Moutai makes flammable fuel for China’s stimulus 26 Oct 2018 As companies bid for contracts tied to Beijing’s infrastructure surge, many may toast deals with a bottle of China’s best-known liquor. The $110 bln spirit maker offers a boozy play on government spending, but a sales surge could embarrass graft enforcers, prompting a crackdown.
China aims rare-earth bazooka at trade rivals 25 Oct 2018 Beijing is limiting output of tough-to-mine minerals like cerium and neodymium, starving foreign buyers of key ingredients used in electronics and weapons. It's a drastic escalation that will punish profit margins, and yet an overdue rush to develop new supply will come too late.
Beijing’s stock rescuers can’t leave market alone 25 Oct 2018 Officials are raising over $14 bln to stave off a market selloff. Unlike the “national team” intervention during the 2015 crash, anxious local governments are getting involved early. The issue is similar: once again officials have let China’s debt problem infect equities.
Gucci owner is unreliable beacon for luxury sector 24 Oct 2018 Kering’s upbeat view on Chinese demand sparked a rally in high-end stocks. But the group has so far been less vulnerable to economic swings than rivals thanks to its social media savvy. And the outlook for spending may be less rosy if China’s consumer confidence is any guide.
Xi’s tone-deaf southern tour wastes opportunity 24 Oct 2018 China's leader retraced the steps of liberaliser Deng Xiaoping this week. Yet far from announcing reforms to help the region’s private exporters, he barely spoke as he opened a $15 bln bridge. In other comments, he endorsed self-reliance over trade. Better to have said nothing.
China’s oil bankers blink at Iran sanctions 24 Oct 2018 Bank of Kunlun could soon stop handling payments from the Islamic Republic. Limiting a primary channel for transactions with Tehran is the strongest signal yet that Beijing’s top firms are quietly acceding to Washington’s demands. Iran will struggle to fill the gap.
China’s tech hub warrants an upgrade from Beijing 22 Oct 2018 Shenzhen has morphed from tiny market town to a $320 bln economy. Conferring a province-like status on it would boost Xi Jinping’s plans to integrate the surrounding region. Having more power in the capital amid a trade war also could help champion the likes of Tencent and DJI.
The Exchange: Stephen Harper 19 Oct 2018 Canada’s former prime minister, in office through the financial meltdown a decade ago, is an advocate for conservative politics with a small “c.” He talked to Breakingviews about the revamped NAFTA, Donald Trump’s standoff with China and the pros and cons of the loonie.
China needs shadow bankers to unclog growth 19 Oct 2018 The economy expanded only 6.5 pct last quarter, missing expectations. The campaign to quash financial risk is squeezing private companies, and exhorting banks to lend more won’t cut it over the long run. It’s time to let unconventional credit play a bigger role.
Review: No baby boom for China’s Big Brother 19 Oct 2018 The state hopes to manipulate women for economic and political ends, says Leta Hong Fincher in “Betraying Big Brother”. Once they were workers. Today the priority is bearing babies to defuse a demographic time bomb. A falling birth rate shows the limits of Beijing’s power.
U.S. Treasury hasn’t yet been Trumped 17 Oct 2018 China again escaped being named a currency manipulator by the U.S. agency, despite pressure from the president. Although some trade-related penalties are already happening through other means, it’s a rational decision. Steady hands at Treasury and the Fed offer investors comfort.
China’s share-backed debt problem is a lasting one 16 Oct 2018 Some $220 bln of loans backed by stock collateral threaten to worsen a nearly $2 trillion selloff this year in the People's Republic. Beijing is likely to step in to contain the immediate risk, but higher lending costs and moral hazard will hurt for longer.
Beijing’s art auctioneers aim at Western duopoly 16 Oct 2018 Poly International and China Guardian now dominate the $7.1 billion global market for Chinese art and antiques. Having crushed smaller local rivals, they are expanding abroad. But their parochial, state-protected nature hobbles them. Sotheby’s and Christie’s look safe for now.
Review: Forget robots, capitalism is the future 12 Oct 2018 Ex-Fed boss Alan Greenspan and journalist Adrian Wooldridge have penned a fast-paced history of the good wrought by American entrepreneurs. But their solutions for today’s perceived stagnation – less welfare and fewer regulations – undervalue the adaptability of their subjects.
BMW writes China JV owner manual for its rivals 11 Oct 2018 The luxury carmaker will take control of its venture with Brilliance Auto for $4.2 bln, making it the first to take advantage of new rules. Share weakness has helped it drive a bargain, even if the deal doesn’t close until 2022. Others like Daimler may follow in the slipstream.
Barbarians pushing boundaries at Asian gates 11 Oct 2018 Buyout shops PAG and Blackstone are being uncharacteristically aggressive in separate property bids in Hong Kong and Sydney. Abundant cash seeking deals may lead to more such hostilities. It also risks undoing private equity’s carefully managed reputation for takeover civility.
Tencent’s $230 bln selloff is a double pain 11 Oct 2018 A tech rout has hit the Chinese giant harder than U.S.-listed rivals like Alibaba. Tencent's loss is increased by its exposure to fickle mainland punters and a large emerging market weighting. But boss Pony Ma’s top problem is a regulatory crackdown undermining the core business.
U.S. deal review could be new stick to beat China 10 Oct 2018 Minority stakes in U.S. tech firms will be under tougher scrutiny starting next month. That’s reasonable, and the Treasury, which will oversee reviews, has a rational approach. The risk is that hardliners co-opt the process to hurt Beijing once tariffs reach their limit.
Self-fulfilling prophecy imperils Chinese shoppers 10 Oct 2018 Tourism spending during last week’s Golden Week holiday grew a healthy 9 pct from a year ago to nearly $90 bln. Any “consumer downgrade” seems more informed by alarming anecdotes than any hard data so far. There are good reasons, though, to fear the spread of skittish sentiment.
China worries give luxury investors excuse to sell 9 Oct 2018 Reports of stricter customs checks on Chinese tourists returning from the week-long national holiday triggered a selloff in luxury stocks. Government curbs are nothing new. But the sector’s high valuations make shareholders nervous about any sign of weaker demand from China.