US Withdrawing but China Exporting Capital to Globalize Its Interests


While US President Trump opposes globalization and urges US companies to withdraw their capital for creating jobs in the US, China is now the leader of globalization and exploiting it to find opportunities for export of capital to make money and get technology.

China’s Tencent Holdings Ltd’s purchase of 5% stake in US rising electric car maker Tesla Inc. is but one example.

Comment by Chan Kai Yee on Reuters’ report “Tesla deal boosts Chinese presence in U.S. auto tech”, full text of which is reblogged below:

Tesla deal boosts Chinese presence in U.S. auto tech

By Paul Lienert | DETROIT Tue Mar 28, 2017 | 5:55pm EDT

China’s Tencent Holdings Ltd (0700.HK) has bought a 5 percent stake in U.S. electric car maker Tesla Inc (TSLA.O) for $1.78 billion, the latest investment by a Chinese internet company in the potentially lucrative market for self-driving vehicles and related services.

Tencent’s investment, revealed in a U.S. regulatory filing, provides Tesla with a deep-pocketed ally as it prepares to launch its mass-market Model 3. Tesla’s shares rose 2.7 percent to $277.45 on Tuesday, closing in on Ford Motor Co (F.N) as the second-most-valuable U.S. auto company behind General Motors Co (GM.N).

Tencent also could help the U.S. company sell – or even build – cars in China, the world’s largest auto market, analysts said.

“It certainly is a strong chess move for Tesla,” said Jeff Schuster, senior vice president of forecasting for researcher LMC Automotive, citing the cash infusion and “help in navigating the Chinese market.”

Tesla Chief Executive Officer Elon Musk on Tuesday tweeted: “Glad to have Tencent as an investor and adviser to Tesla.” Musk did not say what he meant by “adviser” but in a separate tweet he noted Tesla had “very few” Model 3 orders from China, where the car has not been formally introduced.

The midsize Model 3 is due to go on sale later this year in the United States.

The deal expands Tencent’s presence in an emerging investment sector that includes self-driving electric cars, which could enable such new modes of transportation as automated ride-sharing and delivery services, as well as ancillary services ranging from infotainment to e-commerce.

Those new technologies, and their potential to create new business models and revenue streams in the global transportation sector, have attracted billions in investment from China’s three tech giants – Tencent, Alibaba Group Holding Ltd (BABA.N) and Baidu Inc (BIDU.O).

In an investor note, Morgan Stanley auto analyst Adam Jonas said on Tuesday that he “would not be surprised” to see Tencent and Tesla collaborate in the development and deployment of some of those technologies.

The White House did not immediately respond to a request for comment on the Chinese investment in Tesla, but President Donald Trump has been critical of U.S. automakers and of China trade policies.

Founded in 1998 by entrepreneur Ma Huateng, Tencent is one of Asia’s largest tech companies, best known for its WeChat mobile messaging app. With a market capitalization of about $275 billion, it is roughly six times the size of 14-year-old Tesla, whose $45 billion market cap on Tuesday was only $1 billion shy of 114-year-old Ford.

Tencent was an early investor in NextEV, a Shanghai-based electric vehicle startup that since has rebranded itself as Nio, with U.S. headquarters in San Jose, not far from Tesla’s Palo Alto base. Tencent also has funded at least two other Chinese EV startups, including Future Mobility in Shenzhen.

In addition, Tencent has invested in Didi Chuxing, the world’s second-largest ride services company behind Uber, and in Lyft, Uber’s chief U.S. rival.

Baidu has invested in Nio, as well as in Uber and Velodyne, a California maker of laser-based lidar sensors for self-driving cars. Alibaba’s mobility investments include Didi and Lyft.

As Tesla is doing, many of the start-up companies backed by Tencent, Baidu and Alibaba are developing self-driving systems that eventually could be introduced in commercial ride-sharing fleets in the United States and China after 2020.

Tencent maintains a U.S. office in Palo Alto, in the heart of California’s Silicon Valley. Beijing-based Baidu and Hangzhou-based Alibaba also maintain offices in Silicon Valley.

Tencent owns about 8.2 million shares in Tesla, the carmaker said. It is the fifth-largest shareholder, behind Musk and investment companies Fidelity, Baillie Gifford and T. Rowe Price.(bit.ly/2nvNeMI)

To help fund Model 3 production, Tesla raised about $1.2 billion by selling common shares and convertible debt earlier this month. Tencent said its shares were acquired as part of the early March equity sale and on the open market.

Musk had a stake of about 21 percent as of Dec. 31.

(Additional reporting by Rishika Sadam in Bengaluru, Sijia Jiang in Hong Kong and David Shepardson in Washington; Editing by Nick Zieminski and Dan Grebler)


Trump’s U.S. jobs push may open doors to China in Mexico: ICBC bank


By Anthony Esposito, Dan Freed and Noe Torres | ACAPULCO, Mexico Fri Mar 24, 2017 | 8:15pm EDT

U.S. President Donald Trump’s push to force U.S. industry to bring jobs home is opening investment avenues for Chinese companies in Mexico, an executive with Industrial and Commercial Bank of China (ICBC), the country’s largest lender, said on Friday.

Fears of a hit to foreign investment ran high when Ford Motor Co (F.N) canceled a $1.6 billion plant in Mexico’s central state of San Luis Potosi in January.

Trump, who had railed against U.S. manufacturers investing in Mexico, hailed the decision as a major victory, but Ford put it down to declining demand for small cars.

Yaogang Chen, head of ICBC’s (601398.SS)(1398.HK) Mexico unit, said U.S. industry’s loss could be China’s gain.

“If some U.S. investment projects don’t (happen), there has to be somebody to invest. … If Chinese companies think it is profitable, they will invest,” he said in an interview on the sidelines of a banking conference in the resort of Acapulco.

In February, China’s Anhui Jianghuai Automobile Group Co Ltd (JAC Motor) (600418.SS) and Mexico’s Giant Motors, along with distributor Chori Co Ltd (8014.T), said they would invest over $210 million in an existing plant to build SUVs in the central state of Hidalgo.

Prior to Trump’s campaign against U.S. manufacturers shipping jobs overseas, Chinese companies were making tentative inroads into Mexico.

China’s BAIC Motor Corp Ltd (1958.HK) in June 2016 started selling in Mexico its own cars imported from China and has said that it will look into building an industrial plant in Mexico to produce cars and electric vehicles.

BAIC is already a client of ICBC’s in Mexico.

ICBC, one of the world’s top banks by market capitalization and assets, received its banking license in Mexico in 2014 and started operations there in mid-2016.

“JAC, we think, will be a client of ours in Mexico too,” Chen said.

Still, Chinese foreign direct investment in Mexico is a tiny fraction of what U.S. firms have plowed in over the years.

State-controlled ICBC expects to grow its assets and loan portfolio in Mexico tenfold over the next three years to some 10 billion pesos ($533 million), Chen said.

The executive said ICBC aims to offer a service to allow clients to convert Mexican pesos to Chinese renminbi and vice versa, and make cross-border transactions cheaper.

(Reporting by Anthony Esposito, Dan Freed and Noe Torres; Editing by Richard Chang)

Source: Reuters “Trump’s U.S. jobs push may open doors to China in Mexico: ICBC bank”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views


US Withdraws Investment Back to Create Jobs, China’s Opportunities


The Chevron Oil Refinery is seen in Cape Town, South Africa, June 30, 2016. REUTERS/Mike Hutchings

Chevron sold its African stake to China’s Sinopec. That perhaps is US President’s way to take back funds for creating jobs at home. Its China’s good opportunities for investment abroad.

Comment by Chan Kai Yee on Reuters’ report yesterday, full text of which can be viewed below:

China’s Sinopec buys first major refinery in Africa from Chevron

China’s Sinopec (600028.SS) (0386.HK) will pay almost $1 billion for a 75 percent stake in Chevron Corp’s (CVX.N) South African assets and its subsidiary in Botswana to secure its first major refinery in Africa, the companies announced on Wednesday.

China Petroleum and Chemical Corp, or Sinopec, Asia’s largest oil refiner, said the assets include a 100,000 barrel-per-day oil refinery in Cape Town, a lubricants plant in Durban as well as 820 petrol stations and other oil storage facilities.

Chevron Global Energy Inc said in a statement that Sinopec’s bid was selected in part because of the better terms and conditions it offered, including a commitment to operate the businesses as going concerns and the opportunity to reap strategic value for its longer-term strategy in Africa.

The deal, which includes 220 convenience stores across South Africa and Botswana, is subject to regulatory approval.

With a growing middle class, demand in South Africa for refined petroleum has increased by nearly 5 percent annually over the past five years, to a current total of about 27 million tonnes, Sinopec said.

Sinopec in 2012 partnered South Africa’s national oil company PetroSA to help develop a new greenfields refinery that has subsequently been shelved due to high costs. It said it would retain the whole workforce as well as the existing Caltex brand for the retail fuel stations for up to six years before launching a rebranding strategy.

The remaining 25 percent of the South African assets will continue to be held by a group of local shareholders, in accordance with South African regulations.

Reuters reported on Friday that Sinopec was the last remaining bidder in the auction which lasted more than a year and drew interest from French oil firm Total (TOTF.PA) and commodity traders Glencore (GLEN.L) and Gunvor.

(Reporting by Meng Meng and Beijing Monitoring Desk and Wendell Roelf in Cape Town; editing by Himani Sarkar and Elaine Hardcastle)


Tillerson ends China trip with warm words from President Xi


China’s President Xi Jinping (R) shakes hands with U.S. State of Secretary, Rex Tillerson at the Great Hall of the People in Beijing, China, March 19, 2017. REUTERS/Thomas Peter

By Yeganeh Torbati and Michael Martina | BEIJING Sun Mar 19, 2017 | 2:14am EDT

With warm words from Chinese President Xi Jinping on Sunday, U.S. Secretary of State Rex Tillerson ended his first trip to Asia since taking office with an agreement to work together with China on North Korea and putting aside trickier issues.

China has been irritated at being repeatedly told by Washington to rein in North Korea’s nuclear and missile programs and the U.S. decision to base an advanced missile defense system in South Korea.

Beijing is also deeply suspicious of U.S. intentions toward self-ruled Taiwan, which China claims as its own, with the Trump administration crafting a big new arms package for the island that is bound to anger China.

But meeting in Beijing’s Great Hall of the People, those issues were brushed aside by Xi and Tillerson, at least in front of reporters, with Xi saying Tillerson had made a lot of efforts to achieve a smooth transition in a new era of relations.

“You said that China-U.S. relations can only be friendly. I express my appreciation for this,” Xi said.

Xi said he had communicated with President Donald Trump several times through telephone conversations and messages.

“We both believe that China-U.S. cooperation henceforth is the direction we are both striving for. We are both expecting a new era for constructive development,” Xi said.

“The joint interests of China and the United States far outweigh the differences, and cooperation is the only correct choice for us both,” Xi added, in comments carried by China’s Foreign Ministry.

China and the United States must strengthen coordination of hot regional issues, respect each other’s core interests and major concerns, and protect the broad stability of ties, Xi said.

Tillerson replied that Trump looks forward to enhancing understanding with China and the opportunity for a visit in the future.

Tillerson said Trump places a “very high value on the communications that have already occurred” between Xi and Trump.

“And he looks forward to enhancing that understanding in the opportunity for a visit in the future,” Tillerson said.

“We know that through further dialogue we will achieve a greater understanding that will lead to a strengthened, strengthening of the ties between China and the United States and set the tone for our future relationship of cooperation.”

Trump has so far been an unpredictable partner for China, attacking Beijing on issues ranging from trade to the South China Sea and in December by talking to Taiwan President Tsai Ing-wen.

Before Tillerson arrived in Beijing on Saturday, Trump said North Korea was “behaving very badly” and accused China of doing little to resolve the crisis over the North’s weapons programs.

SOME PROGRESS

Speaking in Seoul on Friday, Tillerson issued the Trump administration’s starkest warning yet to North Korea, saying in Seoul that a military response would be “on the table” if Pyongyang took action to threaten South Korean and U.S. forces.

Still, China and the United States appeared to have made some progress or put aside differences on difficult issues, at least in advance of a planned summit between Xi and Trump.

Both Tillerson and Chinese Foreign Minister Wang Yi struck a more conciliatory tone in their meeting, with Tillerson saying the United States and China would work together to get nuclear-armed North Korea take “a different course”.

Underscoring the tensions, North Korea conducted a test of a new high-thrust engine at its Tongchang-ri rocket launch station and leader Kim Jong Un said the successful test was “a new birth” of its rocket industry, Pyongyang’s official media said on Sunday.

North Korea has conducted five nuclear tests and a series of missile launches, in defiance of U.N. sanctions, and is believed by experts and government officials to be working to develop nuclear-warhead missiles that could reach the United States.

Washington wants China, the North’s neighbor and main trading partner, to use its influence to rein in the weapons programs.

China says it is committed to enforcing U.N. sanctions on North Korea, but all sides have a responsibility to lessen tensions and get back to the negotiating table.

Chinese official also repeatedly say they do not have the influence over North Korea that Washington and others believe, and express fears poverty-struck North Korea could collapse if it were cut off completely, pushing destabilizing waves of refugees into northeastern China.

(Writing by Ben Blanchard; Editing by Raju Gopalakrishnan)

Source: Reuters “Tillerson ends China trip with warm words from President Xi”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China to Heighten Economic Pressure on Taiwan


China’s head of the General Administration of Quality Supervision, Inspection and Quarantine, Zhi Shuping, attends a news conference on the sidelines of China’s National People’s Congress (NPC) in Beijing, China, March 14, 2017. REUTERS/Stringer

In my post “China Subdues Taiwan by Military Threat, Driving, Drawing Away Funds, Talents” on March 16, I said that China using stratagem to subdue Taiwan by stratagem without the need of fighting a war.

What stratagem? It is putting pressure on Taiwan economy by military threat that force Taiwan to spend more in weapons and scare away foreign investors and Taiwanese capital and talents while attracting Taiwan capital and talents with preferential policies.

To screw up the pressure, according to Reuters’ report titled “China says Taiwan tensions affecting some imports”, China greatly reduced import of cosmetics and food from Taiwan on the excuse of political tension that has affected cooperation on safety standards. The situation will not improve unless Taiwan “recognized the ‘1992 consensus’” i.e. one-China consensus.

As China is Taiwan’s major export market, China can further screw up pressure by reducing more import, which does not affect China and may give rise to great difficulties in Taiwan.

Now the US is going to help China in drying Taiwan’s financial resources by selling more weapons to Taiwan. (See my post “Trump administration crafting big new arms sales to Taiwan: sources” yesterday.)

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at http://www.reuters.com/article/us-china-parliament-taiwan-idUSKBN16L0G0


Trump administration crafting big new arms sales to Taiwan: sources


By David Brunnstrom and Matt Spetalnick | WASHINGTON Fri Mar 17, 2017 | 3:58pm EDT

The Trump administration is crafting a big new arms package for Taiwan that could include advanced rocket systems and anti-ship missiles to defend against China, U.S. officials said, a deal sure to anger Beijing.

The package is expected to be significantly larger than one that was shelved at the end of the Obama administration, the officials told Reuters on the eve of a visit to Beijing by U.S. Secretary of State Rex Tillerson.

“The political desire is there to do a substantial sale,” one administration official said, adding that internal deliberations had begun on a deal “that’s much stronger, much more significant than the one that was not accepted by the Obama people.”

President Donald Trump’s administration is eager to proceed with the sales, but it is expected to take months and possibly into next year for the White House to overcome obstacles, including concern that Beijing’s sensitivities over Taiwan could make it harder to secure cooperation on priorities such as reining in North Korea, the official said.

Completion of a package also could be held up by the slow pace at which the Trump administration is filling national security jobs, the officials said, speaking on condition of anonymity because initial work toward new arms sales has not been made public.
Discussions between Taiwan and the new administration already have begun, according to a person in Taipei familiar with the matter.

The White House declined comment.

Details of the administration’s approach to Taiwan emerged as Tillerson was due to visit China this weekend, where he will seek more Chinese support on North Korea and firm up a first meeting between Trump and Chinese President Xi Jinping expected next month.

In December, President Barack Obama’s administration put the brakes on a Taiwan deal under discussion. That package was worth $1 billion, Washington’s Free Beacon newspaper reported this week, citing unnamed officials, who also were quoted as saying the Trump administration was now preparing new sales.

Ned Price, a National Security Council spokesman under Obama, said the previous administration put a “relatively modest” arms package for Taiwan on hold, in part to let the new administration make the decision.

The Trump administration source told Reuters that the new deals under consideration would likely top the $1 billion mark.

The new administration plans to focus more than the previous one on enhancing Taiwan’s “asymmetric” capabilities, possibly with advanced multiple launch rocket systems, anti-ship missiles and other technologies that would enable Taiwan’s military to defend against a much larger Chinese force in the event of an attack, the U.S. official said.

Lockheed Martin Corp (LMT.N) is the top U.S. manufacturer of multiple launch rocket systems. Other foreign companies involved in the sector include Germany’s Diehl and Britain’s BAE Systems (BAES.L).

A $1.83 billion arms sale to Taiwan that Obama announced in December 2015, to China’s dismay, included two Navy frigates in addition to anti-tank missiles and amphibious attack vehicles.

The United States switched diplomatic recognition from Taiwan to China in 1979, acknowledging Taiwan as part of “one China.” But successive administrations have continued providing billions of dollars in arms as part of a congressionally mandated requirement to ensure the island can defend itself.

Taiwan has already been a major point of contention between Trump and China, which considers the island a renegade province.

As president-elect, Trump broke with protocol and accepted a congratulatory phone call from the Taiwanese President Tsai Ing-wen in December, angering China. He then suggested he might abandon Washington’s “one China” policy, which accepts the self-ruled island as part of China. Once in office, Trump reaffirmed the U.S. commitment to the decades-old policy.

The White House is mindful that tensions could flare again over new arms sales. But some Trump aides insist they are needed to make clear that the United States, Taiwan’s sole arms supplier, is committed to upgrading the island’s defenses.

(Additional reporting by J.R. Wu in Taipei and John Walcott in Washington; Editing by John Walcott and Tom Brown)

Source: Reuters “Trump administration crafting big new arms sales to Taiwan: sources”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


‘Pivot to the Pacific’ is over, senior U.S. diplomat says


By: Aaron Mehta, March 14, 2017

WASHINGTON — The Obama administration’s Pacific rebalance effort — also known as the Pivot to the Pacific — effort is officially dead, according to a top State Department official.

Asked by reporters about the future of the rebalance, Acting Assistant Secretary of State Susan Thornton said Monday that the new administration has its own plan for the region, even if that plan has yet to take shape.

“Pivot, rebalance, etcetera — that was a word that was used to describe the Asia policy in the last administration. I think you can probably expect that this administration will have its own formulation. We haven’t really seen in detail, kind of, what that formulation will be or if there even will be a formulation,” she said

However, Thornton — speaking on the eve of Secretary of State Rex Tillerson’s first visit to the Asia-Pacific region — stressed that the new administration remains committed to the region, even if the flavor of that commitment may change.

Source: Defense News “’Pivot to the Pacific’ is over, senior U.S. diplomat says”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.