Xinhua Finance Agency

World Insights: Int'l trade with China soars in 2022, decoupling theory crushed by real flows

Xinhua Finance Agency — Thu, 23 Feb 2023 14:22:17 +0800

BEIJING, Feb. 23 (Xinhua) -- Many top economies have lately reported significant growth of trade with China in 2022 with some figures even hitting record high, showing ever closer trade links and supply chain collaboration between China and the rest of the world.

Analysts believe the annual import and export reports will boost global confidence in the Chinese economy and bolster win-win cooperation with China, speaking volumes for the fact that the world rejects the decoupling theory hyped up by some U.S. politicians.

ROBUST TRADE WITH CHINA HITS NEW HIGHS

Newly released U.S. official data showed that trade between the United States and China hit a record 690.6 billion U.S. dollars in 2022, indicating robust trade growth amid decoupling rhetoric.

The data showed that despite U.S. government's decisions to add tariffs and impose export curbs and some politicians' rhetoric to decouple from China, trade growth between the two major economies remains robust.

Meanwhile, total trade volume between the EU and China has grown about 23 percent from 2021, hitting 856.3 billion euros (912.6 billion dollars), another new high, according to statistics released by the Eurostat on Feb. 15.

In 2022, the total trade volume between China and Germany grew 20.9 percent year on year to 297.9 billion euros (318.8 billion dollars), according to the Federal Statistical Office (Destatis). China has been Germany's most important trading partner for seven years in a row.

"The Chinese economy is too big to decouple from it completely," Juergen Matthes, an expert at the German Economic Institute, said earlier this month. "No one wants that, and it would not make sense."

Data from the General Administration of Customs of China showed that China's total trade volume with Africa, the Association of Southeast Asian Nations and Latin America in 2022 reached 282.0 billion dollars, 975.3 billion dollars and 485.8 billion dollars, representing year-on-year increases of 11.1 percent, 11.2 percent and 7.7 percent, respectively. All shattered previous records.

Ljubo Jurcic, former Croatian minister of economy, told Xinhua that although the COVID-19 pandemic took its toll on China's economy, it's expected to resume strong growth after the government improved its pandemic responses. Due to strong economic growth and its huge size, China is already the "locomotive" of the global economy, said Jurcic.

COMPLEMENTARY ADVANTAGES FACILITATE WIN-WIN RESULTS

The price spikes in international energy and raw materials have exacerbated inflation in Germany, therefore affordable commodities produced in China are more favored by the German market. China has also become a preferred market for German companies who have gradually increased investment in China, according to a report by the German Institute for Economic Research.

Automobiles have been a highlight in bilateral trade between Mexico and China over the past year. According to data from the National Institute of Geography and Statistics of Mexico, Chinese cars accounted for nearly a quarter of Mexico's imported cars in 2022. China has surpassed the United States, Japan and other countries to become the main source of imported cars in Mexico.

For Argentina, China has become the country's second-largest export destination and largest source of imports in 2022. Compared with 2021, Argentina's imports from and exports to China in 2022 increased by 29.4 percent and 27.4 percent respectively, according to the latest data from the Argentine National Institute of Statistics and Census.

Pablo Levinton, a professor of economics at the National University of Lanus in Argentina, believes that the economies of Argentina and China are highly complementary. "Argentine high-quality beef, red wine and other products are welcomed by the Chinese market. Mineral resources such as lithium and copper in Argentina are also needed by China's renewable energy and other industries," said the expert.

In 2022, the bilateral trade volume between Indonesia and China increased by nearly 20 percent compared with the previous year. China remained Indonesia's largest trading partner and largest export market, demonstrating the high degree of correlation and complementarity between the economies. "China's rapid economic growth will greatly promote Indonesia's economic and social development," said Bambang Suryono, chairman of the Indonesian think tank Asian Innovation Research Center.

CHINESE MARKET EXPECTED TO BRING GROWTH IMPETUS

Looking ahead, many institutions and analysts are optimistic about the prospects of China's foreign trade, and believe that China's economy will gain greater vitality and that will bring more market opportunities and development dividends to the world.

Chilean customs statistics show that in 2022, Chilean exports to China amounted to 38.11 billion dollars, accounting for 38.9 percent of the country's total exports. China has been Chile's largest trading partner since 2009, with nearly 90 percent of Chile's cherry exports going to the Chinese market.

"The Chinese market is so important for us!" said Ivan Marambio, the president of the Chilean Fruit Exporters Association.

After China eased travel restrictions for incoming visitors in early January, Marambio led a delegation to visit several Chinese cities to meet business partners.

"We are optimistic about the resilience and consumption vitality of the Chinese market and hope to achieve greater development through the Chinese market," he said.

In 2022, China has been Brazil's largest trading partner for the 14th consecutive year. Last year, Brazilian exports to China amounted to 89.43 billion dollars, accounting for 26.8 percent of the country's total, according to official Brazilian figures.

The deepening economic and trade partnership between Brazil and China has driven the development of Brazil's agriculture, infrastructure, science and technology, e-commerce and other fields, said Jose Ricardo dos Santos Luz Junior, CEO of LIDE (Group of Corporate Leaders) China, a Sao Paulo-based company that connects Chinese and Brazilian entrepreneurs, in a recent interview with Xinhua.

Bilateral trade has been hitting new highs, contributing greatly to Brazil's economic growth, and will surely boost bilateral exchanges in various fields, he said.

In a report released in January, the African Development Bank raised its economic growth forecast for the African region to 4 percent in 2023.

According to the report, after China optimized its COVID-19 responses, Asia, as an important export destination of Africa, will achieve steady growth, thus expanding Africa's development space.

Ralf Klein, managing director of HARTING Electronics Co., Ltd. in Germany, said that China has great market potential, and China's economy has huge influence on the development of German enterprises in China.

"We expect China's economy to grow faster," he added.

China is Britain's second-largest trading partner in imports and fifth largest in exports in 2022, according to data released by the Office for National Statistics earlier this month.

Gordon Cheung, a scholar at Durham University in Britain, said that driven by diversified trade demand, British exports to China have increased.

The British business community is actively promoting economic and trade exchanges between Britain and China, and bilateral trade is expected to grow further this year, said Cheung.

Live COVID-19 updates: U.S. COVID-19 cases top 1 mln

Xinhua Finance Agency — Wed, 29 Apr 2020 08:17:07 +0800

BEIJING, April 29 (Xinhua) -- The following are the updates on the global fight against the COVID-19 pandemic.

- - - -

DUBLIN -- Irish Prime Minister Leo Varadkar said Tuesday that the new coronavirus levels in the country are not low enough to allow any easing of restrictions on May 5, the date when the current lockdown measures in Ireland are supposed to end.

Varadkar made the remarks while chairing a cabinet meeting to review the pandemic situation in the country, according to local media reports.

- - - -

BRUSSELS/BERLIN -- Despite the fact that the European Region on WHO dashboard has accounted for more than half of the over 200,000 global COVID-19 deaths, many European countries are forced to fight a two-front battle to save both life and livelihood amid deepening economic woes.

Greek Prime Minister Kyriakos Mitsotakis outlined on Tuesday the government's plan for gradual transition to normalcy after lifting the nationwide lockdown on May 4.

- - - -

TUNIS -- The Tunisian Ministry of Health confirmed on Tuesday eight new COVID-19 cases, bringing the total number to 975.

Following a total of 396 lab tests in the last 24 hours, 16 cases tested positive, of which eight were new cases and eight were previously confirmed cases who were still infected with this virus, according to the ministry's daily epidemiological report.

- - - -

WASHINGTON -- Over 1 million people in the United States have been infected with COVID-19, with the death toll exceeding 57,000 on Tuesday, showed the latest data.

The country's number of COVID-19 cases topped 1 million Tuesday afternoon, reaching 1,002,498 as of 1:55 p.m. (1755 GMT), with a total of 57,266 deaths, according to the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University.

- - - -

CAIRO -- The death toll from COVID-19 in Turkey approached 3,000 on Tuesday. Meanwhile, a Chinese team of medical experts started working with their Kuwaiti counterparts to fight the coronavirus pandemic.

The number of fatalities from the novel coronavirus in Turkey, the worst-hit country in the Middle East, surged to 2,992 after 92 more deaths were reported, Turkish Health Minister Fahrettin Koca said.

- - - -

DAKAR -- The Senegalese government on Tuesday launched a food aid distribution operation to help 1 million vulnerable households affected by COVID-19.

"We have just launched officially the delivery of food kits. This operation marks the start of operations across the country," said Minister of Community Development, Social and Territorial Equity Mansour Faye at a launch ceremony in the presence of several beneficiaries as well as local administrative authorities and elected officials in Pikine, a city east to Dakar.

- - - -

PRAGUE -- The Czech Chamber of Deputies on Tuesday approved the extension of the country's state of emergency until May 17, the lower house of Parliament announced.

The current state of emergency was supposed to end on April 30. Prime Minister Andrej Babis's government had asked for an extension until May 25.

- - - -

JERUSALEM -- The total number of coronavirus cases in Israel rose on Tuesday by 173 to 15,728, the state's Ministry of Health said.

The death toll from COVID-19 infection in Israel increased from 204 to 210, while the number of patients in serious condition decreased from 126 to 116.

- - - -

RIYADH -- Saudi Arabia's coronavirus cases exceeded 20,000 on Tuesday after 1,266 new infections were confirmed, Saudi Press Agency reported.

Mohammed Al Abdulaali, spokesman of the health ministry, told the daily press briefing that 66 percent of the new cases were detected through random screening, while 77 percent of them are non-Saudis.

- - - -

AMMAN -- The World Bank on Tuesday approved a 20-million-U.S.-dollar project to help Jordan ease the health impacts of the coronavirus epidemic.

The new project, named "COVID-19 Emergency Response," will support Jordan's health ministry in preventing, detecting, and responding to the threat posed by the pandemic and strengthening public health preparedness, according to a statement by the World Bank, a copy of which was obtained by Xinhua.

Xinhua top 10 China news events in 2019

Xinhua Finance Agency — Mon, 30 Dec 2019 00:40:35 +0800

BEIJING, Dec. 29 (Xinhua) -- The Xinhua chronicle of the top 10 China news events in the year of 2019 is as follows:

1. FOREIGN INVESTMENT LAW TO BOOST HIGH-LEVEL OPENING UP

The second session of the 13th National People's Congress on March 15 passed the foreign investment law, which will become effective on Jan. 1, 2020.

Adoption of the law is an important measure to implement the decision and arrangement of the Communist Party of China (CPC) Central Committee to expand opening up and promote foreign investment.

2. DIPLOMATIC EVENTS HOSTED TO SHOWCASE OPENING UP, WIN-WIN COOPERATION

The Second Belt and Road Forum for International Cooperation, successfully held in Beijing from April 25 to 27, saw the participation of over 6,000 foreign guests from 150 countries and 92 international organizations, and opened a new chapter of high-quality joint building of the Belt and Road.

Then Beijing hosted the World Horticultural Exposition and Conference on Dialogue of Asian Civilizations, and Shanghai hosted the second China International Import Expo from November 5 to 10. All the diplomatic events were splendid and vividly illustrated China's expansion of opening up and deep integration with the world based on mutual benefits and win-win cooperation.

3. CPC LAUNCHES EDUCATION CAMPAIGN

An education campaign themed "staying true to our founding mission" among all members of the CPC has been carried out nationwide since it was launched on May 31.

The fundamental task of the campaign is to conduct in-depth studies on and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, forge the political character of loyalty, integrity and a keen sense of responsibility, and unite the Chinese people of all ethnic groups and lead them to strive together for the realization of the great dream.

The campaign, especially targeting officials at and above the county level, is a major initiative to ensure full and strict Party self-governance and self-reform.

4. MAJOR REGIONAL STRATEGIES FURTHER DEVELOPED

On Sept. 18, Xi Jinping, general secretary of the CPC Central Committee, elevated the ecological protection and high-quality development of the Yellow River basin to one of China's major national strategies, which also include the coordinated development of Beijing-Tianjin-Hebei region, development of the Yangtze River Economic Belt, construction of the Guangdong-Hong Kong-Macao Greater Bay Area, and the integrated development of the Yangtze River Delta.

2019 also saw China's progress in developing the Xiong'an New Area, building the pilot demonstration area of socialism with Chinese characteristics in Shenzhen and deepening reforms comprehensively in Hainan. The country also broke new ground in Western Development, promoted reform and innovation in the northeastern region, boosted the high-quality development in the central region, and advanced the trailblazing development in the eastern region. Furthermore, the country's coordinated regional development made further progress.

5. MAJOR PROJECTS SUCCESSFULLY IMPLEMENTED

Beijing Daxing International Airport opened to flights on Sept. 25, which is expected to realize a passenger throughput of over 100 million a year. China's first domestically-built aircraft carrier, the Shandong, was delivered to the People's Liberation Army Navy on Dec. 17.

New achievements have also been made in other major projects this year: 5G licenses for commercial use were granted; The Chang'e-4 probe made the first-ever soft landing on the far side of the moon; The Long March-5, carrying the Shijian-20 technological experiment satellite, was successfully launched; The length of China's railroad lines in service has exceeded 139,000 km, including 35,000 km high-speed rail, ranking first in the world.

6. GRAND CELEBRATION HELD FOR PRC'S 70TH FOUNDING ANNIVERSARY

A grand gathering to celebrate the 70th founding anniversary of the People's Republic of China (PRC) was held on Oct. 1 morning at the Tian'anmen Square in Beijing, where more than 200,000 people joined the celebrations in military parade and mass pageantry.

President Xi Jinping, also general secretary of the CPC Central Committee and chairman of the Central Military Commission, delivered a speech and reviewed the troops. Xi also joined the public for an evening gala at the square.

7. KEY CPC SESSION HIGHLIGHTS STRENGTH OF CHINA'S SYSTEM, GOVERNANCE

The 19th CPC Central Committee held its fourth plenary session in Beijing from Oct. 28 to 31. The session reviewed and adopted the CPC Central Committee's decision on some major issues concerning how to uphold and improve the system of socialism with Chinese characteristics and advance the modernization of China's system and capacity for governance.

The decision summarizes the historic achievements in the institutional building of socialism with Chinese characteristics, outlines the notable strengths of China's state and governance systems, expounds on the fundamental, basic and important institutions that underpin the system of socialism with Chinese characteristics, specifies the targets and tasks concerning how to uphold and improve the system of socialism with Chinese characteristics and advance the modernization of China's system and capacity for governance.

8. CHINESE ECONOMY MAINTAINS STEADY GROWTH AGAINST HEADWINDS

The Central Economic Work Conference was held in Beijing from Dec. 10 to 12. It was agreed at the meeting that under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, China has kept pursuing progress while ensuring stability, focused on its supply-side reform, promoted high-quality development, made solid progress in ensuring economic stability, and maintained healthy economic and social development. Meanwhile, the country's progress in achieving the major tasks of the 13th Five-Year Plan met expectations, and new major steps have been made toward finishing the building of a moderately prosperous society in all respects.

China's major annual development targets and tasks can be well completed, and its economic growth rate leads world's major economies. It is estimated that more than 10 million people and about 340 poverty-stricken counties have been lifted out of poverty in 2019.

9. CHINA, U.S. AGREE ON TEXT OF PHASE ONE TRADE DEAL

The economic and trade consultations between China and the United States had suffered major setbacks this year, with the U.S. side imposing rounds of additional tariffs on Chinese products which met firm opposition and forced countermeasures from the Chinese side.

On Dec. 13, the Chinese side announced that the two countries had reached agreement on the text of the phase one economic and trade deal on the basis of equality and mutual respect. The deal is expected to benefit the two countries and the whole world.

10. ADHERING TO "ONE COUNTRY, TWO SYSTEMS," OPPOSING EXTERNAL INTERFERENCE IN HONG KONG, MACAO AFFAIRS

On Nov. 14, Chinese President Xi Jinping made clear the stance and attitude on Hong Kong's situation, which was to bring violence and chaos to an end and restore order, while attending the 11th BRICS summit in Brazil.

On Dec. 16, Xi stressed again that "we have unswerving determination to safeguard China's sovereignty, security and development interests, implement the 'one country, two systems' principle and oppose any external force interfering in Hong Kong affairs," while meeting with Chief Executive of Hong Kong Special Administrative Region Carrie Lam, who was on a duty visit to Beijing.

On Dec. 20, a gathering marking the 20th anniversary of Macao's return to the motherland and the inauguration of the fifth-term government of Macao Special Administrative Region was held in Macao. Attending the event, Xi said China will not allow any external forces to interfere in Hong Kong and Macao affairs.

Feature: Tourism rejuvenates old Silk Road town

Xinhua Finance Agency — Mon, 09 Dec 2019 15:07:54 +0800

URUMQI, Dec. 9 (Xinhua) -- Having grown up in the old town area of Kashgar, Xinjiang, Abdureshit is accustomed to having morning tea in a 100-year-old teahouse after finishing his prayers in the Id Kah Mosque at dawn.

On cold winter mornings, coppersmiths who get up early have begun to make pots or plates. Amid the tinkles and clangs, residents begin to wake up, have breakfast, sweep their courtyards and go to work.

Located in the downtown area of Kashgar, an ancient Silk Road city with a history of over 2,000 years, the old town is home to the world's largest earth architectural complex.

Labyrinthine, narrow lanes and crowded dwellings with elaborately carved doors and windows give a glimpse of the glory of the thriving old town along the Silk Road. Its exotic charm appeals to tourists from home and abroad.

The town becomes busier in the morning as tourists bustle around. Many visitors flock to the time-honored teahouse that Abdureshit always goes to, sipping on Uygurs' traditional herbal tea while appreciating the view of buildings and alleys from the second floor.

When it is too crowded, Abdureshit will move to a nearby small teahouse with his friends. The 72-year-old said he likes to make room for travelers.

"There's no need to be upset. On the contrary, I'm so proud that more people come to visit and are falling in love with my hometown," Abdureshit said.

There are performances of local songs and dances at around 10 a.m. Tourists can enjoy the shows, go shopping in various shops or just walk around to explore the traces of different cultures, ethnic groups and religions.

Mewlan Turaq, 26, is an owner of a vintage clothing shop. He displays over a dozen articles of Uygur clothing in his shop, showing the changes in traditional Uygur clothing over the past century.

The clothing is very popular among tourists, along with other products such as vintage accessories, mobile phone cases and bags with Uygur characteristics. Many travelers try on the clothing and pay for camera crews to take photos of them in the old town.

"Since more and more tourists are traveling to Kashgar, the previous 10-square-meter shop was too small. So I moved into the new shop, which is 30 square meters. My mum now runs the smaller one," the young man said.

Salametgul Khari was the first person in the old town who opened her home to tourists two years ago, allowing strangers to enter her home, eat, sing and dance with her family at a reasonable price. This innovative method offered out-of-towners a fresh experience to immerse themselves into the true life of Uygurs. Salametgul's success caused many locals to follow suit.

"We served more tourists this summer than the last. The number of chefs and waiters I employ this year has increased to 18. Many tourists said they want to stay for several days, so I traveled to Yunnan and Sichuan provinces to learn homestay operation. I plan to open 10 rooms for homestay next year," she said.

When night falls, the old town transforms. Unlike the leisureliness during the day, the old town is illumined by the bustling night bazaar. The mouthwatering aroma of roasted lamb, fried lamb sweetbread and beef attract both tourists and local residents.

Abdukerim Memet has run a small booth selling zongzi in the bazaar for more than four decades.

Zongzi, or sticky rice dumpling, is a traditional food during the celebration of the Dragon Boat Festival. It is made of glutinous rice with fillings wrapped in bamboo leaves.

Although Abdukerim does not know the origin of the snack, he knows the elders started to sell zongzi at the bazaar long ago. The old man uses local reed leaves instead of bamboo leaves to wrap the rice, which he said comes from east China's Fujian Province. He also pours yogurt on zongzi instead of sugar. With an increasing number of tourists, he can earn about 600 yuan (85 U.S. dollars) per night.

Statistics showed, from January to October, Kashgar received over 14 million tourists from all over the world, up 63 percent year on year.

Today, a comfortable life and tourism boom in the old town is ascribed to a huge renovation project in Kashgar.

There were over 200,000 residents squeezed in the eight-square-kilometer old town. Crowded old buildings were under risk of fire hazards and house collapse, and there was a lack of conditions for developing tourism.

In 2010, the Chinese government kicked off an renovation project in the old town of Kashgar with an investment of more than 7 billion yuan, rendering local buildings earthquake-proof while maintaining their traditional Uygur charm.

Nearly 50,000 households had their old and dilapidated houses renovated due to the project. Modern infrastructure and facilities have made the lives of local residents easier and cozier, and facilitated the development of tourism.

Feature: Chinese digital company seeking growth in U.S.

Xinhua Finance Agency — Wed, 04 Dec 2019 17:19:31 +0800

Photo taken on Nov. 14, 2019 shows the office of HAND Enterprises Solutions USA Inc. in the suburb area of Detroit, the United States. (Xinhua/Wang Ping)

Positioning the company as the "one-stop enterprise digital management solutions service provider," Ken Chen, CEO of HAND USA, has planned to find more medium- and small-sized enterprises as its customers in the United States.

by Xinhua writers Xia Lin, Xu Jing

DETROIT, Dec. 3 (Xinhua) -- Ken Chen has a dream to spread what he learnt in China to the U.S. digital world.

"It will be a long process for a Chinese company to get integrated into the U.S. market. A decade is just a start and 50 years won't be long," said Chen, CEO of HAND Enterprises Solutions USA Inc. (HAND USA), in the suburb area of Detroit.

"Since we started our business in the United States 10 years ago and our company was established five years ago, we've found that some medium- and small-sized enterprises and companies are actually not synchronized with the times, particularly in management means," Chen recalled.

"Filling in a statistic form by pen? Using a landline telephone? These are common. I dare say that they really need our services for accuracy and efficiency," he said.

Ken Chen, CEO of HAND Enterprises Solutions USA Inc., speaks during an interview with Xinhua at his office in the suburb of Detroit, the United States, Nov. 14, 2019. (Xinhua/Wang Ping)

HAND USA boasts an international clientele of 40 factories and companies, with several top-of-the-world manufacturers of automotive spare parts.

Currently, Chinese factories and corporations are the mainstay of its customer list.

Positioning the company as the "one-stop enterprise digital management solutions service provider," Chen has planned to find more medium- and small-sized enterprises in the United States.

"Big ones give you clout. Middle and small ones make you sound," said the 42-year-old man.

Chen's parent company, also named HAND and headquartered in Shanghai, is one of China's largest IT consulting service providers.

HAND started to design enterprise resource planning system in 1996, and now owns over 5,000 clients worldwide with its market value peaking at 6 billion U.S. dollars.

Photo taken on Nov. 14, 2019 shows the office building of HAND Enterprises Solutions USA Inc. in the suburb of Detroit, the United States. (Xinhua/Wang Ping)

Chen said nowadays IT system should come first while a factory or company is being updated, bought or established, because this will enable the investor to collectively analyze essential information to avoid waste and guarantee profit.

"The system or platform serves to collect data and figures. Data and figures tell you what to do and what not to do. Through a digitalized process, all the crucial elements of an enterprise can get integrated into the platform, where the investor finds balance, ease, sobriety and confidence to make decisions," said Chen.

"Data and figures. These are the magic of modern economy and production," said Chen, adding that digitalized management supported logical and precise decision-making.

Photo taken on Nov. 14, 2019 shows the office of HAND Enterprises Solutions USA Inc. in the suburb of Detroit, the United States. (Xinhua/Wang Ping)

HAND USA has been expanding its resource-integrating capability to help clients gain an overall reading of their financial information from all U.S. banks where they reserve their money and assets.

"Better experience. This is our selling point," said Chen.

To adapt HAND USA to its local customers, Chen has been diversifying his team by learning from the parent company's hiring strategy: enrolling fresh faces from college, training them first for theory study and then for project completion, before discerning who are suitable.

"It is like selecting diamond. Only after all these sifting and burnishing, can the best and the most suitable emerge to contribute benefits and profits to HAND," he said.■

To Sort Anbang’s Assets, Chinese Authorities Create Dajia

Xinhua Finance Agency — Tue, 02 Jul 2019 11:09:15 +0800

Chinese authorities have formed a new company to take over assets of Anbang Insurance Group Co., laying the groundwork for a new phase of restructuring for the troubled company.

Dajia Insurance Group, which registered in Beijing earlier this week under Anbang’s chairman, will take over the firm’s assets, according to a person familiar with the matter and the new company’s registration.

The government took over Anbang early last year and then placed it under the control of the China Insurance Security Fund, a state-owned backstop for insurance companies. The creation of a new entity signals a further push by authorities to sort out the company’s assets, some of which are being sold off to raise cash.

The China Insurance Security Fund will own 98% of Dajia, with state-owned China Petrochemical Corp. and SAIC Motor Corp. 600104 1.88% as minority shareholders, according to the National Enterprise Credit Information Publicity System. The ownership structure is the same as that of Anbang.

“There should be some stripping of assets in this,” said Shujin Chen, a financial analyst at Huatai Securities Co. “In a normal restructuring, the buyer doesn’t receive everything.”

Anbang’s sale of assets began last fall with a securities unit being sold to state-backed companies.

Investors are bidding for the insurer’s luxury hotels worth billions of dollars, The Wall Street Journal reported earlier this month. The portfolio includes high-end properties overlooking Manhattan’s Central Park but not the landmark Waldorf Astoria.

Anbang made global headlines by selling investment products to Chinese consumers and plowing money into property and financial companies. The government put an end to that last year by taking over the company and sentencing its then-chairman, Wu Xiaohui, to prison for financial crimes. Regulators have described Anbang’s blazing expansion as a systemic risk to the country’s financial system.

Authorities have disclosed little about the company’s restructuring. The China Banking and Insurance Commission has previously said the insurance fund would hold Anbang until February 2020.

The regulator didn’t respond to a request for comment.

The insurance security fund pumped 60.8 billion yuan ($9.7 billion) into Anbang in 2018 to help stabilize its operations and keep it solvent while it tried to find new private investors.

The new insurance entity has 20.4 billion yuan in initial capital, according to the registrar.

He Xiaofeng, Dajia’s legal representative, is an official with the Chinese insurance and banking regulator.

Source: The Wall Street Journal

UBS: The globe is headed for a recession if U.S-China trade talks fails

Xinhua Finance Agency — Thu, 27 Jun 2019 15:54:04 +0800

One Wall Street brokerage told clients Monday that the globe is “one step away” from recession as the world’s two largest economies head to the G-20 summit meeting in Japan this week to try to hash out key issues and end a monthslong trade war.

While escalation isn’t what UBS expects, a failed meeting between President Donald Trump and China’s Xi Jinping that results in a new wave of tariffs would mean “major” changes to global GDP and market forecasts, global head of economic research Arend Kapteyn wrote in a note.

If the trade war escalates, “we estimate global growth would be 75bp lower over the subsequent six quarters and that the contours would resemble a mild ‘global recession’ —similar in magnitude to the Eurozone crisis, the oil collapse in the mid-1980s and the ‘Tequila’ crisis of the 1990s,” he wrote.

The impact of a scuttled trade deal at the U.S.-China meeting in Osaka and agitated relations wouldn’t be felt immediately, however, but grow in severity over several quarters as higher prices stifle demand and growth, the UBS researcher wrote. In the United States, the cumulative reduction in GDP would be about 1% over six quarters, 1.2% in China and 0.74% in Europe, Kapteyn wrote.

Source: UBS

U.S. and Chinese negotiators are expected to begin discussions in Osaka this week before Trump and Xi meet, hoping to quell inflamed relations between Washington and Beijing, which have crumbled since late April. In a surprise move, Trump tweeted on May 5 that tariffs on $200 billion worth of Chinese goods would increase to 25% and that another 25% tariff would “shortly” be imposed on an additional $325 billion of imported goods from China.

Traders blamed the worsened trade outlook for an equity pullback in May, with the S&P 500 down 6.5% last month.

But further aggravation of the trade conflict could push global equities down 20%, Kapteyn said, with the prior U.S. outperformance relative to Europe eroding and emerging markets taking a heavy hit.

“In global sectors, Materials stands out as most vulnerable, but some defensive and crowded segments are also at risk amidst weaker growth,” he added. “For a bottom up perspective, we lean on our prior work to highlight trade and crowded growth exposed stocks.”

Source: U.N. Comtrade database, U.S. Department of Commerce, Federal Reserve Bank of St. Louis

The economist added that all major central banks would be forced to ease monetary policy, with the U.S. Federal Reserve compelled to cut interest rates by 100 basis points on top of an expected 50-basis-point cut in July. Such a push would pressure the yield on the benchmark 10-year Treasury note below its record low of 1.3%, the UBS economist predicted.

In China, the government would add another 150 basis points of total social financing growth, with GDP falling under 6%. China’s total social financing is a catchall term for lending by banks and other institutions.

“Once policy makers have delivered the limited stimulus, investors will likely worry about them running out of options,” the UBS team wrote. “In the trade escalation case, we expect US 10y yields to fall through all-time lows.”

Is There a Big Short in Bitcoin?

Xinhua Finance Agency — Thu, 27 Jun 2019 15:44:00 +0800

Hedge funds and other big traders are betting that bitcoin will fall, even as the digital currency has risen above $11,000 on a new wave of crypto-optimism.

That is the picture that emerges from bitcoin futures listed on CME Group Inc., CME -3.17% the biggest U.S. exchange operator. Futures are contracts that let traders bet on whether an asset—in this case, bitcoin—will rise or fall.

Hedge funds and other money managers held about 14% more bearish “short” positions in CME bitcoin futures last week than they did bullish “long” positions, according to a recent Commodity Futures Trading Commission report.

Other large traders were even more bearish. “Other reportables”—a loose category of firms that don’t necessarily manage money for outside investors—held more than three times as many short positions in bitcoin futures as long ones, the CFTC report shows.

So who is the optimist? The report shows it is mostly small investors taking the other side of the trade. Among traders with fewer than 25 bitcoin contracts, a category that likely captures many individuals placing bets in bitcoin, long wagers outnumbered short bets by 4 to 1.

“Traditional market participants may be more skeptical of [bitcoin] than millennial day traders,” said George Michalopoulos, a portfolio manager with Chicago fund manager Typhon Capital Management LLC, although he stressed that his views were speculative and that it is hard to know what is driving the CFTC’s numbers.

The CFTC report, which came out Friday, reflected the positioning of market players on June 18, when one bitcoin could buy around $9,000. The cryptocurrency was trading at $11,379.96 late Tuesday afternoon, up 4.6% from the day before.

Though it comes with a lag, the weekly CFTC report offers a glimpse into how various types of traders are positioned in bitcoin futures. Commodity traders closely follow similar CFTC reports on futures like crude oil, wheat and corn for hints of what is driving the market.

The CFTC data shows that hedge funds have been short bitcoin since February, though they recently pared their bearish bets.

On June 11, short bets among hedge funds outweighed long bets by 47%, a gap that narrowed to 14% the following week.

Such data don’t necessarily mean hedge funds are placing outright bets that bitcoin will drop. The short bets could also be part of hedging strategies: for instance, a fund with a portfolio of bitcoins might go short at CME as insurance against the value of bitcoin dropping.

Trading activity has grown in CME’s bitcoin futures in recent months, along with the rebound in bitcoin’s price. In May, average daily trading volume in the CME contract hit a record $515 million, the exchange operator says.

L. Asher Corson, a cryptocurrency analyst at Chicago proprietary trading firm Consolidated Trading, said traders who want to short bitcoin don’t have many choices besides CME.

One option is for them to borrow bitcoins from another trading firm, sell them and return an equivalent amount of bitcoins to that firm later—a process similar to how short selling works in stocks. But the difference is that, in the volatile bitcoin market, few firms are willing to offer that service to short sellers because of the risk of their customers defaulting, Mr. Corson said.

“CME right now is providing a unique ability for the larger players to have massive short positions with very low counterparty risk,” Mr. Corson said.

Volumes in CME’s bitcoin futures contract got a lift when a competing U.S. exchange operator that offered a similar contract, Cboe Global Markets Inc., recently discontinued it. Cboe’s last bitcoin futures contract expired last week.

Are you a bitcoin optimist or pessimist? Tell us about your views on the cryptocurrency by joining the conversation below.

But CME is set to face additional competition soon. Intercontinental Exchange Inc., owner of the New York Stock Exchange, is set to begin testing of a new bitcoin futures contract in July. LedgerX, a startup trading platform for bitcoin options, plans to launch its own futures on the cryptocurrency after the CFTC said Tuesday it had won approval to become a futures exchange. And a group of prominent financial firms, including TD Ameritrade Holding Corp. and Fidelity Investments, are backing a venture called ErisX, which plans to offer both futures and spot trading of cryptocurrencies.

Volumes in CME’s contract remain a fraction of the billions of dollars’ worth of daily activity in the bitcoin “spot” market, where actual units of the digital currency change hands. But some recent studies suggest that the size of the bitcoin spot market is inflated because of rampant fake trading at cryptocurrency exchanges.

That should prompt traders to take a closer look at CME bitcoin futures, analysts from JPMorgan Chase & Co. said in a June 14 report. As a regulated exchange, CME bars wash trading—in which traders engage in back-and-forth buying and selling to generate fake volume—and violators can be subject to both CME and CFTC fines. That makes CME’s volumes more trustworthy.

“The importance of the listed futures market has been significantly understated,” the JPMorgan analysts wrote.

Source: The Wall Street Journal

China’s Risky Move To Boost Domestic Oil Production

Xinhua Finance Agency — Wed, 26 Jun 2019 14:33:02 +0800

China's unprecedented economic development since Deng Xiaoping's "Open Door Policy", has transformed the Asian country into the second largest economy of the world. The booming economy has had the undesired side-effect of increasing Beijing's dependence on foreign oil imports.

Twenty-five years ago, China produced approximately 4 million barrels per day (mb/d), which was enough to satisfy the Asian country's domestic demand for petroleum products. In April, on average, 10.64 mb/d were imported, which is a new record. In 2018, the ratio of foreign oil dependency reached 70 percent and this number is expected to grow.

It is a reason for concern, as oil is a crucial product for maintaining stability and security. Beijing is aware of its relative weakness because most of the imported oil reaches mainland China through shipping lanes, which are controlled by the U.S. Navy. The relative weakness of the Chinese navy increases the risks and exemplifies the security threat in case of a blockade. Therefore, Beijing has been pushing domestic energy companies to increase production from local oil fields.

Rising investments

In the next five years China's ‘big three', PetroChina, Cnooc, and Sinopec, aim to increase spending by 517 billion yuan or $77 billion, which is a growth of 18 percent compared to last year. In contrast to Western firms, the Chinese state-owned energy giants are investing in oil fields that are mature and require high-costs to raise production. These assets need an increase in investment between 13 and 27 percent to reach their goals.

Pouring money into oil fields with low productivity has become a concern for private investors who are skeptical about the future ability of Chinese energy companies to pay a dividend. Although the firms are state-owned, they are also listed on both Chinese and U.S. stock exchanges. As the potential rates of return of the concerning oil fields are relatively low for international standards, the value of the shares has dropped significantly.

The reliance on foreign oil producers has become especially worrying for Beijing due to the escalating trade war with the U.S. and President Xi has now directly called on Chinese energy companies to increase domestic production. According to a researcher at the China National Petroleum Corp., the parent company of PetroChina, the additional spending will only increase production to 200 million tons by 2022, which is not a significant gain.

According to analyst Neil Beveridge from Sanford C. Bernstein & Co. "there is no question that those companies are under much pressure to grow production quickly. There will be a concern that in our low commodity price environment, this could erode returns and shareholders will want to see discipline."

The Chinese energy firms are taking a significant risk by increasing production at oil fields with low productivity compared to top-tier assets. However, it also underlines Beijing's attention to decrease dependence on foreign producers. In this context, oil is not only a vital source of energy but also a strategic asset.

Shale and natural gas

Chinese energy giants have also been trying to replicate the American shale boom. However, they are facing significant challenges as the shale formations in China differ from the ones in the U.S. because the oil and gas deposits are located much deeper in the Earth's crust and are less concentrated which makes extraction more difficult and expensive. Add to this that Western companies are reluctant to share their technological know-how due to intellectual property rights issues.

Besides oil, China is also growing increasingly dependent on foreign natural gas. Beijing's push to combat air pollution through the so-called coal-to-gas policy has significantly increased the consumption of gas. In 2017 natural gas made up around 7 percent of China's total energy mix. The government intends to increase that number to around 15 percent in 2030. It could make China the world's largest importer of LNG with approximately a quarter of the entire global production of 500 million tons.

Beijing doesn't look keen to become overdependent on foreign producers for crucial resources to power the economy and security apparatus. Especially the current standoff with the U.S. and heightened tensions are a reason for concern. Therefore, the government is pushing its energy giants to increase domestic production despite the high costs and low productivity.

Source: Yahoo Finance

The trade war is weighing on Chinese home buying in the US

Xinhua Finance Agency — Wed, 26 Jun 2019 11:31:26 +0800

Chinese home buyers last year ponied up much less cash in the U.S. as the trade war continues to escalate between the world’s two largest economies.

As top leaders of the two countries prepare to meet this week, there are worries that decline in spending could extend further.

U.S. property sales to Chinese buyers saw a 4% drop from 2017 to 2018, according to numbers provided by Juwai.com, China’s largest foreign property sales site.

“The worsening trade relationship between China and the US may cause Chinese investors to shift their presence into other key markets,” property consultancy Knight Frank said in a report. It suggested that investment can instead go to major cities in Australia, Japan, and the United Kingdom, according to the firm’s 2019 Wealth Report.

All foreign spending on U.S. homes fell by 25% in 2018, according Juwai.com.

U.S. homes have long been a favorite among Chinese foreign property buyers. But that’s increasingly less of a sure thing amid the escalating trade tensions and China’s tighter controls on money leaving the country.

Trade war and travel warnings
As the trade war between Washington and Beijing has been dragging on for just over a year, “Chinese buyer enquiries for US property were down in four out of the five last quarters,” said Juwai.com CEO Carrie Law.

“In the first quarter (of 2019), Chinese buyer enquiries on U.S. property were down 27.5% from a year earlier,” she said. “Meanwhile, they were up in Canada, the UK, Australia, and Japan, all of which are often considered alternative destinations to the United States.”

But the trade war isn’t the only factor driving the decline. Official warnings about U.S.-China travel are likely also pressuring spending.

“Travel warnings are part of an overall environment of negativity between the two countries that is discouraging Chinese property buyers from investing in the U.S.” Law said.

In January 2019, the U.S. Department of State issued a travel warning on China, suggesting citizens visiting China to “exercise increased caution in China due to arbitrary enforcement of local laws as well as special restrictions on dual U.S.-Chinese nationals.” China then respond by issuing a safety warning in June for Chinese citizens and companies in the U.S. to “raise awareness, strengthen preventative measures and respond properly” when traveling and doing business in the United States.

It’s all part of a pattern that’s making the United States less of an appealing destination for Chinese investment.

Capital controls
Some experts said the decline in Chinese property purchases in the U.S. can also be attributed to internal pressure in China.

Neil Brookes, Asia Pacific head of capital partners at Knight Frank told CNBC last week that Chinese outbound capital fell 83% in 12 months, “largely due to trade wars and the government trying to stop money leaving the country.”

In the past two years China has been tightening its grip on capital outflows, which “has cast a shadow over outbound investment,” according to a report by Knight Frank.

Looking ahead
Despite the declines in property expenditure, Chinese tourist spending has actually increased in the U.S.

According to the U.S. National Travel and Tourism Office, there was a decline in visitors from China in 2018, from 3.2 million to 2.9 million. Those who did visit the country, however, spent more than ever before.

In fact, international visitors from China spent $36.4 billion in the United States in 2018, an increase of 3% when compared to the previous record set in 2017.

The health of the U.S.-China tourist trade may point to a significant cushion for Chinese investment into the United States. And, looking ahead, Law said she expects purchasing American homes will remain attractive to many Chinese.

“Chinese will always be substantial buyers of US property and even now are probably still the largest foreign buyer group in the country,” she said.

“The thing that makes buyers most nervous is uncertainty,” Law added. “If the trade war simply becomes the new normal, or if it is resolved on good terms, you will likely see an increase in Chinese buying in the US.”

Source: CNBC

U.S. Airlines, After Rebuilding Home Networks, Look to Expand Overseas

Xinhua Finance Agency — Tue, 25 Jun 2019 15:49:53 +0800

U.S. airlines are rediscovering the rest of the world after years of ceding market share to rivals and international partners on overseas flights.

The big three network carriers are adding more than a dozen new routes and thousands of additional seats each week to destinations as far afield as South Africa, India and Croatia, reversing the trend over several years when they were outgrown by foreign airlines.

U.S. airlines are betting that three years of rebuilding their home networks by bolstering hubs and adding flights to smaller cities have given them a better foundation to expand overseas.

They are armed with new aircraft equipped with amenities that can boost margins on overseas flights, such as lie-flat seats. The strong dollar, meanwhile, is luring more Americans to far-flung locations abroad, creating a bigger pool of potential customers on new routes.

U.S. carriers will fly around two million more seats to and from Europe between May and July this year compared with the same period last year, according to published schedules, while domestic capacity will rise at less than half that pace, adding about 2.3 million seats.

That would reverse three years that saw overseas carriers claim a majority of the passengers flying into and out of the U.S.

American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc. were outgunned by the rapid expansion of carriers from the Middle East and China, and new low-cost, long-haul airlines such as Norwegian Air Shuttle A/S. Now, rivals such as Emirates Airline have slowed their expansion while U.S. carriers grow abroad again.

American leads the pack with 8.3% growth in capacity this summer, almost twice the pace of carriers in its Oneworld alliance, which includes British Airways and other members of International Consolidated Airlines Group SA. American raised the number of flights by less than 1% to Europe in the same period last year, while Oneworld expanded by 3.4%.

Delta and United are also taking on more European flying this summer than their partners in the SkyTeam and Star alliances, respectively. Growth across the Atlantic outweighs a drop in flights to Asia caused by cuts in flights to Japan and China, as well as a slowdown to Latin America because of the cooling economies in Brazil and Argentina. Middle East-based carriers such as Emirates, previously one of the biggest drivers of growth into the U.S., have dialed back because of slowing Asian economies. The recent closure of some airspace in the Gulf because of U.S.-Iran tensions has exacerbated their slowdown.

“We’re pivoting,” said Joe Esposito, Delta’s senior vice president of network planning. “We intend to be balanced with our partners.”

Delta is the biggest U.S. airline by traffic on flights to Europe, and over the past three years it has boosted annual domestic capacity by 4% and international flights by just 1%. This year it will expand its own international flying by 3%—in line with domestic growth—and more than twice that pace across the Atlantic.

Buying airline tickets can be a maddening ordeal. Luckily, new studies are providing some clues into the inner workings of airline ticket pricing. WSJ's Scott McCartney has the details. Photo: Getty Images.

“We’ve really turbocharged the network,” said Patrick Quayle, United’s vice president of its international network, with additions focused on linking its hubs with those of Star partners such as Deutsche Lufthansa AG . It’s started flying between Denver and Frankfurt, while adding flights to secondary European cities such as Prague and Naples from its beefed-up Newark hub.

Some industry experts say new destinations like Cape Town—which United plans to start flying to in December—and Dubrovnik aren’t likely to generate enough premium traffic to make those routes profitable for U.S. carriers.

United has added 22 new routes to Europe since 2017. Here, a United plane prepares to land at London’s Heathrow Airport. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
“I wonder if they’re getting into a contest to see who can fly to the most places overseas,” said Mike Boyd, president of Boyd International, a consultant who advises airports working to attract new carriers.

Vasu Raja, American’s vice president of network and schedule planning, acknowledged that U.S. carriers had in the past started some overseas routes before there were sufficient domestic travelers to sustain them. They also underinvested in long-haul aircraft to match services offered by partners and rivals.

American lacked the lie-flat beds preferred by business passengers on planes flying between JFK and Heathrow until 2016, he said. That made flying on partner British Airways’ jets more attractive on the world’s biggest premium route by revenue. BA operates 10 daily “shuttle” flights to Heathrow, but American—after adding new Boeing 777-300ER jets with lie-flat beds—now flies four as part of the alliance’s daily shuttle service.

American is adding new services to Dublin and Munich from its Dallas-Fort Worth hub, and from Philadelphia to secondary cities such as Prague, Bologna and Dubrovnik that it wouldn’t have considered two years ago. The airline last week also ordered 50 Airbus SE A321XLR jets, a single aisle plane that can link the Midwest to central Europe.

JetBlue Airways Corp. also this week ordered more long-haul Airbus jets and plans to start flights to London in 2021.

Bolstering the number of passengers they can feed through domestic hubs has also given U.S. carriers more bargaining power within the alliances. Regulators allow alliance members to market flights and set fares together, with revenue typically split according to how much flying each carrier does.

The division of sales and profits between partners has become more sophisticated and airlines are more willing to shuffle flying according to available aircraft and the relative strength of their hubs, said Jeff Arinder, Delta’s vice president of alliances.

Source: The Wall Street Journal

China’s 2018 Venture Capital Binge Could Turn Into a Hangover

Xinhua Finance Agency — Tue, 25 Jun 2019 15:04:22 +0800

This year, for the first time, Chinese start-ups raised more cash than their Silicon Valley counterparts, notching up $56 billion in six months. But the excitement may be cooling as the year ends, thanks to tougher regulation and a slowing economy. A shakeout could easily follow.

It has been a blowout 2018. For the first half of the year, a study released this week by the data provider Preqin and Insead business school suggests that China beat the $42 billion raised in the United States by some way. That’s largely thanks to a huge funding round for Alibaba’s financial affiliate, Ant Financial, as well as some other chunky efforts. But it’s a high-water mark regardless. As is, perhaps, SoftBank’s mooted move to place a team in China to help spend its giant Vision Fund, after years of investing remotely.

The coming months look less exuberant. The likes of SoftBank and Singapore’s Temasek still have plenty of money to plow into splashy names like the news and video-sharing app ByteDance. Others are less enthusiastic, if figures for China-focused venture funds are anything to go by. In the 11 months to mid-November, around 70 such funds raised just over $15 billion, Preqin estimates; that compares to $40 billion or so raised by 330 funds in all of 2016.

All of this suggests increased nerves. The vast majority of Chinese unicorns that listed this year, including the takeaways-to-taxis app Meituan Dianping and the smartphone-maker Xiaomi, are now underwater. Just a small fraction of those $1 billion-plus companies, including video-streaming companies Huya, Bilibili and iQiyi, have risen above their initial public offering prices. Rocky starts like that of the Alibaba-backed parenting site Babytree, which debuted last month at a valuation below its last funding round, won’t help.

What most of this year’s debutantes have in common is that they bet on local consumers, one way or another. But those shoppers look more fretful. Changes to rules on education, fintech and gaming have only added to the strain. Weaker companies may fall by the wayside.

Source: The New Yourk Times

China is now ‘too big to ignore,’ says FTSE analyst

Xinhua Finance Agency — Tue, 25 Jun 2019 10:32:36 +0800

The growing internationalization of Chinese equities and bonds means China is now “too big to ignore,” according to FTSE Russell Managing Director of Global Markets Research, Philip Lawlor.

FTSE Russell kicked off the first phase of its Chinese A-share inclusion on Monday, starting with its Emerging Index. The move sees 1,000 small, medium and large cap Chinese companies added to the index.

A second phase of inclusion is due in September with a third scheduled for March 2020. The total program is expected to add $260 billion to FTSE emerging market indexes, and Lawlor told CNBC’s “Squawk Box Europe” that China is “going to dominate emerging markets in the same way the U.S. dominates developed markets.”

U.S. Senator Marco Rubio recently followed President Donald Trump’s hardline trade war position on China, by writing to MSCI to request information on why it was increasing the weighting of Chinese company shares in its benchmarks.

Lawlor told CNBC that while FTSE Russell “might get a letter” from Rubio, the index provider “can look people in the eye and say this is not being driven by any external political pressure,” on account of its “objective, very systematic and transparent” approach to assessing the quality of markets.

FTSE Russell also has China on a watch list for possible inclusion into its World Government Bond Index (WBGI). While this is no guarantee of future promotion to the index, Lawlor said such an event would be “very big” for global investors “in terms of the sheer scale and exposure” the bonds would have, in combination with the A-share inclusion.

“China is going from being something people could be watching, but not feeling they have got to get involved, to a market you’ve got to get involved in because if you don’t, it could be very costly,” he added.

The Shanghai composite index is up more than 20% for the year to date despite ongoing uncertainty over the trade war between China and the U.S.

Source: CNBC
Translated by Jennifer

Google Brushes Off a Shareholder Revolt Over Its Plans in China

Xinhua Finance Agency — Mon, 24 Jun 2019 14:34:17 +0800

The tech giant’s multiclass voting structure makes it nearly impossible to challenge its plans for the People’s Republic.

Last year, Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google faced a fierce backlash after details leaked about its censored search engine for China, codenamed Dragonfly. In December, The Intercept claimed that Google "effectively ended" the development of Dragonfly, but CEO Sundar Pichai refused to rule out future plans to develop another censored search engine for China.

That refusal sparked a revolt among some shareholders, who tried to persuade Google to conduct and publish a human-rights impact assessment of a censored Google search engine in China. Google recently struck down that proposal during a shareholder meeting, and the company reiterated its "desire to increase its ability to serve users in China and other countries."

That result shouldn't surprise investors. Google still sees China as a big growth market, and its investors don't have any real power over its decisions -- since it uses a controversial multiclass share structure that silences regular investors.

Why Google refuses to give up on China

When Google left China over a row with the Chinese government regarding allegations of censorship and email hacking, it controlled over 40% of the country's search market. Its abrupt exit cleared the way for Baidu (NASDAQ:BIDU), which controlled over half the market, to become China's undisputed leader in searches.

Baidu controls 65% of the market today, according to StatCounter, followed by Sogou's 18% share and Alibaba's Shenma, which controls 8%. That market looks saturated, but there's still a strong demand for Google to return to China.

Last year, a poll on Weibo found that 72.8% of respondents would use Google if it returned to China, compared with 21.7% who preferred Baidu and 5.5% who were willing to use both. If Google returns to China and claims a meaningful slice of the market again, the growth of its core advertising business -- which faces market saturation and tough competition in many markets -- could surge.

What's Google's next move in China?

Google probably still plans to launch a censored search engine in China. But for now, it's taking other steps back into the market through alliances with Tencent (NASDAQOTH:TCEHY) and its e-commerce partner JD.com (NASDAQ:JD).

Google partnered with Tencent in a patent cross-licensing deal; launched social games for Tencent's WeChat, the top mobile messaging app in China; and introduced new mobile apps, including Files Go and Google Translate, for Chinese users. Google also invested $550 million in JD.com and started selling JD's products on its Google Shopping marketplaces overseas.

Those moves, along with the whopping voting power of Google's top brass, indicate that the tech giant still has big plans for China -- and it isn't worried that shareholder revolts will get in the way.

Source: The Motley Fool

France's Carrefour takes step to exit China with Suning.com deal

Xinhua Finance Agency — Mon, 24 Jun 2019 14:20:58 +0800

Carrefour, Europe's largest retailer, took a decisive step on Sunday toward a full exit of the Chinese market by selling a majority stake of its activities in the country to Suning.com.

Carrefour, which has been in China since 1995, has spent years trying to fix a business where 2018 sales fell 5.9% to 4.1 billion euros ($4.66 billion) amid fierce competition from local players and a buoyant online market.

The French retailer said in a statement it had agreed to sell 80% of its Chinese operations to Chinese group Suning.com for 620 million euros in cash.

The agreement also includes several windows of opportunity to sell the remaining 20% stake it holds in the Chinese subsidiary, further indicating its intention to leave the market entirely.

"The stake acquisition will allow Suning.com to strengthen its brand, as well as boosting its marketing capabilities, food quality control and supply chain management in the fast-moving sector," Suning.com Co Ltd said in a Chinese-language filing to the Shenzhen stock exchange on Sunday.

The deal with Suning.com also puts an end to preliminary talks Carrefour has held with Chinese tech giant Tencent over a potential sale of a minority stake in its local business.

"The talks that have started since January 2018 for the sale of a minority stake (in Carrefour China) to Tencent are over," a spokeswoman for Carrefour said. "However, the strategic business partnership with Tencent remains in place."

Carrefour announced a partnership last year with Tencent, which led to the opening of a store in Shanghai.

Carrefour also said at the time that Tencent and Yonghui , a retailer specialising in fresh food and small stores, could take a stake in Carrefour China.

Tencent declined to comment.

The deal values Carrefour China at 1.4 billion euros ($1.59 billion), debt included, and is expected to close by the end of 2019, pending regulatory approvals, the French retailer said in a statement.

Carrefour China operates 210 hypermarkets and 24 convenience stores. It generated net sales of 3.6 billion euros and earnings before interest, tax, depreciation and amortisation (EBITDA) of 66 million euros in 2018.

Source: Reuters

Trump-Xi meeting at the G-20 could impact the Fed’s next move: economist

Xinhua Finance Agency — Fri, 21 Jun 2019 14:23:44 +0800

The meeting between U.S. President Donald Trump and China President at next week’s G-20 summit could sway the Federal Reserve at its next meeting, said the chief economist and head of research for Asia Pacific at ING, Rob Carnell.

The U.S. central bank held interest rates steady on Wednesday and indicated that no cuts were coming in 2019.

However, Fed chairman Jerome Powell opened the door to the possibility of rate cuts, after the Fed’s statement was released, when he said: “Many participants now see the case for somewhat more accommodative policy has strengthened.”

The meeting between the leaders of the world’s two largest economies will be “pretty important,” Carnell told CNBC’s “Capital Connection” on Thursday.

Powell had said Wednesday “there was not much support for cutting rates now, at this meeting.” But Carnell pointed out that things could change if the meeting in Japan doesn’t go well.

“The one thing that could really change that would be if we have the Osaka meeting, we have the sideline meeting between Presidents Trump and Xi, and they go away shaking fists at each other about trade,” said Carnell.

“Now that, at that stage, that stuff has to put a rapid rate cut into play,” Carnell said. Very little else could sway the Fed’s stance, he added.

On Wednesday, the Federal Reserve Open Committee (FOMC) changed the language in the June statement to indicate that economic activity is “rising at a moderate rate.” It was a downgrade from its May statement which said economic activity rose at a “solid” pace.

In their baseline scenario, FOMC members said they still expect “sustained expansion of economic activity” and a move toward 2% inflation, but realize that “uncertainties about this outlook have increased.”

Market participants have been concerned over global economic growth, particularly amid the fallout from the U.S.-China trade war.

Source: CNBC

Apple says incoming China tariffs would be disastrous for business

Xinhua Finance Agency — Fri, 21 Jun 2019 14:11:56 +0800

Apple says the Trump administration’s tariffs could lower the company’s economic output and put it at a disadvantage compared to its international competitors, particularly its Chinese counterparts. In Apple’s letter to US Trade Representative Robert Lighthizer, the company argues that the proposed tariffs, which would impact nearly every Apple device including the iPhone, MacBook, AirPods, and Apple Watch, would hurt Apple’s US employees and its ability to contribute to the US economy.

Up until now, Apple has more or less skirted around the Trump administration’s tariffs, despite its heavy reliance on Chinese manufacturing. Earlier rounds of China tariffs had avoided Apple’s highest volume devices, like the iPhone and Apple Watch, but did have its “adapters, chargers, cables, and cords” affected.

In May, the Trump administration announced a massive expansion of those tariffs, levying a 25 percent tariff on nearly every category of goods that had been previously unaffected, including computers, smartphones, and televisions. The Office of the US Trade Representative is currently seeking comment on those tariffs, which is why Apple wrote this letter.

Other laptop manufacturers like Dell, HP, Intel, and Microsoft, also wrote a letter in which they voiced their opposition to the increase. “The tariffs will harm US technology leaders, hindering their ability to innovate and compete in a global marketplace,” the companies write.

If the tariffs go into effect, companies like Apple don’t have many options to avoid them. One option would be to move their production out of China, which Apple is reportedly exploring. Nikkei reported yesterday that Apple is looking to move to other South East Asian countries, like India and Vietnam. Apart from shifting the production location, companies would either have to raise prices on their goods, which wouldn’t be great for consumers, or absorb the cost of the tariff, which would reduce profit.

Sheryl Sandberg: ‘We Understand’ Concerns About Big Tech Companies

Xinhua Finance Agency — Fri, 21 Jun 2019 14:04:55 +0800

Facebook Chief Operating Officer Sheryl Sandberg said that the social-media company failed to anticipate foreign interference aimed at disrupting the 2016 U.S. presidential election.

Speaking onstage during a question-and-answer session at the Cannes Lions International Festival of Creativity, Ms. Sandberg said the company was prepared to thwart hackers in advance of the 2016 election but wasn’t ready to combat the spread of misinformation from Russia and elsewhere.

“We really missed it,” Ms. Sandberg said. “Everyone missed it.”

Since then, she said, Facebook has created safeguards to curb misinformation. The company ramped up its engagement with governments around the world to prevent election interference and launched a verification program with third-party fact-checkers to reduce the spread of hoaxes.

During a 45-minute conversation, Ms. Sandberg addressed topics including data privacy, growing calls for regulation of big tech companies and Facebook’s current approach to mergers and acquisitions.

Ms. Sandberg’s appearance comes amid increasing scrutiny of big tech companies by government regulators. Facebook is being scrutinized by investigators at the U.S. Federal Trade Commission, and the Justice Department is preparing an antitrust investigation of Alphabet Inc.’s Google.

Ms. Sandberg said that Facebook is calling for some regulation of the company—echoing an op-ed by Chief Executive Mark Zuckerberg published in the Washington Post earlier this year—adding that Europe’s General Data Protection Regulation policy is a “good blueprint” for U.S. lawmaking.

“We are very much trying to usher in the next era,” Ms. Sandberg said. “We are very much working with governments to write the right rules.”

During the question-and-answer session, Ms. Sandberg also addressed calls by critics for antitrust action against Facebook. Antitrust action is meant to preserve choices for consumers, Ms. Sandberg said, and Facebook users already have a variety of alternatives for social networking.

“Absolutely you could share [a photo] on Instagram, but you could also share it on other services,” Ms. Sandberg said.

Toward the end of the conversation, Ms. Sandberg said that Facebook doesn’t have any big acquisitions in the pipeline currently but noted that Facebook has made small acquisitions in the past. Instagram only had 13 employees when it was acquired, Ms. Sandberg said, an example of a small company that grew quickly after it was acquired by Facebook.

Although Ms. Sandberg experienced challenges during her tenure as chief operating officer of Facebook, she said that she stayed at the company through the recent tumult because she felt a responsibility to fix the social network’s problems.

“Through all of it I really believe so deeply in what happens on Facebook,” she said.

Source: The Wall Street Journal

Facebook’s Crypto Plan Borrows From China

Xinhua Finance Agency — Thu, 20 Jun 2019 15:09:00 +0800

The Chinese precedents suggest the social-media giant needs to focus less on crypto engineering and more on improving the use case for Libra

The problem it will bump up against in the U.S. and Europe is that consumers already have decent mobile-payment options using established currencies, regulations and financial plumbing. A few specific cases such as cross-border transfers aside, it also isn’t clear what obstacle Facebook’s cryptocurrency would overcome.

The U.S. social-media giant spelled out Tuesday its plan for a new cryptocurrency, Libra. Sending remittances across borders is the initial focus, but Facebook hopes people will eventually use Libra to pay bills or buy goods and send money to each other on its messaging apps WhatsApp and Messenger.

Facebook wants to leverage its billions of social-media users to expand into digital payments. That approach has worked in China. Tencent’s WeChat service, which started as a WhatsApp-like instant-messaging app, now also runs WeChat Pay, one of China’s two top mobile-payment systems.

WeChat Pay took off in 2014 when the app started to enable its users to send red packets to each other—a common practice during Lunar New Year. Merchants also hand out red packets through WeChat, which has 1.1 billion monthly active users, to attract customers. Peer-to-peer transfers like that didn’t make money directly for Tencent, but they boosted adoption of the service. People can now use WeChat Pay to settle almost everything, including bills online and lunches at restaurants. Third-party mobile payments are ubiquitous in China, with transactions worth 160 trillion yuan ($23.2 trillion) last year, according to data research firm BigData-Research.

It would be difficult for Facebook to achieve the same dominance, both because of privacy concerns and the presence of alternatives. Apple Pay and other services offer mobile-phone payments using the existing financial architecture. Facebook may think cryptocurrency is the best way to assuage consumer fears about its use of personal data. Libra is minted by an independent, not-for-profit organization, while Calibra, Facebook’s subsidiary that offers a digital wallet for using Libra, promised to separate social data from financial data.

But that seems an unnecessarily convoluted way for people to buy coffee at Starbucks . Even though Libra’s price should be relatively stable compared with other cryptocurrencies such as bitcoin—it is backed by a basket of global currencies or other investments—it will still fluctuate. Nobody wants the price of a cup of coffee to change every day.

To succeed in payments, Facebook needs to focus less on crypto engineering and more on understanding how and why its social-media users use payment apps.

Source: The Wall Street Journal

Electric dreams in danger as funding dwindles for China's Tesla challengers

Xinhua Finance Agency — Thu, 20 Jun 2019 14:41:29 +0800

Last year, Wei Qing and his private equity investment team visited more than 20 Chinese electric vehicle manufacturing startups.

The end result? They decided not to invest in any.

"There are too many uncertainties from when a company tells a story in the early stage, to when it produces a sample car and raises funds, to the eventual mass production," said Wei, managing director at Shanghai-based Sailing Capital.

Wei, who declined to name the EV makers his team visited, said he thinks only a few of them will survive. Sailing instead decided to invest in an EV parts supplier, he added.

His concerns reflect what bankers describe as increasingly tough funding times for Chinese EV makers which must jostle for attention in a crowded sector and produce convincing arguments about future profitability despite government cuts to EV subsidies and plans to phase them out.

Numerous setbacks plaguing Tesla Inc in its quest for sustained profitability as well as a dramatic slide in sales and problems with some cars at Chinese startup Nio Inc have also put investors on their guard.

This year, Chinese EV makers have raised just $783.1 million as of mid-June compared with $6 billion for the same period a year earlier and $7.7 billion for all of 2018, according to data provider PitchBook.

One Hong Kong-based banker said he had been approached by at least a dozen EV makers seeking new funds but had to pass on most of them as they were not able to set themselves apart from the crowd.

Even fundraising efforts that have gotten off the ground are not moving as fast as EV makers would like.

SUBSIDY WOES
Eager to curb smog and jump-start its own auto industry, China has said it wants so-called new energy vehicles (NEVs) - which also include hybrids, plug-in hybrids and fuel cell cars - to account for a fifth of auto sales by 2025 compared with 5% now.

Those ambitions have spawned a plethora of EV startups competing not just with each other, but also global automakers and Tesla, which plans to start production in China this year.

About 330 EV firms are registered for some sort of subsidy, government data shows, although the number of more well established startups is much smaller, at around 50.

But amid criticism that some firms have become overly reliant on government funds, Beijing has reduced subsidies, raised the standards needed for vehicles to qualify and flagged they will end altogether after 2020.

That has led to sharp slowdown as vehicle prices rise. Sales of NEVs in May rose just 1.8% from a year earlier compared with 18.1% in April, and 62% growth for 2018.

Surviving in the current funding environment, requires much cost discipline, Daniel Kirchert, CEO at Nanjing-based EV maker Byton, told Reuters.

"Given the current situation, it is not enough for any startup to come up with good products and be fast to market. At least it’s equally important to manage cost. Not only fixed costs but variable cost," he said.

TESLA, NIO WEIGH
But overall, industry funding prospects are much bleaker, particularly as Tesla and Nio struggle.

Founder Elon Musk told Tesla employees last month the $2.7 billion the company recently raised would give it just 10 months to break even at the rate it burned cash in the first quarter. Shares in the industry pioneer have slid 32% in the year to date.

Nio's shares have been hit harder, down 60% this year on a cut to its delivery outlook, a halving in first-quarter sales from the previous quarter, increased competition and reduced subsidies. Its reputation has also been hurt after three vehicles caught on fire and by the inadvertent shutting down of a car on Beijing's prestigious Changan Avenue after the driver initiated a software update.

Nio declined to comment.

"Some of the listed EV industry leaders are currently underperforming in the secondary trading market and that has created pressures for the sector's short-term outlook," said Brian Gu, president of EV startup Xpeng Motors and a former senior JP Morgan banker.

"We are seeing investors become more cautious, selective and keenly focused on the frontrunners. I think this trend is likely to persist," he said.

An investor in WM Motor was more downbeat about the willingness of private equity investors to fund the industry. "Nio is probably the best among Chinese EV start-ups. Look where it stands now - how can that make us comfortable about writing cheques for other EV start-ups?" said the investor who also held Nio shares but sold them this year.

Source: Reuters