US Supreme Court hearings must be seen to be fair
Accuser’s claims against Brett Kavanaugh deserve serious treatment

The FT View: Grounds for hope, as well as scepticism, on the Korean peninsula
Donald Trump should risk a second summit with Kim Jong Un

The Big Read

The Big Read: China’s relentless export machine moves up the value chain Mid-range manufacturing push improves the Chinese position as trade war intensifies

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