FCCC Meeting with Suzhou Wujiang delegation on 24 July 2018 – Ghent
Jul-31-2018 By : fcccadmin
On 24 July 2018, the Flanders-China Chamber of Commerce, represented by Ms Gwenn Sonck, Executive Director, received a delegation from Suzhou Wujiang District People’s Government. The meeting took place at the offices of the FCCC in Ghent. The delegation was led by Mr Li Ming, Deputy Party Secretary and District Mayor. The aim of the visit was to introduce the investment environment of Wujiang located in Jiangsu Province. With Shanghai to its east, Taihu lake to its west, Hangzhou to its south and Suzhou’s main city zone to its north, Wujiang covers an area of 1,176 sq kilometers. Its population counts 1,600,000. Its main industries are: intelligent equipment manufacturing; electronic information; silk textiles: cable & optical fibre. Companies interested to receive more information, can send an e-mail to: info@flanders-china.be
Qualcomm drops USD44 billion bid for NXP Semiconductors
By : fcccadmin
U.S. chip maker Qualcomm dropped its USD44 billion offer to purchase NXP Semiconductors as the deal failed to obtain the Chinese government’s approval. The merger agreement expired on July 25, nearly 21 months after Qualcomm first offered to buy the Dutch chip maker. Beijing’s silence on the acquisition led Qualcomm to believe that approval would not be given. Qualcomm’s CEO, Steve Mollenkopf said the company would move ahead with a USD30 billion stock buy-back plan rather than continue with its pursuit of NXP. Qualcomm still must pay the Dutch company a USD2 billion break-up fee. China’s State Administration for Market Regulation remained silent about the acquisition in the run-up to the deadline. The acquisition was considered strategically important as the U.S. and China are both racing to dominate 5G technology, the next stage for telecommunications networks.
“There is no real fundamental reason to kill the deal,” said Stacy Rasgon, a semiconductor analyst at U.S.-based investment firm AllianceBernstein. “The deal fell victim to a combination of things, including trade, intellectual property and everything else.” Qualcomm first announced the acquisition in October 2016, and eight of the nine countries – including the U.S. and Japan – where Qualcomm does business signed off on the deal. China’s approval remained the lone obstacle.
Meanwhile, U.S. lawmakers have reached a deal to not reinstate a ban on ZTE that crippled the Chinese telecommunications company for violating U.S. business laws, in a victory for U.S. President Donald Trump’s administration. Some senators backed down from their attempt to reimpose the ban issued by the Commerce Department in April that prevented ZTE from buying any American components, effectively shuttering it. A compromise amendment, part of the Defense Appropriation Bill, adopts the House of Representatives’ softer language, which stops the Pentagon from buying ZTE products on national security grounds.
Also in the U.S., lawmakers instead passed the Foreign Investment Risk Review Modernization Act (FIRRMA), a measure which, among other actions, strengthens the authority and expands the reach of the Committee on Foreign Investment in the United States (CFIUS), an inter-agency body that assesses foreign investments for potential threats to national security. This could prompt China to also become stricter in approving U.S. investments in China.
The investment environment in the U.S. for Chinese companies has deteriorated recently. According to a report by U.S. research provider Rhodium Group in June, Chinese direct investment in the U.S. slumped 92% year-on-year to USD1.8 billion in the first five months of 2018.
Business groups urge U.S. not to impose more tariffs on Chinese imports
By : fcccadmin
As the U.S. prepares to impose a 25% tariff on an additional USD16 billion of Chinese imports, representatives of American industries that will be affected by the proposed new tariffs voiced their concerns to U.S. officials as part of a hearing on U.S. President Donald Trump’s expanding efforts to exert economic pressure on Beijing. They warned that new duties would be harmful to U.S. businesses, especially those that rely heavily on products that only China can provide, with one witness decrying the “blunt instrument of tariffs”.
The Office of the U.S. Trade Representative called the two-day public hearing in Washington as the government seeks to finalize a list of Chinese products totaling USD16 billion that will be subject to a 25% punitive tariff. The move would be the first expansion of U.S. tariffs on Chinese goods since a similar tax was imposed on USD34 billion worth of goods on July 6. In an indication that those duties are already affecting American agriculture, the administration announced that it was planning to offer USD12 billion in aid to farmers hurt by China’s retaliatory tariffs.
In his opening remarks at the hearing, Representative Kevin Cramer, Republican of North Dakota, offered a defense of Trump’s trade policy. “After years of unsuccessful U.S.-China dialogue, the United States is taking action to confront China over its state-led, market-distorting policy and practices,” Cramer said, adding that it was the “negligence of previous administrations” that had caused the United States’ current trade disadvantage. “It is past time we take strong, defensive action to protect America’s lead in technology and innovation” he said. But the initial testimony from witnesses suggested that it was the tariffs themselves that had provoked strong, defensive reactions. The first round of eight witnesses – of a scheduled 85 individual appearances – voiced unanimous opposition to the inclusion of chemical imports on the proposed list of new duties.
Speaking on behalf of a plastics industry trade association, Richard Braillie urged the administration not to push ahead with tariffs that targeted fluoropolymers, of which Teflon is an example, saying the new tariffs would cause “severe and irreparable damage to the U.S. fluoropolymer industry”. Such duties, Braillie said, would harm more than 4,000 businesses and jeopardize the tens of billions of dollars the industry contributes to the U.S. economy, the South China Morning Post reports.
In a written submission before the hearing, the U.S. Chamber of Commerce expressed its staunch opposition to tariff escalation, saying it would be U.S. businesses and customers who would foot the bill of the “hidden, regressive taxes”. The trade war could still escalate further as President Trump has already laid the groundwork for tariffs on a further USD200 billion worth of Chinese imports, and even indicated that he was willing to impose tariffs on all Chinese products imported to the United States, with the total value of good targeted reaching USD500 billion.
Moreover, China is set to become the focus of Donald Trump’s global crusade for “free and fair trade” after the U.S. reached a deal with the EU to suspend new tariffs and expand European imports of U.S. goods.
China’s judiciary should prepare itself for a possible surge in corporate bankruptcy cases as a result of the trade dispute, state media warned. In an opinion piece in the People’s Court Daily, Du Wanhua, Deputy Director of an advisory committee to the Supreme People’s Court, said that courts needed to be aware of the potential harm the tariff row could cause. “It’s hard to predict how this trade war will develop and to what extent,” he said. “But one thing is sure: if the U.S. imposes tariffs on Chinese imports of USD60 billion, USD200 billion, or even USD500 billion, many Chinese companies will go bankrupt.”
Foreign buyers increasingly interested in Chinese commercial property
By : fcccadmin
Foreign buyers are increasingly investing in Chinese commercial property, as Chinese competitors are now hampered by Beijing’s financial deleveraging campaigns. “Overseas investors have always been interested in commercial property in China, especially those in its tier 1 cities. The difference now is that domestic investors are grappling with financing difficulties and rising funding costs, which has given prominence to overseas investors’ activities,” said Xu Xixi, Director of JLL’s Capital Market for North China.
“There are definitely opportunities for cashed-up investors with access to inexpensive capital to take advantage of the current deleveraging taking place throughout China,” said Anthony McQuade, Managing Director of Savills Northern China. Brookfield Asset Management just closed an investment in two shopping malls in Shanghai for an undisclosed price, after announcing earlier this year it would invest CNY2 billion in China in the next five years. In a deal announced on July 9, the property investment arm of Germany’s Allianz bought an office tower in Beijing from Kailong Group and Goldman Sachs valued at USD185-196 million. The company said it expected China to account for 50% of its Asia-Pacific fund allocation going forward from 40% now, with a focus on the new economy and logistics sectors.
US private equity firm Blackstone has raised USD7.1 billion to invest in real estate across Asia, in its largest ever fundraising activity. UK-based AEW Capital Management also announced it had raised USD1.12 billion for an Asia-Pacific property fund that viewed China as a target market. The Singapore sovereign fund GIC and the Canada Pension Plan Investment Board have, respectively, recently launched funds with local developers to acquire rental apartment projects. Savills North China’s McQuade said international investors have been historically underweight in Asia and China, and were now looking for chances to add to their portfolios to better reflect the global weight of economies and property markets, the South China Morning Post reports.
Meanwhile, Shanghai has canceled five planned land sales worth a total of CNY10 billion in 20 days, reflecting the dampened appetite of developers. Chinese developers are facing a liquidity squeeze and rising funding costs as a result of the government’s deleveraging campaign and efforts to rein in housing prices. According to the Shanghai Bureau of Statistics, citywide property investments in the first half grew 3.6%, while new home starts slumped 6.4%. Property sales rose 3%. In Shenzhen, 26 parcels of land were sold in the first half, fetching CNY10.9 billion, down 67% from the same period last year.
More than 2,800 foreign companies confirm participation in CIEE
By : fcccadmin
More than 2,800 overseas companies have confirmed they will attend the first China International Import Expo (CIIE) in November in Shanghai, a government official said at a 100-day countdown press conference for the Expo. Companies from over 130 countries and regions from five continents have confirmed participation in the upcoming Expo, Vice Minister of Commerce Wang Bingnan said. Wang also said more than 200 businesses attending the CIIE are on the Fortune Global 500 list of industrial leaders.
The first CIIE will consist of three sessions – the enterprise and business exhibition, which will display overseas products, the country pavilion for trade and investment, which will offer trade in goods and services, and the Hongqiao International Trade Forum.
Several overseas exhibitors revealed their plans for the CIIE at another press conference. Jaguar Land Rover will launch a luxury electric SUV, while Japan-based shopping mall Takashimaya is going to display some traditional Japanese fashions. Dong Dengxin, Director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times that the CIIE shows a shift in China’s trade policy. According to Dong, China used to be overly reliant on exports, as previous trade expos in China mainly exhibited Chinese exports. “In the past, China emphasized exports in order to guarantee foreign currency reserves. But now that forex reserves are sufficient, the government is trying to embrace a trade structure that is more balanced, meaning that imports should also develop fast,” Dong said.
Registration will be completed by the end of August, and 150,000 purchasers are expected to come to the fair. Some heads of state and leaders of international organizations have also confirmed they will attend the Expo.
Customs data released on July 13 show that China’s exports surged 12.8% on a yearly basis to USD1.17 trillion while imports rose 19.9% year-on-year to USD1.03 trillion in the first six months of this year.
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