Finance

China to retaliate against nations that work with U.S. to isolate Beijing

Published

2 months ago

April 20, 2025

BEIJING — China on Monday warned it will retaliate against countries that cooperate with the U.S. in ways that compromise Beijing’s interests, as the trade war between the world’s two largest economies threatens to embroil other nations.

China’s warning comes as U.S. President Donald Trump‘s administration is reportedly planning to use tariff negotiations to pressure U.S. partners to limit their dealings with China. Trump this month paused major tariff increases on other countries for 90 days, while hiking duties further on goods from China to 145%.

“China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures,” the Chinese Ministry of Commerce said, according to a CNBC translation.

The ministry cautioned about the risk to all countries once international trade returns to the “law of the jungle.”

The statement also sought to cast China as willing to work with all parties and “defend international fairness and justice,” while describing the U.S. actions as “abusing tariffs” and “unilateral bullying.”

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In a shift toward a harder stance this month, China retaliated against U.S. tariffs with levies of 125% on imports of American goods. Beijing has also restricted critical minerals exports and put several, mostly smaller, U.S. companies on blacklists that restrict their ability to work with Chinese companies.

Analysts don’t expect the U.S. and China to reach a deal anytime soon, although Trump on Thursday said he expected an agreement could be reached in the next three to four weeks.

Chinese President Xi Jinping last week visited Vietnam, Malaysia and Cambodia in his first overseas trip of 2025. In official Chinese readouts of his meetings with the three countries’ leaders, Xi called for joint efforts to oppose tariffs and “unilateral bullying.”

Since Trump imposed tariffs on China during his first term, the Asian country has increased its trade with Southeast Asia, now China’s largest trading partner on a regional basis. The U.S. remains China’s largest trading partner on a single-country basis.

Last week, China’s Ministry of Commerce replaced its top international trade negotiator with Li Chenggang, who also became a vice minister and has been the country’s ambassador to the World Trade Organization. China has filed a lawsuit against the U.S. with the WTO over Trump’s latest tariff increases.

Finance

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Published

8 hours ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

10 hours ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”