North Korea’s Kim Jong-un visits China’s Xi Jinping

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…Tariffs aren’t the only thing damaging China’s economy

North Korean leader Kim Jong-un has arrived in Beijing for an unannounced visit, at the invitation of Chinese President Xi Jinping.

Mr Kim will be in China until 10 January with his wife Ri Sol-ju, according to state media reports.

The visit comes amid reports that negotiations are under way for a second summit between Mr Kim and US President Donald Trump.

The two met last June, the first such meeting for a sitting US president.

Speculation had grown on Monday that Mr Kim was possibly making his way to China after South Korea’s Yonhap news reported that a North Korean train had been seen crossing the border.

Dozens of security vehicles and officials blocked roads around the train station in the border town of Dandong.

Hotel guests in Dandong had also not been allowed to enter rooms that faced the border, with news outlet Kyodo calling this an “apparent move to prevent the train from being seen”.

Both countries’ media confirmed the visit on Tuesday morning. Mr Kim’s distinctive green and yellow train arrived at a station in Beijing later in the day.

The train, the same one used during Mr Kim’s first visit to China, resembles the one used by his father Kim Jong-il during his visits to China and Russia in 2011.

A motorcade with heavy security was later seen driving through central Beijing.

Mr Kim’s visit, during which he is being accompanied by several leading North Korean officials, is his fourth to China in less than a year.

Tuesday is also reportedly Mr Kim’s 35th birthday, though his date of birth has never been confirmed by Pyongyang.

China is an important diplomatic ally for North Korea, and one of its main sources of trade and aid.

“[Mr] Kim is eager to remind the Trump administration that he does have diplomatic and economic options besides what Washington and Seoul can offer,” Harry J Kazianis, Director of Defense Studies at the Centre for the National Interest told Reuters.

Mr Kim, unusually, did not meet Mr Xi for the first six years of his leadership of North Korea.

But last year, he visited China three times. None of the trips was announced in advance.

The BBC’s Laura Bicker in Seoul says two of the trips, which took place ahead of the historic summits with the South Korean leader Moon Jae-in and Mr Trump, were seen by some as a chance to co-ordinate strategy.

The latest three-day visit, our correspondent says, is likely to fuel speculation that a second US-North Korean summit will take place soon.

Earlier this week, Mr Trump said a location for another meeting between the two would be announced in the not-too-distant-future.

Mr Trump told reporters in Washington DC that “a good dialogue” was taking place with North Korea, but that sanctions on Pyongyang would remain in place.

In his annual New Year’s speech last week, Mr Kim said he was committed to denuclearisation, but warned that he would change course if US sanctions remained.

Diplomatic progress between Mr Trump and Mr Kim has stalled since the Singapore summit. Both parties signed a pledge at the time to denuclearise the Korean peninsula, though it was never clear what this would entail.

In the meantime, as pivotal trade talks between delegations from the United States and China get under way this week, some economists are taking issue with President Donald Trump’s characterization of the impact that his trade sanctions have had on the Chinese economy.

Commerce Department Secretary Wilbur Ross said in an interview on CNBC’s Squawk Box on Monday that the Trump tariffs were causing slower growth and raising the potential of political instability. He said China’s slowdown was a “big problem in their context of having a very big need to create millions of millions of jobs to hold down social unrest.”

However, “I would characterize the Chinese economy as slowing, for sure, but we wouldn’t blame it on the trade issue,” said Paul Christopher, head of global market strategy for the Wells Fargo Investment Institute.

“I think China wants to get it resolved. Their economy’s not doing well,” Trump told reporters on Friday.

Trade and market expert say statements such as this lack two things: An acknowledgement that investor anxiety over the potential impact of a drawn-out trade war on the U.S. economy also contributed to market volatility that has sent equities plummeting over the past several weeks, and an understanding of the factors from which China’s economic woes stem.

“Today, both the U.S. and China are negatively affected by the current tensions,” said Ludovic Subran, global economist at Euler Hermes. “The big issue is really more the domestic economy and its transformation,” he said.

“There’s evidence that the latest round of economic reforms started to slow the economy before we got to the tariffs,” Christopher said. In terms of advancing a mix of expansionary and tightening policies, China is still tinkering with the balance. “They haven’t really found the right combination yet,” he said. “We think they’re still experimenting.”

A decrease in Chinese car sales is one key data point that has been misconstrued, China experts say. Automotive consulting firm ZoZoGo found that car sales in China reversed course last year and fell by 3 percent after roughly two decades of growth, and the country’s largest automotive trade group also has reported sinking sales figures in recent months.

Nicholas Lardy, a senior fellow at Peterson Institute for International Economics, said that a temporary tax break spurred Chinese consumers to accelerate car-buying, and the subsequent falloff is a natural outcome of pulling forward demand.

Strong growth in Chinese exports to the U.S. for much of 2018 could indicate an acceleration of commerce as businesses scramble to get goods and manufacturing inputs over the border before any additional tariffs kick in.

“The trade flows alone don’t tell the whole story. Some of the strength of U.S. imports from China is the result of firms trying to ship products before more tariffs are applied, so it won’t last,” said Mark Williams, chief Asia economist at Capital Economics.

As in the U.S., uncertainty over tariffs has weighed on the Chinese equity market as businesses hold off on investments until they know more about what the future holds. “But the trade war is not the main headwind that China’s economy is facing,” Williams said.

That headwind is tighter domestic financial policymaking, experts say. The Chinese government put sharp curbs on non-bank lending, which had fueled considerable growth in consumer spending, real estate investment and local infrastructure projects, but also ratcheted up the risk factor.

“I think the slowdown is primarily a result of the slowdown in credit,” Lardy said. “By the end of last year, credit was growing at the slowest pace in 10 years,” which has crimped spending, investment and weighed on the Chinese stock market.

More recently, Beijing has been walking back some of these tightening policies to promote a more stimulative economic environment: On Friday, China’s equivalent of the Federal Reserve announced that it would cut bank reserve requirements, which would free up more capital for lending, following pledges to cut taxes and increase infrastructure spending to further stimulate its economy.

Economists say a shrinking pool of credit is one contributor to slower Chinese consumer spending, which has been fueled in recent years by taking on debt, and — as in the U.S. — people are unwilling to add to their debt burden in the face of economic uncertainty. “We also notice households have taken on some debt in recent years, and we think some of them might be reaching their limits,” Christopher said. “Households, we think, are feeling a little bit of a pinch,” he said.

Softness in Chinese household spending also is a result of how consumer economic activity is calculated, experts say. As the Chinese economy matures and its middle class grows, people are spending increasingly more on services ranging from healthcare to education to tourism — spending not captured by metrics that only include purchases of goods.

“Service spending by Chinese households, that growth rate is still at an upward trajectory — it’s not only the level that’s rising, but the growth rate that’s rising,” Christopher said.

BBC with additional report from NBC