China-Philippines relations had been quite satisfactory with South China Sea dispute remaining on the sideline until former Philippine President Aquino was exploited by the US to contain China with intensification of the dispute. However, Aquino got nothing as the US was not willing to fight China for Philippines’ interests.
Upset by US inaction as an ally, Philippine President Duterte wanted to recover and even further improve relations with China and estrange his country from the United States, Philippines’ old ally. However, that is not something new as described by lots of Western media. It is but the recovery and further development of Philippines’ old policies to be friendly with China and estranged from the US.
Do not forget that the Philippines took back US military bases to drive away US troops stationed there in 1992. The US shall be aware of the trend so that it has to give the Philippines something when it asks the Philippines to do something for it. Its failure to do so has caused it to lose the Philippines to China as China can and is giving the Philippines lots of things: funds, cooperation in exploiting fish and energy resources etc.
If we know the history of Philippine- China and US relations, we will not be surprised at the development of closer ties between China and the Philippines at the expense of the US.
SCMP says in its report “Beijing and Manila to discuss South China Sea dispute” today that China has invited Philippine coastguard to visit China and plans to hold talks on South China Sea dispute with the Philippines in May.
In fact, according to Chinese media Global Times’ report “Duterte has not only invited Chinese warships to visit the Philippines but will also board a Chinese warship” on March 25, Duterte has invited Chinese navy to visit the Philippines and will board a Chinese warship in person to show the vigorous development of Philippine-China relations.
Comment by Chan Kai Yee on SCMP and Global Times’ reports, full text of which can respectively be found at http://www.scmp.com/news/china/diplomacy-defence/article/2082900/beijing-and-manila-discuss-south-china-sea-dispute and http://mil.huanqiu.com/world/2017-03/10374760.html
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)
Dave Majumdar February 19, 2016
Chinese media is claiming that the People’s Liberation Army has been able to track the U.S. Air Force’s Lockheed Martin F-22 Raptor stealth fighters over the East China Sea. While the Chinese report might be easily dismissed as propaganda—it is not beyond the realm of possibility. In fact—it’s very possible that China can track the Raptor. Stealth is not a cloak of invisibility, after all. Stealth technology simply delays detection and tracking.
First off, if a Raptor is carrying external fuel tanks—as it often does during “ferry missions”—it is not in a stealth configuration. Moreover, the aircraft is often fitted with a Luneburg lens device on its ventral side during peacetime operations that enhances its cross section on radar.
That being said, even combat-configured F-22s are not invisible to enemy radar, contrary to popular belief. Neither is any other tactical fighter-sized stealth aircraft with empennage surfaces such as tailfins—the F-35, PAK-FA, J-20 or J-31. That’s just basic physics.
The laws of physics essentially dictate that a tactical fighter-sized stealth aircraft must be optimized to defeat higher-frequency bands such the C, X, Ku and the top part of the S bands. There is a “step change” in a Low Observable (LO) aircraft’s signature once the frequency wavelength exceeds a certain threshold and causes a resonant effect. Typically, that resonance occurs when a feature on an aircraft—such as a tail-fin — is less than eight times the size of a particular frequency wavelength. Effectively, small stealth aircraft that do not have the size or weight allowances for two feet or more of radar absorbent material coatings on every surface are forced to make trades as to which frequency bands they are optimized for.
Therefore, a radar operating at a lower-frequency band such as parts of the S or L band—like civilian air traffic control (ATC) radars—are almost certainly able to detect and track tactical fighter-sized stealth aircraft. However, a larger stealth aircraft like the Northrop Grumman B-2 Spirit, which lacks many of the features that cause a resonance effect, is much more effective against low-frequency radars than, for example, an F-35 or F-22. Typically, however, those lower-frequency radars do not provide what Pentagon officials call a “weapons quality” track needed to guide a missile onto a target. “Even if you can see an LO [low observable] strike aircraft with ATC radar, you can’t kill it without a fire control system,” an Air Force official had told me.
That being said, Russia, China and others are developing advanced UHF and VHF band early warning radars that use even longer wavelengths in an effort to cue their other sensors and give their fighters some idea of where an adversary stealth aircraft might be coming from. But the problem with VHF and UHF band radars is that with long wavelengths come large radar resolution cells. That means that contacts are not tracked with the required level of fidelity to guide a weapon onto a target. As one U.S. Navy officer rhetorically asked, “Does the mission require a cloaking device or is it OK if the threat sees it but can’t do anything about it?”
Traditionally, guiding weapons with low frequency radars has been limited by two factors. One factor is the width of the radar beam, while the second is the width of the radar pulse—but both limitations can be overcome with signal processing. Phased array radars—particularly active electronically scanned arrays (AESA)—solve the problem of directional or azimuth resolution because they can steer their radar beams electronically. Moreover, AESA radars can generate multiple beams and can shape those beams for width, sweep rate and other characteristics. Indeed, some industry experts suggested that a combination of high-speed data-links and low-frequency phased-array radars could generate a weapons quality track.
The U.S. Navy and Lockheed may have already solved the problem. The service openly talks about the E-2D’s role as the central node of its NIFC-CA battle network to defeat enemy air and missile threats. Rear Adm. Mike Manazir, the Navy’s director of air warfare, described the concept in detail at the U.S. Naval Institute just before Christmas in 2013.
Under the NIFC-CA ‘From the Air’ (FTA) construct, the APY-9 radar would act as a sensor to cue Raytheon AIM-120 AMRAAM air-to-air missiles for Boeing F/A-18E/F Super Hornets fighters via the Link-16 datalink. Moreover, the APY-9 would also act as a sensor to guide Raytheon Standard SM-6 missiles launched from Aegis cruisers and destroyers against targets located beyond the ships’ SPY-1 radars’ horizon via the Cooperative Engagement Capability datalink under the NIFC-CA ‘From the Sea’ (FTS) construct. In fact, the Navy has demonstrated live-fire NIFC-CA missile shots using the E-2D’s radar to guide SM-6 missiles against over-the-horizon shots—which by definition means the APY-9 is generating a weapons quality track.
That effectively means that stealthy tactical aircraft must operate alongside electronic attack platforms the like Boeing EA-18G Growler. It is also why the Pentagon has been shoring up American investments in electronic and cyber warfare. As one Air Force official explained, stealth and electronic attack always have a synergistic relationship because detection is about the signal-to-noise ratio. Low observables reduce the signal, while electronic attack increases the noise. “Any big picture plan, looking forward, to deal with emerging A2/AD threats will address both sides of that equation,” he said.
Dave Majumdar is the defense editor for the National Interest. You can follow him on Twitter: @davemajumdar.
Source: National Interest “Revealed: China’s Radars Can Track America’s Stealthy F-22 Raptor”
Note: This is National Interest’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
Politicians should carefully consider the impact that their words may have on America’s international relationships.
Jared McKinney March 26, 2017
The first rule of rational thinking is that one should not assume what one hopes to prove. The first rule of international politics is that misperception is rampant. And the first rule of strategy is that the adversary gets a vote too. Sadly, Rep. Ted Yoho violates all three of these rules in his March 22 analysis titled “How America Should Confront China’s Unchecked Maritime Bullying.” The result is an empty shell of words masquerading as strategic advice. Isolated, this could be ignored; more worryingly—and more difficult to ignore—is that Rep. Yoho’s article nicely represents the resentful, unreflective, incurious and superficial rhetoric that is increasingly coming to dominate Washington’s view of China.
Assuming What We Claim to Prove
Rep. Yoho begins his article by commenting on the economic importance of maritime Asia. Undisputedly, a large amount of commerce passes through these waters. He then suggests this commerce may be threatened by China, which has “possibly” indicated its “ambition to exclude foreign vessels from China’s near seas at will.” His evidence? The increasing strength of the People’s Liberation Army and Chinese investments in Anti-Access/Area Denial weapons.
Confronted with the fact that China has sought to strengthen its military since Deng Xiaoping launched his “four modernizations,” an intellectually curious person might posit a variety of explanations. These might include Chinese embarrassment over its poor performance in the 1979 war with Vietnam, a desire to be recognized as a great power by the United States and Russia, and a commitment to defending China’s territorial interests, particularly given the humiliation it suffered in the 1995–96 Taiwan Straits Crisis. Indeed, if a person took the trouble to speak with some Chinese military officers, or even merely read some standard histories of China’s rise, then that person would discover that this last explanation is particularly salient. China desires the ability to defend its territorial integrity and sovereignty. Since U.S. actions have threatened—and could once again threaten—these objectives, China is making investments intended to preserve its interests. Here we have the origins of China’s A2/AD investments, and an explanation for Chinese strategy.
But this is not what Rep. Yoho does in his analysis. Instead, he connects China’s growing military power to the possible “ambition to exclude foreign vessels from China’s near seas at will.” This connection is not impossible, and if it were something China was capable of doing, and if it was something China was likely to do, given the region’s importance, then this would be a big deal. But Rep. Yoho never completes that argument. He never informs us why it is likely that China might exclude trading vessels from the region, thereby injuring global commerce.
Risk is calculated by multiplying the probability of an event occurring by the estimated consequence of that event. When probability is extremely low, even when the consequence is high, risk is low. This formula must lie at the heart of all strategic thinking. When it does not, the results are not just irrational but dangerous.
So what is the likelihood that China would disrupt the “$5 trillion” in commerce that moves across the Asia-Pacific region? Most of this commerce is coming from China, going to China, passing through a Chinese port, or ultimately destined for China in one capacity or another. This is a good place to start: disrupting this commerce would be contrary to China’s most important interests.
Seemingly aware of this fact, Rep. Yoho moves on to discuss energy supplies for nations like Japan and South Korea. Perhaps China would intercept those? And what does Rep. Yoho think would happen to the Chinese economy if the economies of two of its closest neighbors collapsed at China’s behest? Does Rep. Yoho understand that a disabled Chinese economy would destroy the legitimacy of the Chinese Communist Party? Does he know that oil can be sold on a spot market (sometimes as many as thirty times on one journey), making it difficult for a blockading force to tell where oil is ultimately destined? Does he know that transshipment of oil from Southeast Asia would be impossible to prevent? Has he calculated China’s ability to impose such a blockade? Does he know that the South China Sea is a “tough neighborhood for hegemonies” because it lacks any dominating geographical features? Is he aware that China’s neighbors could respond with their own A2/AD networks, locking China out of the region’s seas? Does he realize the United States could easily respond tit-for-tat in the Persian Gulf, for China, too, is dependent on oil imports? And has he considered that such a move would forever alienate China’s neighbors and most of the globe’s respectable powers? The answer to all these questions is an apparent “no.” But if someone did bother to answer them, then that person would come to the realization that it would be literally suicidal for China to disrupt the commerce of the Asia-Pacific region. Further reflection would likely yield the conclusion that China could not effectively do so even if it so desired.
Where then is the evidence that China’s military investments are intended to disrupt the commerce of the Asia-Pacific region? None has been offered. What Rep. Yoho desires to prove he has merely assumed. Until evidence is provided to the contrary, the risk of China destroying the maritime commerce of the Asia-Pacific region should be assessed as close to nonexistent.
Misperception Is Rampant
Rep. Yoho seems to believe that Chinese “belligerence” is running in a straight line, and as a result of the Obama administration’s failure to “impose costs,” China is running rampant, bullying its neighbors. This view misperceives the extent to which the situation in the South China Sea has stabilized. Indeed, in the last year, both the Philippines and Vietnam have ended their open rivalry with China and engaged in bilateral negotiations. Knowledgeable diplomats believe an Association of Southeast Asian Code of Conduct will be agreed upon this year, and Chinese insiders have told me that China is committed to seeing it through. China is no longer building the types of islands that so concern Rep. Yoho and Filipino fishermen are back at Scarborough Shoal. In East and Southeast Asia, foreign-policy elites are now more worried about being dragged into a U.S.-China conflict than Chinese “assertiveness.” Japanese nationalism, naturally, remains alive and well, and the Terminal High Altitude Area Defense issue has made China-South Korea ties the worst in recent history, but these are separate issues.
Yet even if interactions in the South China Sea have stabilized, there remains plenty of room for misperception. For example, Rep. Yoho claims that China’s seizure of America’s unmanned underwater vehicle in December 2016 was “a transparent attempt to deliberately engineer an international incident.” This is an assertion, but not an argument (see point one above). Furthermore, this statement assumes a good many things about China that may not, in fact, be true. Why would China want to engineer a conflict with the incoming Trump administration, which has not yet decided how it’s going to deal with China? Is Rep. Yoho aware, as I have previously argued, that it could be that the United States was the actual engineer of this international incident? Even more significantly, as I have recently learned from conversations with two dozen Chinese foreign-policy experts, within China there is a sound consensus that the seizure of the unmanned underwater vehicle was not authorized by China’s political leaders. If this is the case, then Rep. Yoho is perceiving an unauthorized Chinese move as an intentional political challenge. In other words, that is a common case of misperception.
The Adversary Gets a Vote Too
The single most extraordinary fact about Rep. Yoho’s article is that he never once considers whether his solution for Chinese “belligerence”—imposing costs—will, in fact, change Chinese behavior in the way he intends. Anticipating an adversary’s response is the most basic rule of strategy. This rule is endemic to human interaction, and highlighted in certain games, such as chess. Only a fool would move first and consider consequences later.
Yet this is what Rep. Yoho would have us do. He suggests a series of moves: more freedom of navigation operations, commercial sanctions, punishing (though expressed in more diplomatic terms) the Philippines for its realignment and disinviting China from the 2018 Rim of the Pacific naval exercise while inviting Taiwan. Rep. Yoho merely assumes these moves will result in his preferred outcome. Yet there are alternative possible outcomes. One is that such moves change nothing. Minor pokes are not going to force China to fundamentally alter its strategy. Another alternative is that China escalates tensions, but in its own way. Perhaps it more closely tails U.S. forces in the region. Perhaps it increases its long-term military investments. Or perhaps it punishes American “allies,” such as Taiwan.
The most likely outcome need not be assessed in this essay. My present plea is only that we—as Americans—reorient our thinking. If the United States is going to formulate intelligent strategies in this increasingly complicated time, simple assertions need to be excised from our strategic discourse. The National Interest and other serious foreign-policy publications should not publish a single new essay on the theme of changing U.S. strategy towards China unless that essay carefully considers how China (and other regional actors) would respond to such a change. Strategic interactions are dynamic, and, like good chess players, we must model probable action-reaction cycles to the best of our ability. In the realm of international politics, the rules are not as certain as those of chess, but that is no excuse. In real life, our decisions could result in conflict or even war. As chairman of the House Foreign Affairs Committee’s subcommittee on Asia and the Pacific, Rep. Yoho has a particularly weighty responsibility in this regard—one that his piece in the National Interest sadly neglects.
I have been forced to take a negative tone in this article, but I do so for a constructive purpose: we can do better than this. Indeed, if peace is going to be preserved in the coming decade, we must do better. Doing better means formulating thoughtful arguments. That means justifying assumptions, considering alternative explanations and being genuinely curious about discovering the truth. Doing better means realizing that misperception is common in international politics, and doing what we can to mitigate this fact. Signals can be ambiguous; states often aren’t unitary rational actors; and situations evolve constantly. Finally, doing better means realizing that strategy is a dynamic process, and actions can have short- and long-term effects. In 1996, did anyone consider that by projecting force around China in such a humiliating manner that the United States would stimulate a huge Chinese military buildup, including A2/AD investments and an aircraft carrier program? Perhaps not, but that is the point. The Chinese are here to play the long game, and if Washington elites are going to make a habit of publishing articles calling on the United States to poke the dragon, then they should at least consider whether the dragon, in fact, needs to be poked and how the dragon might respond both today and a decade hence.
Jared McKinney is a nonresident fellow at the Pangoal Institution (Beijing) and a PhD Student at the S. Rajaratnam School of International Studies, Nanyang Technological University (Singapore).
Source: National Interest “Why America—and Its Political Leaders—Should Think Twice about Poking China”
Note: This is National Interest’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
It is common sense that China has incurred billions of dollars costs in building its large artificial islands first of all for defense, i.e. military purpose, especially at such high speed.
Therefore, there is no need for US think tank to make analysis on satellite images as indicated by Reuters report “China can deploy warplanes on artificial islands any time: think tank” yesterday. However, if the US wants to attack China from the South China Sea, it certainly has to monitor the islands to see what weapons have been deployed there.
However, what military strength the US has to attack China now?
With submarines? With the group of artificial islands, China certainly has built a powerful anti-submarine network there.
With aircraft carriers? China can increase its deployment of warplanes in the three airports on artificial islands there much more than all US carriers can deploy.
Sorry, the US is now a “hegemon” that lacks the strength to attack China. However, it has strong desire to attack China in order to maintain its hegemony. Otherwise, why the think tank has to be busy in monitoring the islands and making analysis?
However, by so doing, the US is helping Chinese President Xi Jinping rally Chinese people around him to make joint efforts to realize his Chinese dream of the great rejuvenation of the Chinese nation so as to be able to resist US attack.
Stupid US! It wants to contain China but, on the contrary, is doing things to facilitate China’s rise.
Comment by Chan Kai Yee on Reuters’ report, full text of which is reblogged below:
China can deploy warplanes on artificial islands any time: think tank
By David Brunnstrom | WASHINGTON Mon Mar 27, 2017 | 8:03pm EDT
China appears to have largely completed major construction of military infrastructure on artificial islands it has built in the South China Sea and can now deploy combat planes and other military hardware there at any time, a U.S. think tank said on Monday.
The Asia Maritime Transparency Initiative (AMTI), part of Washington’s Center for Strategic and International Studies, said the work on Fiery Cross, Subi and Mischief Reefs in the Spratly Islands included naval, air, radar and defensive facilities.
The think tank cited satellite images taken this month, which its director, Greg Poling, said showed new radar antennas on Fiery Cross and Subi.
“So look for deployments in the near future,” he said.
China has denied U.S. charges that it is militarizing the South China Sea, although last week Premier Li Keqiang said defense equipment had been placed on islands in the disputed waterway to maintain “freedom of navigation.”
AMTI said China’s three air bases in the Spratlys and another on Woody Island in the Paracel chain further north would allow its military aircraft to operate over nearly the entire South China Sea, a key global trade route that Beijing claims most of.
Several neighboring states have competing claims in the sea, which is widely seen as a potential regional flashpoint.
The think tank said advanced surveillance and early-warning radar facilities at Fiery Cross, Subi, and Cuarteron Reefs, as well as Woody Island, and smaller facilities elsewhere gave it similar radar coverage.
It said China had installed HQ-9 surface-to-air missiles at Woody Island more than a year ago and had deployed anti-ship cruise missiles there on at least one occasion.
It had also constructed hardened shelters with retractable roofs for mobile missile launchers at Fiery Cross, Subi and Mischief and enough hangars at Fiery Cross for 24 combat aircraft and three larger planes, including bombers.
U.S. officials told Reuters last month that China had finished building almost two dozen structures on Subi, Mischief and Fiery Cross that appeared designed to house long-range surface-to-air missiles.
In his Senate confirmation hearing in January, new U.S. Secretary of State Rex Tillerson angered China by saying it should be denied access to islands it had built up in the South China Sea.
He subsequently softened his language, saying that in the event of an unspecified “contingency,” the United States and its allies “must be capable of limiting China’s access to and use of” those islands to pose a threat.
In recent years, the United States has conducted a series of what it calls freedom-of-navigation operations in the South China Sea, raising tensions with Beijing.
(Reporting by David Brunnstrom; editing by Matt Spetalnick and Richard Chang)
SCMP says in its report “Chinese drone factory in Saudi Arabia first in Middle East” yesterday that China will earn US$65 billions by selling its most advanced CH-4 drone technology to Saudi Arabia.
It says China is able to do the transaction as CH-4 is cheaper than US MQ-1, but it is exceptional to sell the technology in helping Saudi Arabia build a CH-4 factory.
China has just succeeded in developing CH-5 more advanced than CH-4, but as it has just been developed and not tested in war, CH-4 remains China’s most advanced reliable drone. China displayed its confidence in developing more advanced drones by selling its most advanced drone technology. That is what the US dare not do and the reason China can compete with the US with a much smaller military budget. China is able to recover its R&D costs through export.
Comment by Chan Kai Yee on SCMP’s report, full text of which can be found at http://www.scmp.com/news/china/diplomacy-defence/article/2081869/chinese-drone-factory-saudi-arabia-first-middle-east
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