Caixin
Sep 28, 2019 05:04 AM
CX DAILY

CX Daily: Former Top U.S. Trade Negotiator Calls 'Decoupling' A 'Tragedy'

Robert Zoellick, former president of the World Bank, speaks at a Caixin roundtable in Singapore Sept. 20. Photo: Caixin
Robert Zoellick, former president of the World Bank, speaks at a Caixin roundtable in Singapore Sept. 20. Photo: Caixin

U.S.-China /

Former top U.S. trade negotiator warns of the dangers of 'decoupling'

Speaking at a Caixin roundtable in Singapore Friday, Robert Zoellick, a former U.S. trade representative and former president of the World Bank, said blocking China’s access to advanced American technology has already been occurring in sectors including telecommunications and information services, while “strong common interests” remain in some areas such as life sciences and robotics.

After decades of globalization and supply chain integration, “if you have a bifurcation in the technologies of the future, it would frankly be a tragedy — not only for the two countries but for the world economy,” the former top U.S. trade negotiator said.

The Trump administration has launched an aggressive campaign to persuade foreign allies and partners to reject China’s 5G technology and Chinese telecom giant Huawei, and has delayed the visas of Chinese students studying in the U.S.

FINANCE & ECONOMICS

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Workers install power lines on a railway in East China’s Jiangsu province on March 15. Photo: VCG

Economy /

In depth: Can local governments again come to the rescue?

China is turning, once again, to local authorities to put a floor under the country's economic slowing by boosting infrastructure investment, but local authorities are put off by the prospect of incurring even more debt and a lack of suitable projects to invest in. If forced to implement the strategy, they may end up fueling a glut of inefficient projects that will never earn enough money to repay debts.

Still, the central government has plowed on, focusing on the use of special-purpose local government bonds as the main tool to raise investment funds in an attempt to control risks. Though selling more bonds still leads to an increase in local government borrowing, the debt is explicit, transparent and appears in the budget, as opposed to being concealed in local government financing vehicles and other illicit, obscured channels.

Check out our deep dive.

Banking /

China tells banks to pass excess provisions to shareholders

China is telling its banks to distribute excess provisions for soured loans to investors as part of attempts to curb accounting malpractice, sparking a rally in some local financial company stocks.

Banks with provisions exceeding 300% of their nonperforming-loan balances would be seen as having “a tendency to hide their profits” and would need to distribute reserves beyond that amount as dividends, according to draft rules released Thursday by the Ministry of Finance. The loan-loss provisions have been long seen as a key swing factor for earnings. The ministry is seeking public feedback on the rules through Oct. 26.

Indexes /

China misses out on entering FTSE Russell global bond index

China failed to win inclusion into one of the world’s benchmark bond indexes, as FTSE Russell opted not to follow two competitors in adding the country’s domestic debt.

China will remain on the FTSE Russell’s watchlist, according to a statement Thursday that showed the firm demurred on including China in its flagship World Government Bond Index. The decision means China could be missing out on $6 billion to $7.5 billion of extra investment inflows a month, according to a previous estimate by Goldman Sachs Group Inc.

Coming up /

Mon, Sept. 30: The NBS will release China's official September PMI.

Caixin will release the September Caixin China Manufacturing PMI.

Tues, Oct. 1: Mainland China markets will be closed for seven days due to the National Day holiday. Hong Kong stock market will be closed for one day.

Quick hits /

Shanghai bourse rejects another listing on new high-tech board

Disgraced Anbang founder’s villas auctioned by court

China Everbright Bank opens wealth management unit in Qingdao

BUSINESS & TECH

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A piece of land near Fenjin Road, Hong Kong, Dec. 20, 2018. Photo: VCG

Real estate /

Hong Kong takes back private land for public housing

Henderson Land Development, one of Hong Kong’s three biggest private landowners, said it would acquiesce to the city government’s plan to seize massive tracts of land for public housing.

On Thursday, the city’s Lands Department announced that the government would take back 748 plots of private land — covering an area of 68 hectares (168 acres) – in the city’s northern New Territories, on which 21,000 new homes will be built in the first phase. Henderson’s concession comes as housing supply persists as a source of social and political friction in Hong Kong. The government has recently stepped up pressure on developers, who had previously been able to resist such moves.

Auto /

Exclusive: Local governments lurk behind Chery Automobile’s two bidders

Two privately offered fund management firms have each put down 5 billion yuan ($707.19 million) to bid for a controlling stake in Chery Automobile Co. Ltd. after the cash-strapped state-owned automaker put itself back on the auction block this month, sources told us.

The two bidders are both backed by local governments where they are registered, we've learned. One, Tengxing Yangtze River Delta (Haining) Equity Investment Partners Corp. Ltd., was established only two months ago in Haining, Zhejiang province, and has investment from the city's government. The other is Qingdao Wudaokou New Energy Vehicle Enterprise Fund Corp. Ltd., set up last month, with backing from the city’s Jimo district government.

Huawei ban /

Huawei founder dangles 5G secrets to create an American rival

Huawei Technologies Co. founder Ren Zhengfei is ready to license his fifth-generation networking technology only to one other company — and he wants that potential rival to be American.

The army officer-turned-billionaire reiterated an offer Thursday to license out Huawei’s full portfolio of 5G wireless technology — which would include chip designs, hardware and source code — to a single, exclusive licensee. That should be a U.S. company because Europe is home to close competitors like Nokia Oyj and Ericsson AB and doesn’t need help to compete, he said.

Electric cars /

Some Chinese electric cars are ‘simply worthless’: Industry body

It’s “inevitable” that China’s electric cars have little resale value and some are inherently worth little, according to the China Passenger Car Association (CPCA), which listed several reasons why value retention is “too low” for new-energy vehicles (NEVs), in a recent update on China’s ailing auto market.

Reasons include a shortage of purchase statistics that could be analyzed to help manage risks. The discrepancy of technologies used in Chinese electric cars is also large, meaning certain models are not reliable and are “simply worthless,” the association said. “It’s not very feasible to simply wait for electric vehicles to raise their value retention,” it said.

Quick hits /

BAIC’s electric car subsidiary issues 1.5 billion yuan in bonds

National Day provides small boost for troubled film industry

China poised to unveil e-cigarette industry standards

Huawei launches 5G-ready Mate 30 smartphone series in China

Starbucks challenger Luckin Coffee takes a sip of juice business

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