Business and Finance

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]

  • CNBC
    Date: March 4 2019
    By: Arjun Kharpal

    KEY POINTS

  • Huawei would be forced to hand over 5G data to the Chinese government if it was asked for it, because of national security laws, experts told CNBC.
  • China’s National Intelligence Law from 2017 requires organizations and citizens to “support, assist and cooperate with the state intelligence work.”
  • A government spokesperson said that intelligence work should be done “according to the law” and urged people to “not take anything out of context.”
Ren Zhengfei, founder and chief executive officer of Huawei Technologies, left, speaks during an interview at the company’s headquarters in Shenzhen, China, in January.Qilai Shen | Bloomberg | Getty Images

Huawei would have no choice but to hand over network data to the Chinese government if Beijing asked for it, because of espionage and national security laws in the country, experts told CNBC.

Major governments including the United States, Japan and Australia have blocked the Chinese telecommunications equipment maker from providing hardware for next-generation mobile networks known as 5G. The U.S. has said Huawei equipment could provide backdoors for the Chinese government into American networks — a claim the company has repeatedly denied.

Australia did not cite specific countries or companies, but last year it gave guidance to domestic carriers saying that “the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorized access or interference.”
[FULL  STORY]

Cash-strapped firms are facing a wall of debt due this year. That’s a  problem for industrial companies getting less government help.

Bloomberg
Date: February 24, 2019
By: Anjani Trivedi

I got by with a little help from my friends.

Photographer: Kevin Frayer/Getty Images AsiaPac
Chinese industrial borrowers are strapped for cash, as billions of dollars of debt come due this year. The ones that benefited from Beijing’s largess should be most worried.

Issuers are on the hook for more than 6 trillion yuan 1($890 billion) in 2019, up 15 percent from a year earlier. Companies in sectors including mining and materials, capital goods and real estate make up 4 trillion of the pile – and of that, industrial companies comprise about 60 percent.

 

 

 

 

 

 

 

 

 

For years, this sector largely depended on subsidies to do business, which hampered organic growth. These handouts often show up as lumpy cash, interest-free loans or booked as other operating income. But now the spigots are closing, and these companies are the first to suffer.

With China’s economy sputtering, industrial profits have been dropping in recent months. Constrained financing conditions have squeezed growth and the ability to tap working capital. Cash conversion cycles – a measure of how fast companies are utilizing their inventories and sales to generate cash – are getting longer once again, after peaking in 2016. The largest companies by assets in this sector are running deeper in the red on a free cash flow basis.    [FULL  STORY]

Market update from Crescat Capital’s latest email to investors

ValueWalk
February 23, 2019
By: Jacob Wolinsky

Dear Investors:

There is indeed a business cycle and timing it ahead of key inflection points is key to successful long-term investing. Based on our analysis, we are heading into a bear market in 2019 that will coincide with the start of a global recession that will not be officially acknowledged until well after it began. For the following reasons, we believe September of 2018 marked the essential peak of the US stock market for the current economic cycle:

  1. In 2018, the US stock market historic high valuations across 8 fundamental metrics1;
  2. The technical damage to stocks at the end of last year has altered investor psychology and likely begun a cyclical shift out of stocks from historically high US household allocation to equities that was exceeded only in the tech bubble;
  3. Evidence is building that both China and Europe may already be in recession: industrial production decline in both countries, 2018 Chinese equity bear market, and Chinese manufacturing satellite data show a contraction;
  4. Interest rates across global credit markets are sending signals with uncanny resemblance to past cyclical asset-bubble peaks;
  5. Cross country yield spreads and yield curve inversions are reminiscent of tech and housing bubble peaks;

[FULL  STORY]

“It’s frightening to think about,” a prominent scholar said.

Vox
Date: Dec 12, 2018
By: Alex Ward@AlexWardVoxalex.ward@vox.com  

TOKYO — Most Western predictions about the future of China’s rise are ominous, ranging from

Chinese President Xi Jinping during a meeting in Madrid, Spain, on November 28, 2018.
 Pablo Blazquez Dominguez/Getty Images

theories about how the country will perfect an authoritarian society to how it will serve as a model for a less free future.

But while reporting in Japan on Wednesday, I heard the most troubling prediction about China yet — and it was actually about the country’s decline.

“If the central government runs out of money, then they’re in trouble,” Akio Takahara, one of Japan’s leading scholars on China, told US-based reporters. “If you talk to the Chinese people, they’ll tell you that this [system of government] cannot last forever. So someday there will be a big change, but they don’t know when, they don’t know how, or what the process will be,” Takahara said.

And, he added, it won’t necessarily be peaceful.

There are two worrying things packed into that analysis, so let’s take each in turn.

First, on the surface it seems impossible that China — the world’s second-strongest economy — would run out of cash any time soon. But there are signs that China is undergoing a significant slowdown, partially because of President Donald Trump’s trade war.

Some economists have long held that China vastly inflates its economic growth rate, which officially stands at 6.5 percent right now. But the predictions are getting more dire, with one Chinese economist predicting that China’s real growth rate is zero. If true, that could cause significant problems for Chinese President Xi Jinping and put strain on the Communist Party’s hold on power.

Second, the US and other countries for decades hoped that engaging China would prompt it to open up its economy and eventually become a more democratic society. The hope, though, was that shrewd management of China’s transition to democracy would make it relatively painless — and even bloodless.    [FULL  STORY]

European companies should not be compelled to transfer technology in order to gain access to the Chinese market, said Nicolas Chapuis, ambassador of the EU delegation to China.

The bloc welcomes any foreign investments conducive to creating jobs and growth, said Chapuis.

CNBC News
Date: December 12, 2018
By: Huileng Tan | @huileng_tan

Nelson Ching | Bloomberg | Getty Images
The Chinese and European Union flags

The European Union has a vested interest in promoting technologyexchanges with China, but any transfers should be regulated, said the trade bloc’s ambassador to China on Wednesday.

“For the last 40 years, EU companies have provided most of the foreign tech that is in China, about 50 percent of what is today in China,” said Nicolas Chapuis, ambassador of the EU delegation to China.

However, the diplomat expressed concerns about China trading market access for technology.

Beijing sometimes forces foreign companies to hand over their technological know-how in exchange for access to its massive domestic market. The administration of U.S. President Donald Trump has demanded that China cease forced tech transfers, which have become a flashpoint in the U.S.-China trade war.

“This has to stop or to be regulated,” Chapuis told CNBC at the European Chamber Annual Conference 2018 in Beijing.    [FULL  STORY]

The news spooked investors with U.S. stocks plunging on fears of a flare-up in Chinese-U.S. tensions.

NBC News
Date: Dec. 6, 2018
By: Dawn Liu, Linda Givetash and Alexander Smith

BEIJING — China demanded the release of a senior executive at tech giant Huawei Technologies

Meng Wanzhou, executive board director of the Chinese technology giant Huawei, in Moscow, on Oct. 2, 2014.Alexander Bibik / Reuters

after she was detained in Canada on extradition charges to the U.S.

The arrest of Meng Wanzhou, chief financial officer and daughter of the company’s founder Ren Zhengfei, spooked investors with U.S. stocks tumbling on fears of a flare-up in Chinese-U.S. tensions.

She was arrested in Vancouver, British Columbia, on Dec. 1.

China’s Ministry of Foreign Affairs said officials have been contacted both in the U.S. and Canada to demand Meng’s release. Geng Shuang, a spokesman for the ministry, said her detention needed to be explained, and both countries had to “effectively protect the legitimate rights and interests of the person concerned.”

The Wall Street Journal reported earlier this year that U.S. authorities are investigating whether Huawei violated sanctions on Iran.    [FULL  STORY]

CNN
Date: November 30, 2018
By Sherisse Pham, CNN Business

Hong Kong (CNN Business)Chinese internet companies have started keeping detailed records of their users’ personal information and online activity.

The new rules from China’s internet regulator went into effect Friday, just the latest sign of the increasingly restrictive environment for tech companies like Tencent (TCEHY) and Alibaba (BABA).

The new requirements apply to any company that provides online services which can influence public opinion or “mobilize the public to engage in specific activities,” according to a notice posted on the Cyber Administration of China’s website earlier this month.

Why China’s tech giants are cozying up to the Communist Party
Companies will now have to start logging the activities of users posting in blogs, microblogs, chat rooms, short video platforms and webcasts.

Citing the need to safeguard national security and social order, the Chinese regulator said companies must be able to verify users’ identities and keep records of key information such as call logs, chat logs, times of activity and network addresses.

Officals will carry out inspections of companies’ operations to ensure compliance. But the Cyber Administration didn’t make clear under what circumstances the companies might be required to hand over logs to authorities.    [FULL  STORY]

The Sidney Morning Herald
Date: 6 June 2018
By Michael LaForgia and Gabriel J.X. Dance

New York: Facebook has data-sharing partnerships with at least four Chinese electronics companies, including a manufacturing giant that has a close relationship with China’s government, the social media company said on Tuesday.

The agreements, which date to at least 2010, gave private access to some user data to Huawei, a telecommunications equipment company that has been flagged by US intelligence officials as a national security threat, as well as to Lenovo, Oppo and TCL.

Facebook rejects claims by the New York Times that it had allowed Apple and other major

Huawei is a global technology giant but was sensationally blocked from bidding to build the National Broadband Network.
Photo: Bloomberg

device makers “deep” access to users’ personal data.

The four partnerships remain in effect, but Facebook officials said in an interview that the company would wind down the Huawei deal by the end of the week.

Hauwei has been the subject of concern by Australia’s intelligence agencies in recent years.

Facebook gave access to the Chinese device-makers along with other manufacturers — including Amazon, Apple, BlackBerry and Samsung — whose agreements were disclosed by The New York Times on Sunday.

The deals gave Facebook an early foothold in the mobile market starting in 2007, before stand-alone Facebook apps worked well on phones, and allowed device-makers to offer some Facebook features, such as address books, “like” buttons and status updates.

Facebook officials said the agreements with the Chinese companies allowed them access similar to what was offered to BlackBerry, which could retrieve detailed information on both device users and all of their friends — including work and education history, relationship status and likes.

Facebook officials said the data shared with Huawei stayed on its phone, not the company’s servers.    [FULL  STORY]