Category: Economy and business

Female employees at Citigroup Inc around the world are paid just 71 percent of what men earn, the giant bank said on Wednesday, declaring its intentions to close its gender pay gap.

A Citigroup shareholder group that sought data on the pay gap said the bank is the first U.S. company to disclose such figures.

The U.S.-based bank employs more than 200,000 people in more than 100 countries, and more than half those employees are female, it said.

Tackling the 29 percent gap means increasing the number of women in senior and higher-paying roles, promoting women to at least 40 percent of assistant vice president through managing director jobs, Citigroup said in a statement.

Citigroup said it disclosed the data in response to a shareholder proposal from Arjuna Capital, an investment management firm.

The bank said its “raw pay gap” showed median pay for females globally was 71 percent of the median for men.

The raw gap measures the difference in median total compensation not adjusted for job function, level and geography.

With those adjustments, women are paid an average of 99 percent of what men are paid, it said.

“We have work to do, but we’re on a path that I’m confident will allow us to make meaningful progress,” Sara Wechter, head of human resources, said in a statement.

In the United States overall, women last year working full-time year-round earned 80 percent of what men earned, according to commonly cited data from the U.S. Census Bureau.

Congress outlawed pay discrimination based on gender in 1963, yet public debate over why wages still lag drastically for women has snowballed in recent years.

Globally, the World Economic Forum reported an economic gap of 58 percent between the sexes for 2016, costing the global economy $1.2 trillion annually.

Last January, Citigroup said it was increasing compensation for women and minorities to bridge pay gaps in the United States, the United Kingdom and Germany, becoming the first big U.S. bank to respond to a shareholder push to analyze and disclose its gender pay gap.

This past year it expanded its pay equity review beyond those three countries to its workforce globally, it said.

 
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The Ports of Los Angeles and Long Beach on Wednesday said they set all-time records for moving cargo in 2018, after U.S. retailers and manufacturers pulled forward imports to avoid higher tariffs on Chinese goods. The Port of Los Angeles, North America’s busiest container port, handled 9.46 million 20-foot equivalent units (TEUs) last year, the most in its 111-year history and 1.2 percent more than in 2017.

The neighboring Port of Long Beach processed more than 8 million TEUs for the first time last year, after container cargo totals jumped 7 percent from 2017.

“This is a rush of cargo based on political trade policy,” said Gene Seroka, executive director for the Port of Los Angeles, where direct trade with China accounted for just over half of the $284 billion in cargo the port handled in 2017. “Many people were fearful that we were going to go from a 10 percent tariff on certain items to 25 percent on January 1,” Seroka said.

The U.S. and China in late November agreed to a 90-day cease-fire in their bitter trade war. Under that deal, the U.S. will keep tariffs on $200 billion worth of Chinese imports at 10 percent.

That news came after many importers sped up orders for everything from apparel to auto parts to avoid the higher tariffs.

The cargo surge at Los Angeles/Long Beach and other major U.S. ports spurred disruptions that are rippling through the supply chain. U.S. warehouses are stuffed to the rafters, forcing some importers to delay port cargo pickups or to park containers in parking lots.

The National Retail Federation and Hackett Associates’ Global Port Tracker expect 2018 imports to jump 5.3 percent to a record 21.6 million TEUs. They also project cooling in the early months of 2019, as imports typically soften due to a post-holiday drop in demand and Lunar New Year factory shutdowns in Asia.

“We’ll see a little bit of a lull during Lunar New Year and thereafter. That in and of itself will allow us to catch up,” Seroka said.
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Brexit has British business owners on edge — and that is great news for Lovespace, a storage and warehousing company outside London.

Lovespace, which collects boxes from customers, stores them and then returns the goods when needed, says revenue from businesses doubled over the past year and inquiries quadrupled as enterprises large and small began stockpiling inventory because of concerns they will be cut off from suppliers if Britain leaves the European Union without an agreement on future trading relations.

“People are working out how to store stuff — how to get things to their own customers as the year progresses,” CEO Steve Folwell said as workers moved boxes around the company’s 20,000 square-foot (1,860 square-meter) warehouse in Dunstable, about 35 miles (55 kilometers) northwest of London. “There’s uncertainty because of Brexit and there’s a lack of trust in the political process at the moment.”

The risk of a no-deal Brexit is increasing amid widespread opposition to the divorce agreement Prime Minister Theresa May negotiated with the EU. While May says her deal is the only way to ensure that trade continues to flow smoothly after Britain leaves the bloc on March 29, U.K. lawmakers overwhelmingly rejected the agreement late Tuesday because opponents fear it will leave the country tied to the EU for years to come.

Without an agreement on future relations, 40 years of free trade between Britain and the EU would be replaced by tariffs, border inspections and other non-tariff barriers, with potentially devastating impacts on the British economy. The government’s own contingency plans raise the specter of lengthy border delays that could cause shortages of food and medicine, and the Bank of England predicts gross domestic product could shrink by as much as 8 percent this year.

“Businesses would face new costs and tariffs,” said Carolyn Fairbairn, director-general of the Confederation of British Industries, which represents 190,000 businesses. “Our ports would be disrupted, separating firms from the parts they need to supply their customers.”

Among those taking precautions is Richard Ellison, the founder of Wanderlust Wine, who imports wines from small producers off the beaten track. Worried that supplies to his customers could be interrupted, he’s stocked up in advance to brace for disruption at the border and the potential for an increase in paperwork.

“Everything will have to be checked at the border,” he said, explaining his precautions. “We bought quite a lot in advance — an extra pallet or two to tide us over.”

Companies ranging from supermarket giant Tesco, which imports food from continental suppliers, to carmakers like Ford, who rely on European parts to feed British production lines, have been lobbying politicians for clarity about future trading relations ever since U.K. voters backed leaving the EU in a June 2016 referendum. Now they are taking action to ensure they can continue to operate in the event no deal is reached.

A survey of U.K. manufacturers found that stockpiles of both finished goods and raw materials rose at near-record rates in December as businesses prepared for a possible disruption in supplies, according to the Chartered Institute of Procurement & Supply.

More than 60 percent of U.K. manufacturers are preparing to stockpile goods and 29 percent have already begun to do so, according to a November survey of 242 companies by EEF, the manufacturers’ organization. Some are even erecting new buildings to increase storage capacity.

“They are looking for places to store stuff,” said Francesco Arcangeli, the EEF’s economist. “They are looking for space. They are creating new space. That never happened before.”

Charlie Pool, CEO of Stowga, which loosely describes itself as the Airbnb of British warehousing, said customers looking for storage space searched the company’s site 10,000 times in December, up from an average of 3,000 a month. Businesses are sometimes even paying deposits to secure their bookings, which isn’t standard practice, Pool said, comparing it to paying for a hotel before arrival.

“The data we have is proving that stockpiling for Brexit is definitely a thing,” he said. “It’s happening now.”

That is driving up the cost of storage space. The average price to store a pallet of goods jumped to 2.10 pounds ($2.71) a week last month from 1.85 pounds in September. Pool said he wouldn’t be surprised if exceeded 3 pounds should a no-deal Brexit become a reality. That would still be relatively cheap compared with the cost of not getting products to the end consumers, he said.

The dangers of Brexit to business are evident even for storage companies like Lovespace. Despite the boom in revenue, a potential investor pulled back last year because of the uncertainty caused by Britain’s exit from the EU.

The investor said “it seems awfully complex to me,” Folwell said. “People are looking at the U.K. as a bit of a basket case at the moment.”

 
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International tensions and nationalist politics can further weigh on the global economy this year and hinder efforts to deal with big issues such as climate change, the organizers of next week’s Davos forum warned Wednesday.

In its annual Global Risks Report, the World Economic Forum said the world is evolving into “a period of divergence following a period of globalization.”  A “darkening” economic outlook, in part fostered by geopolitical tensions between the United States and China, “looks set to further reduce the potential for international cooperation in 2019,” it said.

 

“With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation,” said Borge Brende, President of the World Economic Forum, which hosts an annual gathering of business and political leaders in the Swiss ski resort of Davos.

 

“We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us towards,” he added.

 

In 2018, the global economy slowed more than most experts had predicted and stock markets posted their worst year in a decade. Much of that has been blamed on the standoff between the U.S. and China over trade that has led to both sides imposing tariffs on hundreds of billions worth of goods.

 

The report, which is based on the views of around 1,000 experts and decision-makers from around the world, found that 88 percent of respondents expect a “further erosion” of global trading rules and agreements that will hold back growth.

 

The U.S.-China relations will be one of the main talking points at next week’s gathering in Davos, with a number of high level representatives from each side due to attend, including U.S. Treasury Secretary Steven Mnuchin and China’s vice president, Wang Qishan. Britain’s upcoming exit from the European Union will be another key issue after British lawmakers overwhelmingly rejected the Brexit deal Prime Minister Theresa May had negotiated with the EU.

 

The 2016 vote to leave the EU had been driven in large part by a belief that Brexit would restore decision-making powers to Britain. U.S. President Donald Trump has used similar justifications to employ his “America First” policies on a range of international issues, such as climate change.

 

One area identified as being affected by the more fractured geopolitical environment is the need to modernize critical infrastructure projects around the world, such as roads, bridges and power networks, firstly and foremost to avoid accidents such as the collapse of a bridge in Genoa, Italy, last summer that killed 43 people.

 

John Drzik, President of Global Risk and Digital at Marsh, which helped with the preparation of the report, said the “more protectionist economic environment” is increasing costs and causing delays. The introduction of steel tariffs by the United States, he noted, raised the costs of an infrastructure project in Detroit by approximately 13 percent.

 

“Persistent underfunding of critical infrastructure worldwide is hampering economic progress, leaving businesses and communities more vulnerable both to cyberattacks and natural catastrophes, and failing to make the most of technological innovation,” he said.

 

 
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Angolan President Joao Lourenco has made headline-grabbing changes in the nation’s vital oil sector since taking power in 2017.  Economists say these changes should improve Angola’s economy, and may even provide a model for other resource-rich African nations.  But Lourenco’s critics say the reforms are cosmetic and haven’t brought benefits to ordinary Angolans.

 Oil has long been a blessing and a curse for citizens of this Southern African nation.  Allies of longtime president Jose Eduardo dos Santos allegedly enriched themselves off oil profits, while most citizens remained desperately poor.

But since taking office in 2017, Lourenco has been making welcomed changes.

“The current president really, really has — I wouldn’t say he has turned it around, he has taken some major steps that the industry has been waiting and the economy has been looking at,” said NJ Ayuk,  head of the Johannesburg-based Centurion Law Group and chairman of the Africa Energy Chamber of Commerce. “And we are seeing things improving if these steps are actually implemented and they actually go forward.”

Lourenco is trying to diversify the oil-dependent economy, announcing the nation’s first diamond auction later this month.

He also sacked several of the former president’s children from top positions, including his daughter, who was running the state oil company Sonangol.

Lourenco also reformed Sonangol, streamlining operations and regulations to make it easier for foreign investors to work in the oil sector.

Economist Cobus de Hart of NKC African Economics said it’s too soon to be optimistic.

“Most of the improvement is due to higher oil prices,” he told VOA. “And obviously it will take some time for the reforms at Sonangol to translate to increased earnings and also a marked improvement in inefficiencies. But moves have thus far seem to have attracted more interest from global oil majors to invest more in the country.”

Angolan journalist and human rights activist Rafael Marques, a frequent critic of the government, said the leadership changes at the state oil company are cosmetic and misleading.

“The way contracts are allocated, you still have companies that belong to politically exposed persons providing services,” he said. “So, some reforms are being implemented. But the point is not to replace one set of crooks by another set of crooks. Most of the public contracts [Lourenco is] signing off are without public tender. And remember, that’s where the oil money goes to.”

Nonetheless, Ayuk, who recently visited Angola, said he is hopeful. 

He said if Angola continues reforming its oil industry, it could trigger similar efforts in other African countries.

“What is really exciting is that most observers are looking at this and saying, ‘Maybe this could be something that we can really build upon and look at as a model that works for Africa.’ The truth of the matter is that if Angola gets it right, there is no reason why Mozambique or South Africa, or Namibia, or Nigeria, or Equatorial Guinea cannot get it right. Because people are tired of not seeing these resources translate to development.“

 

 
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A Gillette ad for men invoking the #MeToo movement is sparking intense online backlash, with accusations that it talks down to men and groups calling for a boycott. But Gillette says it doesn’t mind sparking a discussion. Since it debuted Monday, the Internet-only ad has garnered nearly 19 million views on YouTube, Facebook and Twitter — a level of buzz that any brand would covet.

The two-minute ad from Procter & Gamble’s razor brand shows men and boys engaging in bullying and sexual harassment and encourages men to “say the right thing” and “act the right way.” Taking on bullying, sexual harassment and toxic masculinity is a big task for a razor brand. Many critics took to social media saying it was insulting to men and laden with stereotypes.

The uproar comes as Gillette battles upstarts like Harrys Razors, Dollar Shave Club, and others for millennial dollars. Gillette controlled about 70 percent of the U.S. market a decade ago. Last year, its market share dropped to below 50 percent, according to Euromonitor.

Allen Adamson, co-founder of branding firm Metaforce, called the ad a “hail Mary” pass from the 117-year-old company. But he added that online buzz, whether positive or negative, rarely makes a long-term difference for a marketer since memory fades quickly.

“Getting noticed and getting buzz is no easy task, and they’ve managed to break through,” Adamson said. “Most advertisers advertise, and no one notices because there is so much noise in the marketplace, so just getting noticed Is a big win, especially for low-interest category like a razor.”

On the flip side, it probably won’t sell many razors either, he said.

Advertisers and social issues

Gillette’s ad echoes other attempts by major advertisers to take on social issues. Pepsi pulled an ad in 2017 showing Kendall Jenner giving a cop a Pepsi during a protest and apologized after an outcry that it trivialized “Black Lives Matter” and other protest movements. Nike polarized the nation with an ad featuring ex-NFL player Colin Kaepernick who started a wave of protests among NFL players of police brutality, racial inequality and other social issues.

Sales weren’t affected in either of those cases. When controversy does affect sales, it is usually over something more substantive than an ad. Lululemon saw sales tumble in 2013 after a string of PR disasters including manufacturing problems that caused their pricey yoga pants to become see through and fat-shaming comments from their founder. But even that was short lived.

Ronn Torossian, CEO of 5WPR, said that much like Nike’s Kaepernick ad, Gillette likely knew the ad would garner online debate.

“Nike knew what they were getting themselves into,” Torossian said. The ad with Kapernick was “making a lot of noise, and it can’t be a surprise to [Gillette] that this is making a lot of noise.”

Gillette response

P&G, one of the world’s largest advertisers, is known for its anthemic spots that appeal to emotions during the Olympics and other events, often aimed at women, such as the tear-jerking “Thank You Mom” Olympics branding campaign and Always “Like a Girl” 2014 Super Bowl ad.

Pankaj Bhalla, North America brand director on Gillette, says the controversy was not the intended goal of the ad, which is part of a larger campaign that takes a look at redefining Gillette’s longtime tagline “The Best a Man Can Get,” in different ways. Another online ad features one-handed NFL rookie Shaquem Griffin.

While he doesn’t want to lose sales or a boycott over the ad, “we would not discourage conversation or discussion because of that,” he said.

“Our ultimate aim is to groom the next generation of men, and if any of this helps even in a little way we’ll consider that a success,” he said.

Larry Chiagouris, marketing professor at Pace University, is skeptical.

“Treating people with respect, who can argue with that, but they’re kind of late to the party here, that’s the biggest problem,” he said. “It’s gratuitous and self-serving.”
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More than 3,200 government, business, academics and civil society leaders will address issues of globalization, climate change and other matters of world importance next week at the annual World Economic Forum in the plush Swiss Alpine village of Davos.

The list of participants reads like the Who’s Who of the most powerful, successful and inventive movers and shakers in the world. They will be rubbing shoulders during hundreds of formal sessions and workshops, as well as in private bilaterals on the sidelines of the meeting. They will discuss and seek solutions to some of humanity’s most vexing problems.

The theme of this year’s gathering is Globalization “4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution.” That refers to the emerging technology breakthroughs in such fields as artificial intelligence and robotics.

Founder and executive chairman of the World Economic Forum Klaus Schwab says this fourth wave of globalization needs to be human-centered. He says globalization in its present form is not sustainable. He says globalization must be made more inclusive.

“Globalization produced winners and losers, and so there were many more winners in the last 24, 25, 30 years. But now we have to look after the losers — after those who have been left behind…what we need is a moralization, or re-moralization, of globalization,” he said.

The program is very wide-ranging. For example, U.N. Secretary-General Antonio Guterres will discuss the state of the world. He will broach issues like climate change, fighting poverty and sustainable development. There will be special sessions by others about ways to make economic growth more inclusive, on rethinking world trade, as well as many scientific, artistic and cultural meetings.

Leaders from all regions of the world will attend. The Middle East will be represented by the presidents of Libya and Iraq. Israeli Prime Minister Benjamin Netanyahu will be there. So will Palestinian Prime Minister Mahmoud Abbas.

Six or seven presidents from Africa will be in attendance. And organizers of the forum say there is great interest in an appearance by the new Ethiopian prime minister, Abiy Ahmed, who has established peace with Eritrea during his first six months in office.

The forum president, Borge Brende, says a strong United States delegation will attend next week’s event, although President Donald Trump canceled his participation.

“We fully understand that, of course, President Trump will have to stay in D.C. as long as the government is facing this shutdown. We are very pleased, though, that the U.S. will be participating with key secretaries,” he said.

Brende confirms that among those coming will be Secretary of State Mike Pompeo, fresh from his travels in the Middle East, Secretary of the Treasury Steve Mnuchin, and Secretary of Commerce Wilbur Ross.
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Although it is unclear if the United States and China will be able to meet a 90-day deadline and strike a deal on trade by March 2, the tussle is clearly adding to uncertainty about the future fate of the Chinese government’s strategic plan named “Made in China 2025.”

The plan itself is much like other countries’ goals to move up the industrial value chain. According to Beijing’s plan, China aims to make the country a world leader in 10 key sectors such as robotics, information technology, and artificial intelligence by 2025.

However, what has raised concerns is how China is going about reaching that goal.

Foreign companies and governments have voiced growing concern about the plan and the Chinese policy and practice of forcing companies to hand over technology in exchange for access to the country’s massive economy.

At the same time, analysts believe Beijing has done little to stop Chinese companies from stealing technology through their operations overseas.

Dilute or delay?

Pushback from abroad has already impacted the implementation of Made in China 2025, said Anna Holzman, a junior research associate with the Berlin-based Mercator Institute of China Studies (MERICS).

“The tough stance followed by actions taken by the United States has notably increased the sense of urgency amongst Chinese policymakers to speed-up the development of domestic capabilities,” she said.

Aside from the trade deficit, forced technology transfers are a key reason why President Donald Trump launched the trade war. It is also the main component of ongoing negotiations between the world’s two biggest economies.

During last week’s talks, China said the two sides made progress on addressing the issue of technology transfers as well as other structural problems.

But the trade dispute, rising investment restrictions on its companies in western countries, and declines in its own industrial economy have some arguing that Beijing may be forced to either dilute or delay the plan.

Over the past few months, officials have stopped mentioning the plan. Beijing recently ordered Chinese companies not to force foreign firms based in China to surrender their technologies. And for the first time in years, the Made in China 2025 plan did not figure in the list of development priorities outlined by the central government for 2019.

Great leap forward

The move by officials to downplay and stop mentioning the plan and other recent measures to open up China’s economy are positive signals, said Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic & International Studies in Washington.

“But they are going to need to be backed up by a much more broad, clear, transparent, change in policies that everyone can see, that are across the board, if you really want to convince the United States and others that China is taking a great leap forward in economic liberalization,” he said.

But while Washington waits for China to change its tune, it is unlikely to shift its increasingly tough stance on technology that has already impacted major Chinese tech firms such as Huawei and ZTE.  A growing number of countries have taken steps to ban Huawei from participating in the build of fifth-generation networks or 5G.

“Technology issues will continue to be there. President [Donald] Trump has a very confrontational position against Huawei as well as ZTE. So this will continue,” Lourdes Casanova, director at Cornell’s Emerging Markets Institute, said while referring to two major Chinese technology companies.

Last week, Poland arrested a Huawei employee on spying charges. Polish authorities say there is no connection between the arrest and the company, but at the same time, they have taken steps to urge the EU and NATO to jointly ban Huawei products.

The arrest of the Huawei employee in Poland follows the detention of the company’s chief financial officer Meng Wanzhou in Canada.

Chinese investments slump

Chinese companies often pour money into investments in the U.S. to acquire new technologies and learn new ways of doing business. But now, stepped up scrutiny of investments imposed by Washington and the deterioration of U.S.-China trade relations has led to a sharp decline.

Last year, according to data compiled by the research firm Rhodium Group, Chinese investments in the U.S. hit a seven-year low of $4.8 billion, a steep drop of 84 percent from $29 billion in 2017.

And 2019 is likely to be equally dismal.

“Washington is moving to implement tougher screening of venture capital and other high-tech acquisitions; and the dark cloud over U.S.-China relations is unlikely to disappear, although a major deal between China and the U.S. could help revitalize investor appetite in sectors with low national security sensitivities,” said New York-based Rhodium Group.

Digging in

However, some analysts believe that Western restrictions and criticisms has made the 2025 program a lot more important for China than in the past. Instead it has pushed Beijing to step up its pursuit of technological leadership and self-sufficiency.

China is merely reducing the propaganda around the 2025 program and talking less about it, said Xiaoyu Pu, author of a recent book, “Rebranding China: Contested Status Signaling in the Changing Global Order.”

“Regardless of any re-branding exercises and concessions made by the Chinese government to appease Western minds, efficient policy implementation in industries and technologies listed under the Made in China 2025 scheme remains a top priority,” Pu said.

 
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French President Emmanuel Macron is formally launching a “grand debate” to try to appease the yellow vest movement following weeks of anti-government protests.

Macron heads Tuesday to Grand Bourgtheroulde, a small town in Normandy, where he is to meet about 600 mayors and local officials.

 

Despite a high security presence, a ban on traffic and restricted access to the town, dozens of yellow vests protesters gathered outside the town to express their discontent.

 

“We are being prevented from accessing the village,” said protester Florence Clement. “I was crossing the road with my yellow vest but I was asked to remove it because it’s forbidden.”

 

Macron started his journey with a stop in the small town of Gasny to attend a local officials’ meeting, where some expressed their concerns over the loss of purchasing power of retirees and civil servants.

Macron addressed this week a “letter to the French” to encourage people to express their views on a series of economic and political matters during a three-month “grand debate.”

 

The consultation will take place through local meetings and on the internet. The debate will focus on taxes, public services, climate change and democracy.

 

The French leader, whose popularity ratings hit record lows at the end of last year, hopes the process will help quell anger over his economic policies.

About 84,000 people turned out last weekend for the ninth round of anti-government demonstrations across France, according to the French Interior Ministry.

 

The yellow vest movement, prompted in November by a tax hike on diesel fuel, has expanded to encompass demands for wider changes to France’s economy to help struggling workers. Protesters have denounced Macron’s pro-business policies as favoring the rich.

 

The movement is named for the fluorescent garments French motorists are required to keep in vehicles.

 

 
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China’s trade surplus with the United States rose dramatically in 2018, despite a tit-for-tat tariff war with the U.S. that has roiled global markets.

The surplus stood at a record-high $323.3 billion, compared to $275.8 billion recorded the year before. 

Data released Monday by China’s customs bureau shows the country’s exports to the U.S. grew more than 11 percent in 2018. Imports from the United States rose only slightly (0.7 percent). 

But the data also revealed that exports slowed by 3.5 percent last month, as the administration of President Donald Trump imposed a series of stiff tariffs on billions of dollars of Chinese goods to force Beijing to buy more American goods and to resolve issues involving technology, intellectual property and cyber theft issues.

The data also revealed mixed news about the strength of the world’s second-biggest economy – while China’s global trade surplus was $352 billion for 2018, its global exports dropped 4.4 percent in December compared to a year earlier, while imports plunged 7.6 percent, suggesting softening demand both at home and abroad.

Figures released by the China Association of Automobile Manufacturers show that car sales fell in 2018 – the first time in 20 years for a decline.
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