Business and Finance

African swine fever in world’s second largest economy has shaken global meat markets

MarketWatch
Date: Nov 11, 2019
By: Tanner Brown

Getty Images
Hogs on a farm near Osage, Iowa, in 2018.

BEIJING (MarketWatch) — One doesn’t appreciate the magnitude and importance of the role pork plays in the Chinese diet until you spend a bit of time here. The meat is so widely consumed, and such an integral part of so many beloved Chinese dishes, that one begins to take for granted that the default protein on menus is pork. Restaurants often feature only brief lists of chicken and beef dishes alongside their page-length selections of pork-based specialties.

So the African swine fever that has wiped out half the country’s herds has been especially excruciating — for consumers, restaurateurs, farmers and the government. Domestic Chinese pork prices have skyrocketed. And the crisis has begun to affect global markets, both positively and negatively.

China is the world’s largest consumer and importer of pork, so much so that it “has become the major influence on the price and availability of pork worldwide,” according to a study commissioned by the U.S. National Pork Board.

“But today’s countrywide [African swine fever] debacle is not just creating shockwaves. It’s an earthquake that is changing the very structure of the pork chain both inside and outside of China,” the report said.    [FULL  STORY]

Turns out “phase one” was only a done deal in Trump’s head.

Vanity Fair
Date: October 14, 2019
By: Bess Levin

Donald Trump speaks to reporters outside the White House on October 3.WIN MCNAMEE/GETTY IMAGES

Last week, amid reports of ISIS prisoners escaping in northern Syria, the president’s defense attorney being criminally investigated, and the continued fallout from Ukraine/Biden/“do us a favor”-gate, markets received a rare bit of good news when Donald Trump announced that the United States had reached a “very substantial phase-one deal” with China. “The deal I just made with China is, by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country,” the president tweeted. “Other aspects of the deal are also great – technology, financial services, 16-20 Billion in Boeing Planes etc., but WOW, the Farmers really hit pay dirt!” Given the negative impact Trump’s never-ending trade war has had on the economy, such news would of course be thrilling to investors, companies, consumers, and the farmers the dealmaker in chief cares so deeply for, but, as it turns out, the “greatest and biggest deal ever” doesn’t actually appear to have any basis in reality. Which is another way of saying it sure sounds like the president lied about negotiations with China, again.

Bloomberg reports that China wants another round of talks before even thinking about signing “phase one” of the trade deal, according to people familiar with the matter. Despite Trump’s all-caps claim on Sunday that “CHINA HAS ALREADY BEGUN AGRICULTURAL PURCHASES FROM OUR GREAT PATRIOT FARMERS & RANCHERS!,” Beijing’s state-run media said only that the two sides had “agreed to make joint efforts toward eventually reaching an agreement.” An op-ed that ran in China Daily over the weekend cautioned, “Let’s nail down ‘phase one’ before moving to the next. As based on its past practice, there is always the possibility that Washington may decide to cancel the deal if it thinks that doing so will better serve its interests.” In a statement, Geng Shuang, a foreign ministry spokesman, said that while progress had been made, there is still work to be done, and that he hoped “the U.S. will work with China and meet each other halfway.” Stocks opened lower on Monday after surging on Friday.

Of course, this is far from the first time Trump has lied through his caps when it comes to a trade deal. Back in December 2018, he boasted to reporters that he’d struck an “incredible” trade deal with Chinese President Xi Jinping that blew up in his face a mere 24 hours later. In August, a breakthrough call with China turned out to actually have never happened. So you can kind of see how there might be some distrust there.    [FULL  STORY]

USA Today
Date: Oct. 12, 2019
By: Kim Hjelmgaard

RHODES, Greece – A senior adviser to China's government told USA TODAY on Saturday that multiple delays by the United States and China to reach a final, substantive trade deal are largely because of President Donald Trump's concerns about the 2020 election.

"Look, Christmas is coming. He wants to be president again. American consumers are not going to accept higher prices on all these goods. He can claim victory any time he wants but that doesn't mean he's won or that a deal has actually been reached," said Huiyao Wang, who spoke to USA TODAY on the sidelines of a geopolitical conference here.

Wang, who is not directly involved in the negotiations, was replying to questions about an emerging trade deal between the United States and China that Trump outlined Friday. Wang was appointed to China's state council in 2015 by China's Vice Premier Liu He, the country's second-in-command who was in Washington Friday for trade negotiations.

Trump has previously said he would insist on a full-blown trade agreement – not a piecemeal deal – that would settle long-running disputes over tariffs, currency rates, technology sharing and intellectual property laws. While a partial agreement could be campaign fodder, there is no indication he has tried to time the negotiations for political benefit. 

China: Donald Trump delays next round of China tariffs amid talks on limited trade deal

Trump said the U.S. and China have "agreed in principle" on a preliminary trade agreement. Trump acknowledged that differences remain on major issues on which the two countries are divided, but the White House still decided not to push ahead with a planned increased to tariffs on $250 billion of Chinese goods next week.

The move would have raised those tariffs to 30% from 25%.    [FULL  STORY]

Barrons
Date: July 12, 2019

Rupal Bhansali, Ariel Investments Photograph by ioulex

Barron’s recently caught up by phone with the members of our January Roundtable. Here are the latest investment views and stock picks of Rupal Bhansali, chief investment officer, international and global equities, and a portfolio of manager at Ariel Investments in New York. She is also the author of Non-Consensus Investing: Being Right When Everyone Else is Wrong, to be published in October by Columbia University Press.

Barron’s: What lies ahead for investors, Rupal?

Rupal J. Bhansali: The economy and growth stocks are likely to disappoint. It is time to switch from FAANG to MANG.

What is MANG?

MANG includes two stocks I discussed in my 2019 Roundtable presentation—Michelin [ticker: ML.France] and Gilead Sciences [GILD]—plus Ahold Delhaize [ADRNY] and Nokia [NOK], the A and B.

Ah, you’ve developed your own acronym.

That’s correct. The common denominator of these four stocks is that they are generally out of favor, as opposed to the crowded, overvalued stocks of FAANG [ Facebook (FB), Amazon.com (AMZN), Apple (AAPL), Netflix(NFLX), and Google’s parent, Alphabet (GOOGL)]. I’m a contrarian, but more important, I am an intrinsic-value investor and all of the MANGs trade at 10 to 12 times earnings and offer roughly 4%-5% dividend yields.

And they don’t face regulatory threats, either.

Or competitive threats of the sort that Netflix and Apple are likely to face.

Before we delve into the MANG stocks, let’s talk about the big picture. Why do you expect growth to slow?

People underestimate how much China was responsible for world gross domestic product growth over the past decade, and China is running out of options to boost growth. The popular perception is thatthe slowdown in China is due to the tariff war with the U.S.. The actual cause is the huge pullback in credit growth, which the Chinese economy is addicted to. Starting in the middle of 2018, there’s been a 40% pullback, year over year. This comes in the wake of a more-than-fourfold increase in credit growth over the past 10 years, from roughly $9 trillion in the banking system to $41 trillion as of the first quarter. For perspective, the banking sector’s total assets in the U.S. are about $18 trillion, and in Japan, about $10 trillion.    [FULL  STORY]

CNBC
Date: Jul 12, 2019
By: Weizhen Tan@WEIZENT

KEY POINTS

  • Between 2000 and 2017, other countries’ debt owed to China soared ten-fold, from less than $500 billion to more than $5 trillion, according to the study from Germany-based think tank the Kiel Institute for the World Economy.
  • For 50 developing countries which have borrowed from China, that debt has increased on average from less than 1% of their GDP in 2015, to more than 15% in 2017, according to estimates by the study’s researchers.
  • The documentation of China’s lending has been at best “opaque,” the report said, with such transactions “missed even by the most ambitious recent attempts to measure international capital flows.”
Italian Premier Giuseppe Conte meets Chinese President Xi Jinping to sign trade agreements on Belt and Road Initiative, on March 23, 2019 in Rome, Italy.
Antonio Masiello | Getty Images News | Getty Images

Italian Premier Giuseppe Conte meets Chinese President Xi Jinping to sign trade agreements on Belt and Road Initiative, on March 23, 2019 in Rome, Italy.

Antonio Masiello | Getty Images News | Getty Images

China’s lending to other countries has surged in the past decade, causing debt levels to jump dramatically, and as much as half of such debt to developing economies is “hidden,” a new study has found.

Such “hidden” debt means that the borrowing isn’t reported to or recorded by official institutions such as the International Monetary Fund (IMF), the World Bank, or the Paris Club — a group of creditor nations.

Between 2000 and 2017, other countries’ debt owed to China soared ten-fold, from less than $500 billion to more than $5 trillion — or from 1% of global economic output to more than 5%, according to the study from Germany-based think tank the Kiel Institute for the World Economy.

“This has transformed China into the largest official creditor, easily surpassing the IMF or the World Bank,” the report’s researchers said.

The study, which looked at nearly 2,000 Chinese loans to 152 countries from 1949 to 2017, was undertaken by well-known debt expert Carmen Reinhart from Harvard University, as well as Kiel Institute’s Christoph Trebesch and Sebastian Horn.    [FULL  STORY]

CNBC
Date: June 12, 2019
By: Yun Li@YUNLI626

KEY POINTS

  • “It’s a huge deal. I would say if they get implemented and we go to the $500 billion, I think certainly it’s possible it could tip us into recession,” Tudor Jones said in an interview Wednesday on Bloomberg TV.
  • President Donald Trump had threatened to put duties on another $300 billion in Chinese goods if a trade agreement is not reached soon.

Paul Tudor Jones
Photo By: Leanne Miller | CNBC

Hedge fund billionaire Paul Tudor Jones believes the market is underestimating the economic impact of tariffs.

“We’ll really have to see the impact they are going to have and if the next round of tariffs gets implemented. It’s a huge deal. I would say if they get implemented and we go to the $500 billion, I think certainly it’s possible it could tip us into recession,” Tudor Jones said in an interview Wednesday on Bloomberg TV.

“We haven’t seen anything like this in 75 years right? … There’s no playbook for this. You got this interconnected global economy that now all of a sudden for the first time in 75 years we are seeing free trade not being expanded but being diminished … I think it would have a bigger impact economically than what the market thinks,” he added.    [FULL  STORY]

  • CNBC
    May 29 2019
    By: Yun Li@YUNLI626

    KEY POINTS

  • “We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!” the People’s Daily said in a commentary titled “United States, don’t underestimate China’s ability to strike back.”
  • The phrase “Don’t say we didn’t warn you” was only used two other times in history by the People’s Daily — in 1962 before China’s border war with India and ahead of the 1979 China-Vietnam War.
  • China threatened it would cut off rare earth minerals as a countermeasure in the escalated trade battle. The materials are crucial to the production of iPhones, electric vehicles and advanced precision weapons
Chinese President Xi Jinping stands by national flags.
Johannes Eisele | AFP | Getty Images

The biggest Chinese newspaper explicitly warned the U.S. on Wednesday that China would cut off rare earth minerals as a countermeasure in the escalated trade battle, using an expression the publication has only used twice in history, both of which involved full-on wars.

“We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!” the People’s Daily said in a commentary titled “United States, don’t underestimate China’s ability to strike back.” The publication is the official newspaper of the Communist Party of China.

The phrase “Don’t say we didn’t warn you” was only used two other times in history by the People’s Daily — in 1962 before China’s border war with India and ahead of the 1979 China-Vietnam War.

“Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery,” the paper said.
[FULL  STORY]

Some say Beijing lends money for infrastructure and development to pressure poor countries with debt. Not so.

The New York Times
Date: April 26, 2019
By Deborah Brautigam

WASHINGTON — Representatives from more than 150 countriesbegan to gather in Beijing

Image CreditCreditGolden Cosmos

on Friday for a grand forum to celebrate China’s grand Belt and Road Initiative. Since its formal unveiling in 2013, B.R.I. — a vast, worldwide web of infrastructure-development projects mostly funded or sponsored by the Chinese government — has generated both tremendous enthusiasm and tremendous anxiety.

Some call the colossal program a new Marshall Plan, arguing that it could radically reduce the costs of international trade as well as underpin the economic transformation of poor countries.

Others accuse China of using B.R.I. as a way to flex its economic muscle for political gain on the sly. The whole effort is a cover for “debt-trap diplomacy,” goes one common criticism — or, to borrow from John R. Bolton, the United States national security adviser, China is making “strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands.” (Some American Democrats seem to agree with him, at least about this.)

Yes, debt is on the rise in the developing world, and Chinese overseas lending is, for the first time, a part of the story. But a number of us academics who have studied China’s practices in detail have found scant evidence of a pattern indicating that Chinese banks, acting at the government’s behest, are deliberately over-lending or funding loss-making projects to secure strategic advantages for China.  [FULL  STORY]

CNBC
Date:  Apr 13 2019 
By: Fred Kempe

KEY POINTS

  • Chinese President Xi Jinping has strengthened his party’s hold domestically while advancing the country’s influence overseas.
  • Experts believe the country’s current goals suggest China wants to fill America’s shoes as the dominant global agenda setter and rulemaker.
  • If China hits its 2021 targets, it would become 40% larger than the U.S. economy. If it meets its 2049 targets, it will become three times larger.
Chinese President Xi Jinping meets with French President Emmanuel Macron, German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker on the sidelines of a global governance forum co-hosted by China and France in Paris, France, March 26, 2019.Xinhua News Agency | Getty Images

European Union leaders sat down this week in Brussels for a summit with a China it recently branded a “systemic rival, ” and the United States is nearing the end game trade talks with a China that national security documents refer to as a “strategic adversary.”

So, it’s surprising that trans-Atlantic leaders are neither working at common cause nor asking the most crucial geopolitical questions of our age.

What sort of world does China want to create?

With what means would it achieve its aims?

And, what should the United States and Europe do to influence the outcome?

By now, there is little remaining doubt that China’s continued rise marks the most significant geopolitical event shaping the 21st century. Yet U.S. and European officials — mired in issues ranging from Trump administration immigration gyrations to Brexit — have failed to give this mother of all inflection points enough attention.

Some are in denial about the fundamental change China’s rise may bring to the global order of institutions and principles established by the United States and its allies after World War II. Others concede that the structural stress between a rising China and an incumbent United States is the defining danger of our times, yet they offer neither an engagement nor containment strategy worthy of this epochal challenge.    [FULL  STORY]

Tesla , Apple and GE among those who say secrets were stolen

Nikkei Asian Review
Date: April 07, 2019
By: Takashi Kawakami, Nikkei staff writer

GUANGZHOU — A mounting string of allegations from the U.S. paint a damning portrait of how China’s advanced technology sector has rapidly grown due to corporate espionage.

Tesla, the latest to lodge a complaint, said in a lawsuit filed in late March that a former autonomous-driving engineer, Cao Guangzhi, illicitly obtained a trove of source code that he handed over to his new employer, the Chinese electric-vehicle startup Xpeng Motors.

This echoes criminal charges brought by the FBI against ex-Apple employee Zhang Xiaolang last July. Zhang is suspected of leaving the U.S. company with proprietary data on self-driving technology, including a 25-page schematic manual, which he gave to his new bosses at Xpeng. This January, the FBI charged yet another ex-Apple employee, Chen Jizhong, with transferring driverless trade secrets to an unidentified Chinese rival.

These are just a fraction of the corporate espionage cases involving Chinese persons and entities since last summer. In October, a senior Chinese intelligence official was arrested for trying to steal tech secrets from General Electric. The U.S. Justice Department indicted Fujian Jinhua Integrated Circuit in November, and Huawei Technologies in January.    [FULL  STORY]