Business and Finance

Date: May 21, 2020

Britain's Prime Minister Boris Johnson applauds outside 10 Downing Street

Britain's Prime Minister Boris Johnson applauds outside 10 Downing Street during the Clap for our Carers campaign in support of the NHS, following the outbreak of the coronavirus disease (COVID-19), in London, Britain, May 21, 2020. REUTERS/Toby Melville
during the Clap for our Carers campaign in support of the NHS, following the outbreak of the coronavirus disease (COVID-19), in London, Britain, May 21, 2020. REUTERS/Toby Melville

(Reuters) – British Prime Minister Boris Johnson has instructed civil servants to make plans to end UK's reliance on China for vital medical supplies and other strategic imports in light of the coronavirus outbreak, The Times newspaper reported on Friday

The plans, which have been code named ‘Project Defend’, include identifying Britain’s main economic vulnerabilities to potentially hostile foreign governments as part of a broader new approach to national security, the newspaper reported, adding that the efforts are being led by Foreign Secretary Dominic Raab.

Two working groups have been set up as part of the project, according to the report, with one source telling The Times that the aim was to diversify supply lines to no longer depend on individual countries for non-food essentials.

Date: 24 Apr 2020
By: John Carney

JIM WATSON/AFP via Getty Images

Donald Trump does not owe the Bank of China tens of millions of dollars.

On Friday, Politico reported incorrectly that President Trump was tens of millions of dollars in debt to the state-controlled Chinese Bank. The story also incorrectly referred to “the historic precedent of a developer-turned president paying back millions to a bank controlled by a foreign government.”

The story went on to claim that Trump’s alleged “financial dealings” with the Chinese bank “complicates one of Trump’s emerging campaign attacks against Biden: that the former vice president would be a gift to the Communist country and America’s chief economic rival.”

But Donald Trump was not the borrower and Bank of China is not the creditor to the investment vehicle that owns the New York City office building that is the focus of the story.

Ali Pardo, deputy communications director for press for the Trump Campaign, said:

The far left and liberal media will stop at nothing to undermine the President. They’ll even go as far as to sensationalize stories that don’t make any logical sense. President Trump was one of the nation’s most successful businessmen before he entered public service, while people like Hunter Biden have been cashing in on his family name and unfathomably been profiting from his father’s political career.

Trump does have an investment in an office tower located at 1290 Avenue of the Americas, near Rockefeller Center in New York City. But the loan financing that building is no longer owed to the Bank of China. It was sold years ago into a securitization that is serviced by Wells Fargo and owned by a wide range of investors.

The Trump organization owns a 30 percent stake in the limited partnership that owns 1290 Avenue of Americas, making President Trump a passive minority investor. The rest of the partnership is owned by Vornado Realty Trust, one of the biggest commercial real estate investors in the U.S.

The building’s tenants include AXA Equitable Financial, Neuberger Berman, and Hachette Books.

Back in 2012, the building was refinanced with a $950 million loan from a consortium of banks that included the Bank of China, which had already become one of the largest lenders to commercial real estate in the U.S. The other lenders at the time were the commercial real estate financing units of Deutsche Bank, UBS, and Goldman Sachs.

But those loans were then packaged into bonds, commercial mortgage-backed securities, and sold to investors. Wells Fargo serves as the master servicer, meaning any payments on the loans would go to Wells rather than the Bank of China. The bonds are owned by a wide range of investors, including mutual funds managed by Vanguard, J.P. Morgan Chase and T.D. Ameritrade.

The securitization happened within days of the closing of the original loan and ended the Bank of China’s role in the loan. As a result, the Bank of China is no longer a direct lender to the building’s partnership—and Trump certainly does not owe tens of millions of dollars to the Chinese lender.    [FULL  STORY]

Date: Apr 18, 2020
By: Kenneth RapozaSenior, Contributor


Watch out for Chinese companies swooping in with buckets of cash to buy strategic stakes, or majority control in U.S. and European companies as asset prices fall due to the pandemic.

NATO sounded the alarm this week, though without naming names.

“The geopolitical effects of the pandemic could be significant,” said NATO Secretary-General Jens Stoltenberg in web conference of defense ministers on Wednesday. “Some allies (are) more vulnerable for situations where critical infrastructure can be sold out,” he said. Of course he meant China. China has been busy buying Greek ports.

It already pretty much runs Italian textiles. It’s a wonder Italy even makes an espresso machine anymore.    [FULL  STORY]

Date: April 20, 2020
By: Zak Doffman, Contributor


Huawei now looks set to be caught in the backlash as global political pressure mounts on China over its handling of the global coronavirus pandemic. Huawei had already warned that 2020 would be its toughest year yet, with “survival our first priority,” and that situation has now worsened—significantly.

Huawei is now almost entirely reliant on the Chinese market for growth—last year, sales in its home market soared 36% to account for around 60% of total revenues. Huawei is also reliant on China to wield its diplomatic broadsword against countries wavering over their 5G decisions, pour encourager les autres.

Talking of swords, this symbiotic relationship between Beijing and its number-one favorite tech giant has become somewhat double-edged. The U.S. blacklist, with its consequent impact on international sales, has removed Huawei’s international hedge. It cannot risk annoying Beijing, it needs to toe the political line.

We saw this last year with Xinjiang. Huawei has always maintained that sales of its technology into the surveillance state targeting China’s Uighur Muslim minority were through third-parties—it had no direct engagement. This was refuted by a new report that claimed Huawei was much more closely and directly involved.    [FULL  STORY]

Date: Mar 31 20209
By: Arjun Kharpal

Reuters reported that senior officials in the Trump administration have drawn up new rules that could hurt the supply of chips to China’s Huawei.

“The Chinese government would not sit there and watch Huawei being slaughtered. I believe there would be counter-measures,” Eric Xu, rotating chairman at Huawei, told CNBC.

Xu said the company would have alternative companies to make chips for it however, if the U.S. rule change came into force.

China will not sit and watch Huawei get ‘slaughtered’, says executive

Beijing will not sit and watch Huawei get “slaughtered” and could retaliate if there are further sanctions on the Chinese technology giant, a top Huawei executive told CNBC on Tuesday.

The comments came in response to a Reuters report that suggested senior officials in the Trump administration had drawn up new rules that would require chipmakers to obtain a license if they use American equipment to make components sold to Huawei.    [FULL  STORY]

National Review
Date: March 31, 2020
By: Christopher O'Dea

Police officers in front of a cargo container ship at a port in Qingdao, China, in 2018. (Stringer/Reuters)

China’s ambition is nothing less than world domination through control of maritime trade.

By quietly acquiring a global network of commercial ports from countries and investors unable or unwilling to maintain their critical economic infrastructure, China has reverse-engineered the logic of conquest: Chinese state-owned companies now control a base network of the sort that previous global hegemons obtained through military victory. Expect China to use the coronavirus crisis to accelerate its efforts to use that economic leverage to pull host countries deeper into Beijing’s political orbit.

It’s too early to say that the coronavirus crisis spells the end of globalization, but as the pandemic unfolds, the outlines of a new international trade and political order are emerging in the Mediterranean region. Call it “globalization with Chinese characteristics.”

As the death toll in Italy soared, China flew in a team of medical experts and nearly 30 tons of medical equipment. On a phone call a week later with Italian prime minister Giuseppe Conte, Chinese president Xi Jinping pledged additional supplies and medical personnel. China also shipped medical equipment to Spain, Austria, and the Czech Republic, and millions of protective masks to France, the Netherlands, Greece, and other nations. But the aid was too late. By late March the death toll in Italy had surpassed the total that China was officially reporting, and even the news that the number of cases had dropped for the first time was accompanied by photos of Italian-army trucks carrying the dead on their final journey.

That was not the visual backdrop Italian leaders were seeking less than a year ago when they signed a memorandum of understanding with China, committing Italy to Xi Jinping’s Belt and Road Initiative. Italy also signed nearly 20 related agreements to build new port and road infrastructure, initiate scientific cooperation in space science and satellite technology, boost exports of frozen pork and citrus fruit to China, and tap Chinese investment funds to pay for many of the projects. Despite the wide-ranging commitments agreed to in Rome in March, China apparently did not believe it had any responsibility to tell its new partner that a dangerous virus had been on the loose in Wuhan in December, and that many of the Chinese arriving in Northern Italy during the winter might be carriers. The decimation of Italy’s elderly highlights how China handles partner nations, and it’s a dark future.

Receiving less attention are papers and articles in the last few days in which leading Chinese academics and industrial leaders present the virus crisis as an opportunity to make epidemic control a major Chinese export. From surveillance drones, disinfection robots, and AI-powered epidemic-forecasting systems to no-contact technology for online education and new factories to make fabric for protective masks, the virus is a boon for Chinese business. In the People’s Daily, the former head of China’s state cement company, Song Zhiping, wrote that “these areas are bound to become the focus of attention of the entire society and have great potential for development”— as if deaths in Turin were market research for China’s new industry.    [FULL  STORY]

National efforts to strengthen food security have an impact far beyond any single country’s borders.

The Atantic
Date: FEBRUARY 15, 2020

A worker in Brazil cleans the ground to prevent the fire from reaching their farm.CRISTINA DE MIDDEL / MAGNUM PHOTOS

This article is a collaboration between The Atlantic and the Pulitzer Center.

The Amazon tends to evoke an Edenic vision—of a mysterious and impenetrable land, pregnant with beasts from jaguars to anacondas, rich with undiscovered flora. But parts of it are incongruous with this reputation, where big rig trucks rumble past dilapidated, grime-covered gas stations, and where land once thick with brambly trees and the promise of jungle adventure has become cattle pasture or soy field.


We are traveling on a road unimaginatively named BR-163. Pull up Google Maps and zoom in to the state of Mato Grosso, and find the thin strand of highway wending up across the state.  Branching out are perpendicular brown lines, all of them unmistakably cleared land, cutting into and contrasting with the dark green forest. This highway is where agriculture and the Amazon jungle meet.

The rain forest here in Brazil has progressively fallen victim to global demand for soy and beef. And the country’s biggest customer for both is China. The story of the Amazon has become entangled not simply with the story of Brazil’s poor protection of its forest frontier but also with that of the rise of this new superpower and its food-security strategy. Soy is China’s weak link, the main food commodity it needs from the outside world. The country imports the crop, which it mostly uses to feed its pigs, and Chinese state-owned companies also invest directly in Brazil’s supply chain so the South American country can increase its own exports. This growing hunger for soy has incentivized Brazilian prospectors to keep pace by razing pristine jungle, thereby accelerating deforestation.

This dynamic highlights some of the tensions inherent in the challenge of combatting climate change. China’s middle class has a growing hunger for meat, leading to a rise in demand for soy. For a country that has pledged to honor the Paris Agreement, China’s food-security measures run counter to its environmental efforts, yet while the climate deal aims to reduce national carbon emissions, it doesn’t account for the activities and responsibilities of signatories in other countries. And Brazil’s president, Jair Bolsonaro, argues that the country must prioritize economic growth, even if it comes at the cost of destroying the planet’s largest tropical rain forest.    [FULL  STORY]

Date: Fsebruary 3, 2020
By: Clyde Russell

, Australia (Reuters) – It’s no surprise that commodity prices in China were hammered on Monday when the virus-hit country reopened its exchanges after a week-long Lunar New Year holiday. What will be more important is what happens on Tuesday.

FILE PHOTO: A truck transports a container next to a cargo vessel at a port in Qingdao, Shandong province, China June 24, 2019. REUTERS/Stringer/File Photo

It was a sea of red ink as domestic investors got to trade for the first time since Jan. 23, with Dalian Commodity Exchange (DCE) iron ore dropping the maximum allowed 8% to 606.5 yuan ($86.64) a tonne at the opening bell.

Iron ore wasn’t the only commodity smashed. Shanghai steel rebar futures reached their down limit of 8% as well, dropping to 3,233 yuan a tonne before recovering slightly in early afternoon trading to around 3,260 yuan.

Shanghai copper slumped to its maximum daily limit, before recovering to trade at 44,880 a tonne two hours after the opening bell, down 6.8% from the close on Jan. 23.

The sharp losses were always likely when trade in China resumed, given the declines elsewhere in the world during the time that China’s markets were shuttered. The main question is what is likely to happen next.

Shanghai copper may offer some clues. While it did drop by the maximum allowed initially on Monday, it did recover a touch as the day progressed.

By early afternoon trade on Monday, the Shanghai contract has taken a bigger hit than the losses incurred by benchmark London copper, which has dropped 6% since the close on Jan. 23 to trade around $5,623 a tonne on Monday.    [FULL  STORY]

Date: February 2, 2020 
By: Cheng Leng, Brenda Goh

FILE PHOTO: A woman walks out of the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing November 20, 2013. REUTERS/Jason Lee/File Photo

SHANGHAI (Reuters) – China’s central bank said it will inject 1.2 trillion yuan ($174 billion) worth of liquidity into the markets via reverse repo operations on Monday as its stock markets prepare to reopen amid an outbreak of a new coronavirus.

FILE PHOTO: A woman walks out of the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing November 20, 2013. REUTERS/Jason Lee/File Photo

Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic, which has so far claimed 305 lives, all but one in China.

The People’s Bank of China made the announcement in a statement on Sunday, adding the total liquidity in the banking system will be 900 billion yuan higher than the same period in 2019 after the injection.

According to Reuters calculations based on official central bank data, 1.05 trillion yuan worth of reverse repos are set to mature on Monday, meaning that 150 billion yuan in net cash will be injected.

Investors are bracing for a volatile session in Chinese markets when onshore trades resume on Monday after a break for the Lunar New Year which was extended by the government.

Date: Dec 20, 2019
By: William Pesek, Contributor 

Chinese President Xi Jinping, center, sings with performers during a cultural performance in Macau … [+]

China’s Xi Jinping probably tops any list of people who can’t wait to see the back of 2019.

 These last 12 months produced the slowest mainland growth since the early 1990s, the biggest pro-democracy protests in Hong Kong’s history and mounting criticism of Beijing’s human rights record. By taking such an authoritarian stance, Taiwan has slipped further away from Beijing’s grip, while some political wags questioned whether Communist Party members were losing faith in President Xi’s governing style.

 But Xi has an even bigger challenge on his hands, and not just Donald Trump’s trade war antics. Make that 13 trillion challenges.

 This figure refers to the size, in U.S. dollar terms, of China’s onshore bond market. And generally, its growth and development have long been touted as a vital rite of passage for the second-biggest economic power. The trouble with debt markets, though, is they tend to expose cracks in financial systems.

Herein lies Xi’s biggest problem. Keeping growth north of 6% is reasonably easy for a command economy. Even amid the trade war, Xi’s party can order up giant infrastructure projects, slash taxes and cajole local governments to ramp up fiscal stimulus. It has its own ATM—the People’s Bank of China.

Trouble is, the more you borrow, the more investors can push back and the more even the most authoritarian of governments can lose control as punters vote with their feet. That risk is increasing along with a recent jump in private-sector debt defaults to a record high.

According to Fitch, 4.9% of private companies missed bond payments from January to November, up from 4.2% for all of 2018. When you combine state and private companies, China Inc.’s onshore defaults risks are growing apace—from none a few years back to at least $18 billion so far this year.