Trump Says US Will ‘Be Fine’ With China As Trade Talks Near

China–U.S. Trade War

Summary:

President Donald Trump said the US will “be fine” with China in comments that come just before the two sides return to the negotiating table and a fragile trade truce nears expiration.

When asked in an interview with Fox News on Sunday about his threat to raise the tariff on Chinese goods by 100%, Trump said the levy was “not sustainable” though “it could stand.”

He added that he had a good relationship with the Chinese leader, and he expected a sitdown to happen in South Korea, where an Asia-Pacific Economic Cooperation meeting starts later this month. “I think we’re going to be fine with China, but we have to have a fair deal. It’s got to be fair,” Trump said.

Treasury Secretary Scott Bessent has said the US and China will hold talks later this week in Malaysia. That came after he met virtually with Vice Premier He Lifeng on Friday, discussions that Chinese state media described as a constructive exchange of views.

A little over a week ago, Trump raised the prospect of canceling his first in-person meeting with China’s President Xi Jinping since he returned to the White House, angry over the Chinese government’s vow to exert broad controls on critical rare-earth elements. He also declared a 100% import surtax on Chinese goods to take effect Nov. 1.

That threatens a trade truce that’s set to run out on Nov. 10 unless extended. After months of tentative stability in the US-China relationship, tensions flared in recent weeks after Washington broadened some tech restrictions and proposed levies on Chinese ships entering US ports. China responded with parallel moves and outlined tighter export controls on rare earths and other critical materials.

China has tried to ease concern over the escalation of curbs on rare earths — critical to making fighter jets, smartphones and even car seats — to soften an international backlash.

In discussions on the sidelines of the International Monetary Fund’s annual meetings last week, Chinese delegates told their counterparts from around the world that tightened export controls will not harm normal trade flows, Bloomberg News reported earlier, citing people familiar with the matter.

The officials said China sought to build a long-term mechanism with the measure, and it was introduced as a response to US provocations such as the expansion of sanctions to capture subsidiaries of blacklisted companies, according to the people, who asked not to be named because the exchanges were private.

Source: Bloomberg Europe

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Frederick Miles

New Zealand’s main opposition Labour Party has unveiled its first key policy ahead of the 2026 general election — a new government fund that will aim to drive investment and economic growth.

The New Zealand Future Fund will be established to focus on domestic investment, Labour finance spokesperson Barbara Edmonds said Monday in Wellington. It will sit alongside the existing NZ$85 billion ($49 billion) New Zealand Super Fund, which invests primarily overseas to support future pension payments.

Labour, which was ousted in the 2023 election, trails the governing National Party in political polling little more than 12 months out from the next election. With the economy smaller than in was in late 2023 and record numbers of citizens leaving the country, the party sees the government’s economic management as a weak spot.

“The Future Fund is how we back ourselves as a country so jobs, opportunity and wealth is made here and stays here,” Edmonds said. “The Fund will invest in New Zealand for the benefit of everyone, building infrastructure and backing innovative businesses to create secure, well-paid jobs and grow wealth in every region.”

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The Future Fund will be seeded with an unspecified capital contribution and a small number of state-owned assets that will provide a dividend stream and a base from which to leverage, Labour said in documents. The selected assets — also unidentified — will be protected by legislation and unable to be sold.

Guardians of New Zealand Superannuation, which manages the NZ Super Fund, will independently govern the new fund. The finance minister will set broad objectives through a letter of expectations.

Labour had 32% support in a recent One News-Verian poll, and alongside potential allies in the Green and Maori parties would control 46% of votes. National has 34% backing and with its current coalition partners would control 51%.

Source: Bloomberg Europe

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James Whitman

Economic

Political

European Central Bank President Christine Lagarde signaled openness to using frozen Russian assets to secure funding for Ukraine as long as countries around the world move in unison.

“I think fair use would consist of an operational loan that would be using cash balances as collaterals,” Lagarde said on CBS’s Face the Nation. “And I think that the strength of the system should be based on everyone holding Russian assets to do the same thing.”

The European Union has been looking more intensely at how to use about €200 billion in Russian funds that it froze after the attack on Ukraine, as other sources of financing for the country’s military and economic needs run dry. The issue is set to be discussed at a meeting of EU leaders this week.

The ECB has previously been wary of seizing the assets, given the potential repercussion for the euro’s international standing and financial stability. Lagarde — who spoke with Ukrainian President Volodymyr Zelenskiy two weeks ago — urged this month that any steps must be compatible with international law.

“If all those countries holding assets that have cash balances available as collaterals go in the same direction of lending the money to Ukraine, to be repaid by Russian financing of the reconstruction of Ukraine because Russia is the aggressor, then I think that would go a long way in convincing Russia that it has to come to the table to negotiate,” she told CBS.

Under plans being discussed by the EU, Ukraine would receive about €140 billion ($163 billion) in fresh loans using the assets. The money would only be paid back if Russia agrees to pay Ukraine for the damage caused by the war. The bloc also wants to coordinate using the assets with other Group of Seven allies, including the US, where some of the funds are held.

The matter is especially sensitive for the euro area as the ECB has identified an opportunity to increase the euro’s international role amid President Donald Trump’s attacks on global trade and US institutions including the Federal Reserve.

“I see signs that the attraction of the dollar is slightly eroded and future will tell whether there is more erosion of that,” Lagarde said on CBS, citing gold’s recent rally and capital flows out of the US to destinations including Europe.

“For a currency to be really trusted, you need a few things,” she said. “You need geopolitical credibility, you need the rule of law and strong institutions, and you need — I would call it — a military force that is strong enough. I think on at least one and possibly two accounts, the US is still in a very dominant position, but it needs to be very careful because those positions erode over the course of time.”

Turning to trade and the implications of higher US tariffs on the global economy, Lagarde said “we’re yet to feel the pain.” At the moment, companies in the US and Europe are absorbing around two thirds of the effects by squeezing their margins, she said.

But this can’t last forever “and when they don’t because it’s becoming too tight, then it’ll be on the consumer,” she said. “So, it’s a question of time.”

On China’s recent moves to restrict the export of rare earths and US threats of retaliation, Lagarde said she would “discount a little bit of the positioning at the moment, because this is typical of negotiating tactics on both sides.” But she stressed that China has a “very, very strong trading position on that front and they’re going to use it.”

Therefore, the US, Europe and other countries “should join forces and be a purchasing force on the other side of the table of a selling force,” she said.

Source: Bloomberg

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James Whitman

Political

Russia-Ukraine Conflict

U.S. President Donald Trump urged Ukrainian President Volodymyr Zelenskyy to accept Russia's terms for ending the war between Russia and Ukraine in a White House meeting on Friday, warning that President Vladimir Putin threatened to "destroy" Ukraine if it didn't comply, the Financial Times reported on Sunday.

During the meeting, Trump insisted Zelenskyy surrender the entire eastern Donbas region to Russia, repeatedly echoing talking points the Russian president had made in their call a day earlier, the newspaper said, citing people familiar with the matter.

Ukraine ultimately managed to swing Trump back to endorsing a freeze of the current front lines, the FT said. Trump said after the meeting that the two sides should stop the war at the battle line; Zelenskyy said that was an important point.

The White House did not immediately respond to a Reuters request for comment on the FT report.

Zelenskyy arrived at the White House on Friday looking for weapons to keep fighting his country's war, but met an American president who appeared more intent on brokering a peace deal.

In Thursday's call with Trump, Putin had offered some small areas of the two southern frontline regions of Kherson and Zaporizhzhia in exchange for the much larger parts of the Donbas now under Ukrainian control, the FT report added.

That is less than his original 2024 demand for Kyiv to cede the entirety of Donbas plus Kherson and Zaporizhzhia in the south, an area of nearly 20,000 square km.

Zelenskyy's spokesperson did not immediately respond to a request for comment sent outside business hours on whether Trump had pressured Zelenskyy to accept peace on Russia's terms.

Trump and Putin agreed on Thursday to hold a second summit on the war in Ukraine within the next two weeks, provisionally in Budapest, following an Aug. 15 meeting in Alaska that failed to produce a breakthrough.

Source: CNBC

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Gerik

Economic

Persistent Deflation Undermines Recovery

China’s factory-gate prices continued to fall in September, extending a three-year streak of producer price index (PPI) deflation. According to the National Bureau of Statistics, the PPI fell 2.3% year-on-year in September, while the consumer price index (CPI) dipped 0.3% compared to the same period last year. Although core CPI rose 1% its highest in 19 months economists attribute the increase to temporary factors such as gold prices and appliance trade-in schemes, rather than a genuine consumption rebound.

The country’s weak demand environment reflects the lingering effects of a property market crisis and structural economic issues. The government’s efforts to curb destructive price competition in industries like EVs, solar panels, and logistics have yielded limited short-term gains. Analysts warn that without boosting household spending and transitioning from an investment-led growth model, long-term stability remains uncertain.

IMF Urges Structural Reforms

The International Monetary Fund (IMF) recently echoed this concern, recommending that China expand social welfare spending, resolve the property market turmoil, and reduce excessive industrial subsidies. Analysts worry that China may follow Japan’s path in the 1990s, when a housing bubble collapse triggered long-term deflation and stagnation.

The upcoming Fourth Plenary Session of the Communist Party, expected next week, is anticipated to unveil potential pro-consumption policies in the country’s next five-year development plan beginning in 2026.

Record-Breaking Canton Fair Amid Trade Headwinds

With domestic demand stagnant, over 32,000 Chinese firms have participated in the 138th Canton Fair, seeking foreign buyers. The event attracted over 200,000 international attendees across its 1.55 million m² venue. Despite new U.S. threats to raise tariffs and mutual port fees between the U.S. and China, Chinese exports still grew 8.3% in September.

Exports to the U.S. dropped 27%, but shipments to Europe, Africa, and Southeast Asia surged, partly offsetting losses. Still, market expansion isn't easy. For example, Baide Electronic moved production to Vietnam to avoid U.S. tariffs but now faces a 20% duty there. Meanwhile, companies targeting African markets, like Staxx Material Handling, struggle to match their high-end products with local demand for manual alternatives.

Localization and Government Support as Key Tactics

To improve outreach, many exhibitors at the fair are hiring local language speakers (Russian, Arabic, French) and tailoring packaging for specific regions. The government is also cutting booth fees by 50% and regulating third-party booth rentals to help exporters.

Given excess industrial capacity and declining profit margins, maintaining export momentum is critical for China's economy. The spring edition of the Canton Fair earlier this year saw a 24.1% rise in visitors from BRICS nations outpacing Western interest signaling a shift in China’s global trade strategy.

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Economic

A New Approach to Banker Bonuses

On October 16, the Bank of England (BoE) officially approved changes to its post-financial crisis rules concerning senior banker bonuses. Under the new guidelines, the mandatory deferral period before full bonus payouts will be halved from eight years to four. This shift reflects the BoE’s intention to modernize its regulatory framework and better align with international financial hubs.

According to the updated Prudential Regulation Authority (PRA) rules, a portion of bonuses will now begin to be paid in stages starting from the moment they are approved. The revised policy applies to bonuses awarded in 2025 and to any previously approved but not yet fully disbursed bonuses.

Rationale Behind the Change

Sam Woods, Deputy Governor and head of supervision at the BoE, emphasized that the decision highlights the central bank’s commitment to maintaining the UK's competitiveness in the global financial landscape. He noted that the prolonged deferral periods had become a disadvantage when compared with international markets, where bonus deferral typically lasts between three and five years.

The original extended deferral rule was implemented after the 2007–2009 global financial crisis. Its purpose was to discourage reckless short-term decisions by delaying large cash rewards, thereby protecting the stability of the financial system. However, critics argue that the UK’s stricter standards have eroded its appeal as a financial center, especially in the face of more flexible practices in cities like New York, Singapore, and Frankfurt.

With these changes, the UK aims to reassert itself as an attractive destination for global finance professionals and institutions. The move is expected to increase talent retention, encourage high performance, and balance accountability with market realities.

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Economic

Overview of EU Inflation

According to Eurostat’s latest report, the European Union recorded an average inflation rate of 2.6% year-on-year in September 2025, slightly up from 2.4% in August. However, the Czech Republic bucked the trend with a decrease from 2.4% to 2%, positioning itself among the six EU countries with the lowest inflation.

Eurostat uses the Harmonized Index of Consumer Prices (HICP) to ensure consistent inflation measurement across EU countries. Under this index, Cyprus reported the lowest inflation, virtually unchanged from the previous year. On the other end, Romania experienced the highest inflation rate at 8.6%.

Within the Visegrad Group (V4), the Czech Republic outperformed its peers with the lowest inflation of 2%, compared to Poland (2.9%), Hungary (4.3%), and Slovakia (4.6%).

Key Drivers of Czech Inflation Drop

Data from the Czech Statistical Office (ČSÚ), based on a domestic calculation method, reported a September inflation rate of 2.3%, slightly down from 2.5% in August.

Experts attribute the Czech Republic’s successful inflation control to a significant decline in energy prices, particularly electricity and natural gas. Additionally, the slowdown in food price increases has helped ease consumer price pressure.

While inflation remains a concern for many EU countries, the Czech Republic’s ability to maintain low inflation signals effective economic management in energy and food sectors. This favorable trend may support greater macroeconomic stability and strengthen consumer confidence moving forward.

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