Business and Finance

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

The Atantic
Date: FEBRUARY 15, 2020
By: MELISSA CHAN & HERIBERTO ARAÚJO

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]

Reuters
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]

Reuters
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.
[FULL  STORY]

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

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

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.
[FULL  STORY]

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]