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China probes diverted FedEx deliveries as trade tension rises

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Beijing authorities will investigate FedEx for allegedly “undermining the legitimate rights and interests” of Chinese clients, the official Xinhua news agency reported on Saturday, less than 24 hours after China’s commerce ministry said it would compile a list of “unreliable” foreign companies.

Xinhua said FedEx had not delivered packages to their intended recipients in China in violation of “laws and regulations governing the express industry in China”.

The agency did not identify the FedEx clients involved or say what penalties the US delivery company could face. Last week, however, Huawei said FedEx had diverted packages sent from Japan to the US rather than to its offices in China. FedEx is reported to have apologised for what it said was an error.

The US delivery company also said that it would fully co-operate with any regulatory investigation.

“Our relationship with Huawei Technologies and our relationships with all of our customers in China are important to us,” FedEx said.

US-China trade tension was ramped up again on Saturday morning when Washington began collecting 25 per cent tariffs on many Chinese goods arriving at its ports. Earlier in the day Beijing began implementing its own higher retaliatory tariffs on much of its $60bn target list of American goods

Huawei is at the centre of this escalating trade war between the world’s two largest economies.

In May, the US placed Huawei on a blacklist restricting its access to US components — a directive that could potentially cripple the company.

The US decision to blacklist Huawei, which came shortly after the US hiked punitive tariffs on about half of all Chinese exports to the US, has made it even more unlikely that the two countries can pave the way for a truce when Mr Trump and Xi Jinping attend a G20 leaders summit later this month in Japan.

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China responded to Mr Trump’s tariffs with counter-tariffs of its own that took effect on June 1.

The commerce ministry’s announcement on Friday that it would compile a list of unreliable foreign companies that harmed the legitimate rights and interests of Chinese companies was widely interpreted as retaliation to the Trump administration’s decision to restrict Huawei’s access to US components.

The commerce ministry has not yet formally added any companies to the list, which could target US companies that withhold components from Huawei.

Beijing officials have signalled that they could also retaliate against the US by withholding supplies of rare earths, most of which are mined in China and vital to many high-tech products.

US companies operating in China are bracing themselves for potential retaliatory measures in the wake of the Trump administration’s decision to increase tariffs and restrict Huawei’s access to American components.

Because the US exports far less to China than China exports to the US, Beijing cannot match Mr Trump’s tariffs dollar for dollar. But Chinese officials have said they will not target US companies in revenge, many of whom are large employers and taxpayers.

Micron, a Idaho-based chipmaker that has alleged its proprietary technologies were stolen by a Chinese rival, is the subject of an antitrust investigation by Beijing regulators.



Via Financial Times

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