China to Ask U.S. to End Sanctions on Its Biggest Shipping Company
China to Ask U.S. to End Sanctions on Its Biggest Shipping Company
(Bloomberg) --
China plans to ask the U.S. to lift sanctions on its biggest shipping company at high-level trade negotiations in Washington this week, people familiar with the matter said.
Officials plan to raise the issue of penalties against the Dalian units of China COSCO Shipping Corp., which the U.S. accuses of knowingly violating restrictions on carrying Iranian petroleum, said the people, who asked not to be identified discussing a private matter. Four other Chinese entities were also sanctioned last month along with COSCO. The people did not say if the Chinese delegation planned to seek relief for those companies.
The U.S. decision to impose sanctions on Chinese shipowners including COSCO Shipping Energy Transportation Co. prompted a bidding war as charterers scrambled to replace vessels owned by targeted companies. It sent costs for ships with oil-carry capacities ranging from 650,000 to 2 million barrels to a 2019-high, while supertanker day rates for the Middle East to China route surged to its highest in probably 11 years.
The penalties against the Chinese companies bar U.S. citizens and entities from dealing with the firms, effectively blocking them from American banks at the heart of the global financial system. China’s National Development and Reform Commission and Ministry of Commerce didn’t immediately respond to faxes seeking comment on the request. China COSCO Shipping did not respond to an email and fax.
President Donald Trump said the first day of high-level negotiations between the U.S. and China went “very well” on Thursday, and that he plans to meet with the top Chinese negotiator Friday. It’s the first senior-level in-person talks since late July as both sides try to end an 18-month trade war that is taking a toll on the global economy and U.S. manufacturing. People familiar said separately the U.S. is seeking to include a previously-agreed currency pact as part of a preliminary deal.
While the sanctions specifically targeted COSCO’s Dalian subsidiary, charterers indiscriminately shunned all tankers owned by its parent company and other units for fear of running afoul of the rules. This week, however, some oil traders once again started booking tankers operated by COSCO, although the charters are not expected to immediately bring calm to markets.
--With assistance from Sharon Cho.
To contact Bloomberg News staff for this story: Sarah Chen in Beijing at schen514@bloomberg.net;Steven Yang in Beijing at kyang74@bloomberg.net;Alfred Cang in Singapore at acang@bloomberg.net
To contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Sharon Chen, Alexander Kwiatkowski
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With assistance from Bloomberg