Asia-Latin America Round-up — 26 Jun 2017

Highlights

Chinese firm buys Lauderhill retail center — The Real Deal
Jin Yang Real Estate Corporation paid $4.15m for a 20,000 sqf shopping center in Lauderhill  for $213/sqf – its first real estate investment in the United States. Jin Yang Real Estate Corporation is a Florida entity set up earlier this year by a Kendall-based Mr Nanyang Wang.

Jack Ma Woos Mom and Pop Shops in U.S. Jobs Push — Bloomberg
Can China and the Internet Save American Small Business? — MIT Technology Review
Alibaba in America? Don't Bet on It. — Bloomberg View
Alibaba Considering Distribution Center in Detroit — Multichannel Merchant
There was plenty of coverage of the Alibaba event that Teddy and Mike attended in Detroit last week, and in the MIT Tech Review, Emily Parker outlines some of the US small business success stories that were highlighted there. The Gateway 17 conference was part of Jack Ma’s effort to achieve two goals: mollify Donald Trump’s protectionist urges and increase Alibaba’s US/global sourcing footprint. Success on the former goal remains to be seen, but the latter goal is the one that commentators have focused on. Christopher Balding in Bloomberg View notes that Alibaba has nowhere near the logistics and delivery platform one would expect from the “Amazon of China,” and that this will make it hard to attract SMEs (intimidated by the difficulties of shipping to China) and large firms (who won’t see a cost benefit from going with Alibaba). However Alibaba wants to continue showing it’s commitment to Detroit, and says it’s considering a distribution center in the area.

Increasingly Affluent Chinese Want Healthier Food — Fortune
Great lede: "China's frozen dumpling makers are finding there's a quick route to winning new sales - increase the vegetable content, and cut down on the meat.” The rising Chinese middle class is becoming more conscious about what it wants to eat, but - like US counterparts - are taking it slowly:

"They like to try to eat more healthy products once a week or fortnight. It's a big trend for mainland China consumers, especially those aged 20 to 35," said Ellis Wang, Shanghai-based marketing manager at U.S. food giant General Mills, which owns top dumpling brand Wanchai Ferry.

China-Latin America

China, Panama diplomatic drive puts business first — Reuters
The fallout from Panama and China’s mutual recognition continues. Panama and Beijing’s diplomatic embrace was backed by Panama's business community, which has set its sights on attracting more investment from China. According to Reuters, initial approaches started soon after President Carlos Varela took office in July 2014, but a push for full ties was not seriously undertaken until a tacit diplomatic truce between Beijing and Taipei in place since 2008 fractured last year, as we had previously suspected.

China puts Nicaraguan Canal plan on hold — The Times
In other news you heard here first in the wake of the Panama-China connection, the planned canal across Nicaragua seems to be officially dead. Per the UK’s Times, construction had been due to start this year, but residents along the planned route have reported no signs of any activity. ProNicaragua, the Nicaraguan government’s investment agency, made no mention of the project in its 2017-2021 plan.

China highlights ties with Peru, eyes infrastructure investment opportunities — Andina
A summary of an interview with China’s ambassador to Lima, Jia Guide. The Ambassador states that China will continue encouraging top-tier companies to invest in Peru, thus "serving as [growth] engine for traditional sectors like mining, hydrocarbons and infrastructure, while creating new growth drivers in fields like environmental protection, renewable energies and information connectivity.” He also notes that we must speed up trade cooperation, trying to optimize the bilateral free trade agreement […] and third, we must continue to strengthen humanistic and cultural exchange, focusing on education, technology, sanitation and tourism cooperation."

China is Mexico's second largest trading partner — Fresh Plaza
US and China can work together in Latin America — Nikkei Asian Review
Berries continue to flow from Latin America to China.  the state of Jalisco sent its first shipment of blueberries in 2015, and last year sent it’s first shipments of raspberry and strawberry to Dubai, Kuwait, and Singapore. As a result, Ildefonso Guajardo, Mexico’s economy minister, suggests his country could shift its trade focus to China from the U.S., in the wake of the latter’s threats to tear up NAFTA.

Oliver Stuenkel — Twitter
"Just returned from southern Guyana, where Chinese merchants have set up a remarkable trading hub in Lethem. Packed with Brazilian shoppers."

Asia-Latin America

Costa Rica seeks FTA with Japan — The Japan News
It’s not just China Latin American countries are looking for FTAs with. Costa Rica is aiming to reach a free trade agreement and an investment pact with Japan as part of the Central American country’s strategy to diversify its economy based on business-friendly but environmentally conscious development platforms, Foreign Trade Minister Alexander Mora says in an interview with The Japan News. Costa Rica’s FTAs with China and Singapore entered into force in 2011 and 2013; last year, South Korea also reached an FTA with six Central American countries including Costa Rica.

China Econ/Policy

Europe and US cannot afford to ignore China's 'belt and road’ — SCMP
German's ambassador to China highlights that the EU and US cannot ignore Beijing’s Belt and Road Initiative. While questions remain about China’s ability to follow through on the Belt and Road vision, it’s impact on Europe’s periphery and surrounding areas means that China’s growing presence needs to be addressed. The Ambassador suggests two approaches: partner with China to close development gaps, while reinforcing the open, transparent and non-hierarchical world order (as he notes seems to be working with the Asian Infrastructure Investment Bank); and offering a competing model of local content, transparent bidding, and environmental and labor standards that would benefit the host countries of infrastructure projects.

A high-flying Chinese dealmaker has his wings clipped — The Economist
A good summary of what Anbang and chairman Wu Xiaohui have accomplished, and the difficulties the firm (and the man) now face.

Ping An Lends $700M for Chicago's Wanda Vista Tower — Mingtiandi
Ping An Bank, the bank financing division of the Chinese insurer, has extended a $700 million loan to the developers of Chicago’s 95 story Vista Tower, said to be the biggest construction loan in the city’s history. The financing will allow partners Magellan Development Group and Dalian Wanda Group to complete the billion-dollar, mixed-use luxury skyscraper by 2020.

China Oceanwide Buys SF Retail Building for $32M — Mingtiandi
China Oceanwide purchased a 15,995 sqf retail property at the corner of First and Mission Streets in San Francisco for $32.5m. The deal further solidifies their control around the ambitious $1.6 billion, Oceanwide Center mixed-use project that broke ground last December and is expected to be the second-tallest skyscraper in San Francisco when complete.

China gains entry to MSCI’s $1.6tn global index — FT
This was the big financial news last week. MSCI, which runs the benchmark global equity index, has agreed to include Chinese stocks in the index, forcing passive investors who track the index to buy those stocks. MSCI’s move means mainland equities, known as A-shares, will next year be included in its flagship emerging markets index, obliging the estimated $1.6tn of investment funds that track the index to buy the stocks. However, Chinese shares will only have a 5% weighting, meaning that they will be one-twentieth what they should be in the basket, limiting their potential upside. 

CIC bidding for 49% stake in 1515 Broadway, valuing tower at $2B — The Real Deal
China Investment Corporation is looking to buy 1515 Broadway, home to Viacom, from SL Green in a deal that could value the 1.75m sqf tower at around $2 billion, or around $1,142/sqf. SL Green is denied a deal has been reached. Last year, CIC, which is a Chinese sovereign wealth fund, bought a 45 percent stake in 1221 Sixth Avenue.

Big China companies targeted over ‘systemic risk’ — FT
China’s bank regulator ordered domestic lenders to check the “systemic risk” presented by “some large enterprises” involved in overseas buying sprees, sending stock prices of some of the country’s most acquisitive private-sector companies sharply lower. As a result, shares in companies controlled by Dalian Wanda, Fosun International and conglomerate HNA all fell.

Trump and the Thucydides Trap: Why West Wingers are boning up on Greek history. (Hint: Think China.) — NYT
Are China and the United States Headed for War? — The New Yorker
The buzzwords du jour inside the Beltway are “Thucydides Trap,” a catchphrase popularized by Graham Allison in his new book “Destined for War.” The phrase purports to describe the fact that “on the current trajectory, war between the U.S. and China in the decades ahead is not just possible, but much more likely than currently recognized.” The idea comes from Thucydides’ the Peloponnesian War, in which the established Sparta was threatened by the rise of Athens, and the resulting change in balance of power made war almost inevitable. Replace “Sparta” with “the US” and “Athens” with China, and you see why people, even in the White House, are nervous after reading this book.

However, Ian Buruma throws Allison a pretty convincing blowback pitch: "His book would be more persuasive, however, if he knew more about China.” Buruma lists many of the issues that can hold back China:

China’s population is aging so rapidly that an ever smaller pool of young people will have to support a growing number of old people, who lack proper welfare provisions; the country is an ecological disaster zone; the dead hand of Communist Party control makes necessary economic reforms difficult; innovative thinking is hampered by censorship; and so on. In terms of military hardware—aircraft carriers and the like—China still lags well behind the United States. And the United States has a wide network of allies in Asia, while China has almost none.

He goes on to highlight several other books (notably Amitai Etzioni’s “Avoiding War With China”) which would be better prisms through which to view the trans-pacific challenge.

Asia-Latin America Round-up — 16 Jun 2017

Highlights

Why international tech startups are making Miami their U.S. base — Miami Herald
An article based around the eMerge Americas conference highlights that in the last year, nearly half of the tech companies checking out Miami have been international, and the Beacon Council has seen increasing interest from Europe, particularly from Spain and France. In addition to the cultural and global appeal of Miami, daily flights to Europe have been increasing and some countries incentivize their companies to expand beyond their borders.

Chinese investors hungry to get into US commercial real estate market  — China Daily
China was the top country of origin in both the buying and selling of US commercial real estate last year.

"For many global investors-including Chinese buyers-US real estate markets offer portfolio diversification, along with safety of capital and solid yields," [George Ratiu, NAR's director of quantitative and commercial research] told China Daily.

"While top-tier cities like New York, San Francisco and Los Angeles have been attracting investment for a long time, with a shortage of inventory in those markets, many investors have found favorable conditions in mid-tier and small-cap markets."

In an expanding economy like the US, demand for commercial space increases, which helps to attract Chinese and other foreign buyers, he said.

"US commercial properties are well diversified both across geography as well as the price spectrum. Moreover, given the various property types, investors gain exposure to various segments of the US economy-industrial trade and logistics, retail consumption and multi-family housing.

China May Be Loria's Last Chance To Get $1.3 Billion For Marlins — Forbes
A group led by Tagg “Son of Mitt” Romney has been trying to cobble together enough money to buy the Marlins for months and is now looking to China for capital. Supposedly at least one owner of a soccer team is currently looking over the Marlins books. Romney is the only group offering $1.3 billion for the baseball team after the group with Jeb Bush and Derek Jeter pulled out of the bidding two weeks ago because it could not come up with the money. Other people interested in buying the team think the Marlins are worth between $900 million and $1.1 billion.

Panama switches diplomatic recognition from Taiwan to China — AP
侠客岛:与台湾“断交” 巴拿马绝不是最后一个 — People’s Daily
Panama has recognized the PRC as the official government of China, switching diplomatic relations from Taipei to Beijing. China and Taiwan have vied for recognition from other countries, often sweetening the opportunity with aid packages and trade deals. Panama had been among the largest economies to have maintained diplomatic relations with Taiwan. The island now has just 20 formal diplomatic partners, 11 of which are in Latin America and the Caribbean. The move ends what had been a decade long “truce” between China and Taiwan, and People's Daily "blogger" Xiake Dao says Panama will definitely not be the last country to cut ties with Taiwan. This also probably puts a nail in the coffin of the Nicaragua canal plan.

Alibaba Looks to Boost Sales Beyond Mainland With Tmall World — Caixin Global
Alibaba is looking to expand in Chinese communities in Southeast Asia, through allowing domestic Chinese merchants whose products attain certain quality and certification standards to sell through a single platform to multiple markets such as Hong Kong, Taiwan, Singapore and Malaysia. This will be done through Tmall World, that will broaden its scope in these markets with better “logistics, payment and localization support,” the company said in a press release.

Baidu’s Turnaround Strategy — WSJ
An interview with new Baidu chief Qi Lu, who plans to turn Baidu around include a big investment in artificial intelligence for the development of new technologies for search and other businesses—including driverless cars.

Mnuchin Seeks Greater Scrutiny of Chinese Investments in U.S. — Bloomberg
The US Treasury wants to include China among a proposed group of hostile nations whose companies would undergo extra scrutiny for national security risks. The proposed expansion of Committee on Foreign Investment in the United States (CFIUS) would also broaden the scope of the committee to include technology joint ventures and real estate transactions near military bases or other national security facilities.

Not one, but two dueling Chinatowns proposed in neighboring Miami-Dade cities — The Real Deal
Both North Miami and North Miami Beach have districts in the works. According to proponents, the proposed Chinatowns are fueled by Chinese investors’ appetite for South Florida real estate and commerce.

China-Latin America

Venezuela’s Road to Disaster Is Littered With Chinese Cash — Foreign Policy
From 2007 to 2014, China lent Venezuela $63 billion — 53% of all its lending to Latin America during this time. Beijing insisted on being repaid in oil. When oil dropped to close to $30 a barrel in January 2016, this caused Venezuela’s price tag for serving its debt to explode. To repay Beijing today, Venezuela must now ship two barrels of oil for every one it originally agreed to. With Venezuela a living nightmare for many of it’s people and teetering on the edge of collapse, Beijing faces no good options on collecting it’s debt, and other countries it is courting through the Belt & Road Initiative will be wary of getting caught in a similar situation.

China está lista para concretar TLC con México — El Financiero
China’s Ambassador to Mexico underlined that his country has the “doors open” to a free trade deal with Mexico. The statements were made at the China HomeLife fair in Mexico City, that brought over 700 Chinese textile, machine, and electronics companies looking to expand their business in the country.

China Southern Airlines eyes Brazil, Argentina destinations — SCMP
Fresh off establishing a route to Mexico earlier this year, Asia’s largest carrier in terms of passengers flown plans to establish passenger routes to Brazil and Argentina within the next five years, completing its worldwide reach. China Southern boss Wu Guoxiang declined to comment on reports that it is in talks to sell a stake in itself worth US$200 million to American Airlines, saying only that the two airlines are talking about “how to cooperate in the future”.

Latin America pivots to China on trade and development — American Journal of Transportation
"As the U.S. goes it alone, China steps into the void.” A look at how China and Latin America are trying to shoehorn the Belt and Road Forum into the vacuum left by the collapse of the US’ participation in the TPP.

Asia-Latin America

Singapore, Americas to boost fintech ties — The Straits Times
Abu Dhabi builds a 'fintech bridge' to Asia — Nikkei Asian Review
The Monetary Authority of Singapore (MAS) and the Association of Supervisors of Banks of the Americas (ASBA) signed a memorandum of understanding (MOU) yesterday to bolster fintech ties between Singapore and the Americas. The MOU provides a framework for fintech cooperation between Singapore and the 36 ASBA member countries. Under the framework, MAS and ASBA can explore potential joint innovation projects on technologies such as blockchain and big data. MAS also signed a similar deal with Abu Dhabi.

China Econ/Policy

Culture Clash at a Chinese-Owned Plant in Ohio — NYT
Chinese company Fuyao Glass Industry Group spent more than a half-billion dollars to fix up an abandoned General Motors plant outside of Dayton, Ohio. But with the explosion of investment has come unexpected trouble — Fuyao faces an acrimonious union campaign by the United Automobile Workers and a lawsuit by a former manager who says he was let go in part because he is not Chinese. “Some workers questioning the company’s commitment to operating under American supervision and American norms."

China Engages California on Climate After Trump’s Paris Snub — WSJ
China and the Americas — Trinidad Express
China rolled out the red carpet when California Governor Jerry “Moonbeam” Brown arrived to take part in an international clean-energy forum and meet provincial officials. Brown was received by President Xi Jinping in Beijing’s Great Hall of the People; U.S. Energy Secretary Rick Perry, also in town for the forum, was received by a vice premier. Among the agreements announced during the week included plans by California to coordinate emission-reduction programs with China’s Ministry of Science and Technology and to set up a joint climate research institute between California and China’s Tsinghua University. The deal got positive play in many places, including Trinidad and Tobago.

China’s New Bridges: Rising High, but Buried in Debt — NYT
Spectacular photos of bridges China has built illustrate this article about the dark side of China’s infrastructure boom. China has overspent on infrastructure domestically, leaving it with white elephant projects that most Chinese can’t afford to use and are saddled with debt. Says one expert who found that  fewer than a third of highway and rail projects are “genuinely economically productive”:

“Infrastructure is a double-edged sword,” said Atif Ansar, a management professor at the University of Oxford who has studied China’s infrastructure spending. “It’s good for the economy, but too much of this is pernicious. ‘Build it and they will come’ is a dictum that doesn’t work, especially in China, where there’s so much built already.”

Cheesegrater financing deal completed — Property Funds World
The Leadenhall Building, otherwise known as the ‘Cheesegrater’, a 46-storey tower in London was bought earlier this year for £1.15 billion ($1.5 billion) by C C Land Holdings Limited, a Hong Kong listed real estate company. It was the largest acquisition of a single building in the UK since December 2014.

Chinese Tech Firms Forced to Choose Market: Home or Everywhere Else — NYT
This article from last August and the accompanying video provide a good outline of the dilemma facing Chinese start ups:  the “Great Firewall" has forced them to choose — either create something that caters to China’s digital population or focus on the rest of the globe. "In many ways, the split is like 19th century railroads in the United States, when rails of different sizes hindered a train’s ability to go from one place to another."

Singapore offers to help bankroll China's global ambitions — Miami Herald
Singapore is offering up its financial industry to help bankroll China's ambition to develop a network of ports, railways, power plants and other projects across a broad swath of Asia, Europe and east Africa. Singapore has traditionally looked to the US for support (the US Navy has a support facility at the Port of Singapore since 1992 and periodically holds joint exercises with Singapore's navy), but the isolationist rhetoric has caused the island state to strengthen it’s connections with China. "Singapore has been a believer in China's rise," Singapore Foreign Affairs Minister Vivian Balakrishnan said after meeting with Chinese officials in Beijing on Monday. "This is a wonderful opportunity to restore, in a sense, these ancient trade links."

Anbang Insurance Chief Wu Xiaohui Said Detained Since Friday — Mingtiandi
Chairman of Chinese Firm Who Tried to Forge Ties With Jared Kushner Is Detained — NYT
Anbang’s billionaire chairman Wu Xiaohui steps aside amid probe reports — SCMP
Anbang Rout Turns China's Stock Giants From Heroes to Zeros — Bloomberg
Anbang's Woes Deepen as Banks Are Told to Halt Dealings — Bloomberg
The Anbang crisis deepens. Last week the company confirmed rumors that had been circulating for over a week that Chairman Wu Xiahui had been taken into custody by the authorities. The exact nature of Wu’s detention remains a mystery. Per Bloomberg:

Wu faces questions in a probe that includes looking into the sources of funding for Anbang’s acquisitions overseas, possible market manipulation by insurers, and “economic crimes,” people familiar with the matter said. The questioning doesn’t mean Wu is accused of any crime or will face charges, they said.

While this could be seen as just the latest and most high-profile move in Xi Jinping’s ongoing corruption clean up, Anbang itself could be in trouble:

Chinese authorities have asked lenders to suspend some business dealings with the insurer, according to a person with knowledge of the matter, who didn’t provide further details. At least six large banks have stopped selling Anbang policies at their branch networks, with some taking action before the government notice, people with knowledge of their operations said.

“It’s like having your legs broken,” said Grace Zhou, a Hong Kong-based analyst at ICBC International, referring to the reported block on Anbang’s bank channels. “It’s their main source of revenue.”

China-backed fund in third bid for U.S. to approve chip deal — Reuters
Canyon Bridge Capital Partners, the China-backed buyout fund that agreed to acquire Lattice Semiconductor Corp in November for $1.3 billion, will submit the deal for U.S. review by CFIUS for the third time. Vacancies left in senior positions at several government agencies since the inauguration of President Donald Trump, have reduced CFIUS' capacity to review cases expeditiously, and are weighing on its decision-making ability, according to Reuters' sources.

Chinese firms in the US worried about Trump, but it won’t impact their investment strategies: survey — The Real Deal
Sixty-three percent of respondents to a Real Deal survey said they expect government oversight of mergers and acquisitions involving Chinese firms will be tightened under Trump, and 53% said they expect tightened government oversight of their activities more generally. However, the CEO of Bank of China USA blames “reasonable” capital controls — and not US policy — for the drop in Chinese investment.

Asia-Latin America Round-up — 9 Jun 2017

Highlights

South Florida tries to hold back the sea — The Economist
As the subhed says: "Denial rules in Tallahassee; Miami takes matters into its own hands.” According to the Economist, by 2030, average sea levels in South Florida are likely to be six to ten inches above the mean level seen in 1992; by 2060, between 14 and 26 inches. By 2100 the Atlantic could devastate the area because of Florida’s porous limestone bedrock and shallow water table, which allow water to well up even behind sea walls. Florida Governor Rick Scott refuses to say whether he accepts the links between human activity and global warming, despite reports that say rising waters will threaten up to $36bn-worth of Florida’s coastal property by 2050. So Miami Beach will spend hundreds of millions of dollars in the next few years on raising streets and improving drainage.

Alibaba’s bullish sales projection draws gasps — FT
Alibaba is forecasting annual revenue to grow by almost 50% this year, more than 10% above analysts’ estimates and "elicited gasps of “wow” and loud clapping from investors at the e-commerce group’s Hangzhou headquarters.” That growth is expected to be driven by the core retail business, including in newer areas such as physical supermarkets and international businesses. 

China Econ/Policy

Billionaire Anbang boss Wu Xiaohui barred from leaving China — FT
Anbang Denies China Is Preventing Chairman From Leaving Country — Bloomberg
The headlines say it all. Wu Xiaohui, the billionaire chairman of the acquisitive Chinese insurer Anbang, has been barred from leaving China, according to four people who have had business dealings with him. The claim was denied by the firm, that has been aggressive in it’s overseas investments in the past several years, starting with the purchase of the Waldorf Astoria Hotel. The apparent motivation, according to one unnamed finance SOE senior executive is that regulators “want to stop financial institutions from doing crazy things” that might provoke a financial crisis. Since the restraints were announced last Friday, no news on Wu has surfaced.

China's Tencent cracks top 10 'most valuable' brands list — Nikkei Asian Review
WPP and Kantar Millward Brown media agencies placed the WeChat owner 8th in their annual top 10 "most valuable" global brands. Tencent was the only non-American brand in the top 10 of the BrandZ Top 100 Most Valuable Global Brands 2017 ranking.  Alibaba was 14th, search engine company Baidu 39th and smartphone maker Huawei 49th.

Top U.S. Diplomat in China Quits Over Trump Climate Policy — NYT
David Rank, the chargé d’affaires (acting Ambassador) of the U.S. Embassy in Beijing, has left the State Department over the Trump administration's decision to quit the 2015 Paris agreement to fight climate change, a senior U.S. official said on Monday. Iowa Governor Terry Branstad, President Donald Trump's pick as the next U.S. ambassador to Beijing, is expected to take up the post later this month.

Chinese-Owned Aussie Builder Scoops Up Sydney Project for $60M — Mingtiandi
China Communications Construction Company (CCCC) bought an office tower in the heart of downtown Sydney through John Holland, a local company it bought three years ago. The 14-storey Grade B tower with 7,357 square meters (79k sqf) of office space and a small retail component sold for A$80m ($60m).

Chinese regulators tighten lending to property developers via trust company loans — SCMP
The China Banking Regulatory Commission is stepping up scrutiny on trust companies in an effort to curtail lending to the real estate sector. According to a local trade publication, officials will check whether trust companies are helping developers to circumvent CBRC-imposed leverage caps by offering additional debt or equity financing to developers. Per SCMP and Brookings, China’s trust companies are financial firms that have a flexible charter and combine elements of banks and asset managers.

China City Construction warns of debt repayment problems — Reuters
China City Construction Holding Group, a state-owned infrastructure and property developer, has warned it is facing cash flow problems and could struggle to repay debts due on June 12. CCC issued bonds worth RMB 1.5b ($220.5) in 2014; while repayment of the principle and interest is due this month, China City Construction says its "financing channels have been restricted.” China City Construction had previously failed to make interest payments on a medium term note due on March 1 this year.

SOHO China chief sues fugitive billionaire Guo Wengui in New York for defamation — SCMP
No week is complete without a new turn in the case of Guo Wengui. The chairman of property developer SOHO China says he’s filed suit against Guo in NY Superior Court for defamation. Guo alleged in a live-stream last month that the SOHO China head and other property developers in Beijing were ­involved in rigging tenders in bids for land near the National Stadium in May 2006. In an unrelated move, Guo’s wife and daughter are said to have flown to New York and joined Guo on the proviso that they would help negotiate between Beijing and Guo. They had previously reportedly been barred from leaving the mainland since Guo left in August 2014.

Asia-Latin America Round-up — 2 Jun 2017

Highlights

China-Brazil Fund officially presented in São Paulo on 30 May – Macauhub
Brazil-China fund to begin operations this Thursday — Global Trade Review
China and Brazil have launched their joint $20b Brazil-China Cooperation Fund for Increasing Productive Capacity this week. Of the amount raised, $15b were provided by Claifund, the Chinese fund for LatAm industrial cooperation, and $5bn were contributed by Brazilian financial institutions, BNDES and Caixa, that will be agents for the fund. Interestingly, this is the first Claifund project with bilateral parity, meaning that Brazil and China will have the same weight in financing decisions. Targets for the fund will include logistics, energy, mining, technology, agriculture and agribusiness.

A $200 Million Bet on Brazilian Tech Start-Ups Amid Political Upheaval — NYT
Latin American venture capital firm Kaszek Ventures has raised a $200 m fund in a bet on Brazilian start ups. The new fund is about 48 percent larger than the firm’s second and most recent fund, which was $135 m and was marketed in late 2013. While based in Argentina, about two-thirds of its investments are in start-ups in Brazil.

Forget New York or San Francisco, Chinese investors are looking at balmy Miami — CNBC
Peggy Fucci, CEO of Ft Lauderdale-based real estate broker OneWorld properties, says she doesn’t think the recent  capital controls are going to stop Chinese investment in US real estate, and she thinks Miami’s growing property market is attractive: "I think that Miami has a lot of growing up to do and there's still a lot of room for growth in Miami," she said. "The real estate market is a long-term play not just a short-term.”

China's Breakneck Metro System Growth, in One Amazing GIF — That’s Shanghai
Just click through. It’s pretty impressive.

China-Latin America

Billionaire Slim eyeing electric taxi to reduce pollution in Mexico City — Reuters
Carlos Slim’s Giant Motors — which in February announced with China's JAC Motors and Japan's Chori Co, said they would invest some $210 million — is joining with a subsidiary of Grupo Bimbo to produce the environmentally friendly car that will eventually replace part of Mexico City's more than 130,000 registered cabs.

Chinese firms should prepare to deal with fallout from mounting crisis in Brazil — Global Times
Official English language newspaper of the Chinese government notes that the Chinese embassy in Brasilia advised Chinese citizens and firms to avoid crowded places in the coming six months around concerns from protests against embattled Brazilian President Michel Temer. According to the Foreign Ministry, China's total Foreign Direct Investment in Brazil currently amounts to at least $30 billion, mainly in infrastructure, energy exploration and transport facilities.

Chinese wine group buys three vinyards in Chile — Xinhua
Yantai Changyu Pioneer Wine has signed an agreement with Chile's Bethia group to buy three vineyards in Chile for over $50m; the deal is to be completed this month. Changyu already has operations in China, France, Italy and New Zealand.

Chinese, European firms express interest in Chile-Argentina tunnel — A Times
Chile and Argentina are looking to build a $1.5 b tunnel under the Andes mountains to connect Argentina’s San Juan and Chile’s Coquimbo. Power China and the Chinese Communications Construction Company, Spain’s OHL and FCC, and Italy’s Astaldi and Salini Impregilo have all bid on the project, according to the Chilean ministry of public works.

Latin America should not be left out of B&R initiative — Global Times
A Mexico-based analyst argues for the need to include Latin America in the Belt and Road Initiative due to the fact that "China's presence through trade and infrastructure in the region means that the framework of collaboration is already in place for the B&R to have a smooth transition to the Southern Hemisphere.”

Barbados and China celebrate long-standing diplomatic relations — Barbados Advocate
Barbados and China celebrate 40 years of diplomatic relations.

Asia-Latin America

Medytox bolsters presence in Latin America — Korea Times
Medytox, Korea’s largest maker of botulinum toxin and dermal fillers, is looking to capitalize on Latin America’s rich and storied tradition of cosmetic beauty investment. Brazil is Medytox’s third-largest export market, and Medytox has access to 13 other countries in the region.

GCC eyes closer ties with commodity-rich Latin America — Zawya
The Dubai Chamber of Commerce and Industry is looking to promote commercial ties between the Gulf and Latin America. In April, Dubai opened a trade mission in São Paulo, and is considering establishing another one in Argentina. But deeper connections are hampered by GCC unfamiliarity with tax systems, bureaucracy, corruption, and the lack of bilateral trade agreements.

China Econ/Policy

CR Land Adds $385M Acquisition to $4.7B in Chinese London Deals in 4 Months — Mingtiandi
China Resources Land has made its first major overseas investment, partnering with a European REIT to acquire a an office building in the City of London for £300m ($384.6m). The property, 20 Gresham Street, is located near St Paul’s Cathedral and the Bank of England in London’s financial district and offers 242,807 square feet (22,558 square metres) of office space.

Anbang Buys Amsterdam Hotel from Blackstone for $392M — Mingtiandi
Don’t call it a comeback: Anbang Group bought the 557-room DoubleTree by Hilton Amsterdam Centraal Station hotel in Holland from US private equity group Blackstone for €350m ($391.6m). This is the fourth hotel Anbang has bought from Blackstone, starting with the Waldorf Astoria in 2014.

China Life Takes 95% Stake in $950M US Real Estate Portfolio — Mingtiandi
Mainland insurer China Life is taking a 95 percent stake in a portfolio of US logistics and manufacturing centres, business parks and healthcare facilities valued at nearly $1 b. The joint venture’s portfolio initially comprises 48 single-tenant properties aggregating more than 5.5 m square feet across 20 states.

CIC to buy Blackstone's €12bn Logicor — EGi
China Investment Corporation is set to buy the 630-asset logistics business Logicor for more than €12b ($13.5b). The purchase of the 146.4m sq ft warehouse property ownership platform will become the largest European real estate deal. Mapletree Investments with Temasek Holdings out of Singapore and Global Logistic Properties, the largest owner of logistics properties in Asia.

The biggest political story in China is centered at a $68 million apartment overlooking Central Park — NYT
A good summary of the ongoing weirdness surrounding the corruption accusations leveled by Guo Wengui against Chinese leadership. After China asked Interpol to put out a red notice on him:

But then something unexpected happened. China stood down. The state media campaign against him tapered off. In mid-May, Mr. Guo announced on Twitter that his wife and daughter — previously barred from leaving China — had been allowed to visit him in New York.

What caused this turnaround, and what this means for Guo’s claims against HNA, is unclear.

Asia-Latin America Round-up — 26 May 2017

Highlights

Why China Must Figure Out How to Feed the Whole World — Bloomberg
Worth it just for the opening gif, this article is a great overview of how China is tackling the challenge of feeding over 1 billion people (one third of which are now expanding into middle class, meat-rich diets) in a world where we’ll need to feed 9 billion people by the middle of the century. Read the whole thing, but the first map is one of the more striking facts.

Miami International Airport officials attempt to land Tokyo-Miami flights — South Florida Business Journal
MIA’s Asia Task Force met with representatives of Japan Air Lines (JAL) last week in Miami to discuss the potential for non-stop flights between Tokyo and Miami. According to MIA, there are more than 415,000 passengers traveling between Asia and Miami, making Miami the busiest U.S. market for travel to Asia that does not have nonstop passenger flights.

Brazil’s Car Wash Scandal Reveals a Country Soaked in Corruption — Bloomberg
Eurasia Group is saying there’s a 70% chance President Michel Temer won’t make it to the end of his term on Jan 1, 2019. This week’s mass protests which culminated with the torching of a government building in Brasília certainly don’t look good, to say nothing of political allies looking for the proverbial exits. This #longread from Bloomberg is good for putting context to Brazil’s perpetual crisis, and what, if anything, will change.

China-Latin America

China's CNPC to invest $2 billion in Peru oil, gas block: Perupetro — Reuters
State-owned China National Petroleum Corporation (CNPC) plans to invest $2 billion in an oil and natural gas block in southern Peru in coming years, according to Rafael Zoeger, the head of Peru's state energy agency Perupetro. CNPC's block 58 has some 3.9 trillion cubic feet of natural gas reserves, according to government data, enough to increase Peru's total gas reserves by 27.7 percent. The CNPC block is in the Cusco department next to the extant Camisea natural gas field.

China supports construction of modern emergency operations center in Peru — Andina
China’s government is funding construction of a modern National Emergency Operations Center (COER) to supplement Peru's National Civil Defense Institute's (Indeci) emergency response capacity. The $16.8 million center is being funding by the state China Aid program.

Why Argentina’s Macri Switched Gears on China, Now His Favorite Business Partner — World Politics Review
Argentina reafirma sus lazos con Asia y consolida su inserción en el mundo — Invest and Trade Argentina
The first article oversells Macri’s (and Argentina’s) about-face - Macri’s family has been doing business with China for decades, and Macri is just leaning back from CFK’s “all-in” approach to getting Chinese financing to support her crippled economic policy. However, the piece is interesting for noting the agreements signed at the Belt and Road Forum that totaled "more than $30 billion of Chinese investments in Argentina on everything from energy and agriculture to transportation and mining, capped by a Chinese plan to build two nuclear power plants at a cost of $12.5 billion.”

The Argentine Agency for Investment and International Business, for it’s part, provides a bit more detail on the agreements, which they say are only $15 billion in investments. The Atucha III nuclear plant begins construction next year, and the other plant will not break ground until 2020.

Chile shares China's vision of integrated future — Belt and Road Portal
Chile is looking to plug into China. "China, given its population, economic scale and projection, is the future, the future of the global economy and the future of innovation: the knowledge-based economy,” says Foreign Minister Heraldo Munoz. The article notes that Chile signed e-commerce agreements with China's online retailer Tmall.com, adding to existing accords with Chinese online retail giant Alibaba. The accords seem similar to those signed by Argentina last month.

Asia-Latin America

Japan finances Buenos Aires Automatic Train Stop rollout — Rail Journal
Japan Bank for International Cooperation (JBIC) is going to finance the rollout of Automatic Train Stop (ATS) on the Buenos Aires suburban rail network. The $49.5 million loan is cofinanced by the Tokyo branch of Deutsche Bank and covers 85% of the procurement cost for the system, which will be rolled out on all eight lines covering 1500km of track and 280 trains over the next four years. The equipment is being procured through Marubeni Corporation and will be manufactured in Japan by Nippon Signal.

Korea Southern Power Co. constructs plant in Chile — Korea Herald
Korea Southern Power has built an independent power plant in Chile, the first by a Korean company. The 517 megawatt Kelar plant is in the Mejillones region located in the port city of Antofagasta. While the type of power plant is not specified (although it’s likely natgas), it is expected to supply 25% of the regional energy needs.

China Econ/Policy

China Spends $16.5B on US Commercial Real Estate in 12 Months to Claim Top Investor Spot — Mingtiandi
The Trump effect hasn’t been felt in real estate yet. China surpassed Canada as the top investor in US commercial real estate in the 12 months ending March 31st – pouring over $16.5 billion into US properties. At $60.9 billion, overall global investment in the US was down 39 percent from its 2007 peak. China’s investments in the US market grew by 10 percent year-on-year, accounting for 22.8% of investment in the US. Real Capital Analytics (RCA) provided this information in the latest edition of their US Cross-Border Investment Compendium report.

Chinese publisher pays $68M for Midtown dev site — The Real Deal
WanXin Media purchased a Midtown office building and vacant lot at 7-15 West 44th Street for $68 million. According to a statement, WanXin, a Chinese publishing company, plans “to develop a boutique luxury hotel and Chinese cultural center” on the site, which has 90,000 buildable square feet. The site is down the block from the Algonquin Hotel, famous for it’s round table.

Belts, Roads, and Strategic Trade Policy — NYT
Nobel laureate Paul Krugman goes back to his economic geography roots, and notes that in addition to being good for China’s dwesmtic market; "Good highways across central Asia and down to South Asia could change that, giving China a new centrality in the world’s economic geography.”

A Silk Road to South America? — China.org.cn
This is a very odd piece in support of the Belt and Road Initiative from a very statist, top-down point of view. The closest it gets to talking about private sector participation is referencing the Asian Infrastructure Investment Bank. 

Asia-Latin America Round-up — 19 May 2017

Highlights

Real estate buyers from China, elsewhere in Asia increasingly eye Miami — Miami Herald
An overview of where things stand on Asian investment in South Florida, noting recent transactions. Of interest: While speaking on a panel at the AREAA conference, Greg Owens from Miami International Airport affirmed that MIA is ready and eager to finalize a new route agreement with Hong Kong-based Cathay Pacific, and expects it to happen within 24 months.

U.S. Strikes China Trade Deals but Leaves Major Issues Untouched — NYT
Last week the United States reached a set of trade deals with China covering areas like electronic payment services, beef, and poultry, compromising on some Obama administration stances but leaving untouched bigger issues. Under the newly announced deals, China set a deadline for fulfilling its promises to allow American beef and said it would speed up consideration of pending American applications to offer bioengineered seeds in China. It will also allow foreign-owned firms to provide credit-rating services in China, publish guidelines to let American firms offer electronic payment services there, and issue licenses to two American financial institutions to underwrite bonds. In return, the US sent a sub-cabinet level representative to the Belt and Road Forum.

Trump Administration Notifies Congress of Intent to Launch Nafta Talks — WSJ
USTR Robert Lighthizer informed U.S. lawmakers that the administration intends to launch formal negotiations on overhauling the North American Free Trade Agreement. Talks will start in as soon as 90 days, in line with Trade Promotion Authority rules. Currency, rule of origin issues, Mexican sugar, and Canadian softwood lumber will all be areas of discussion, but exact goals will not be known until 30 days before negotiations begin. The administration expects to end negotiations by the end of the year, ahead of the 2018 Mexican presidential elections.

Gov. Jerry Brown heading to China to talk climate change — Los Angeles Times
The first week of June, the Governor Moonbeam plans to attend an international summit on clean energy in Beijing. The summit brings together cities, states and provinces who have signed an international agreement promoted by Brown to reduce emissions at faster rates than called for under the Paris agreement on global warming.

Intermediário de Temer ofereceu a Joesley cargos no BC, Receita, CVM e Cade — O Globo       
Aécio Neves pediu R$ 2 milhões, diz dono da JBS em delação — Estadão
Leaked recordings are trouble for Michel Temer — The Economist
Wednesday night O Globo reported that Brazilian President Michel Temer had been caught on tape talking two months ago with one of the owners of meatpacking giant JBS about bribing the former house speaker, who is currently in jail on (other) bribery charges. While Temer is unpopular and bribery is not a good look, he has refused to resign and his allies have theoretical control of the Congress. How long they remain his allies remains to be seen.

China-Latin America

When China sneezes, LatAm…. — Bloggings by Boz
April data out of China shows the country’s economic growth slowing down. As our friend James Bosworth notes: 

The last time Latin America had an economic boom, it was partially driven by Chinese demand for local products and Chinese economic growth pushing up commodity prices globally. While China is not to blame for the Western Hemisphere’s current lackluster economic growth, the data coming from China also show that Beijing won’t be coming to rescue Latin America’s economies any time soon.

Caribbean Bank Wants Chinese Money No One Else Will Touch — Bloomberg
British Virgin Islands goes after Chinese money — SupChina
A BVI entity known as the Bank of Asia is looking to cater to offshore Chinese companies locked out of the global banking system following the release of the Panama Papers. The bank is set to open up for a soft launch within Q3 2017. As Bloomberg notes, China and Hong Kong-linked firms “accounted for almost a third of the offshore companies created by Mossack Fonseca,” the law firm whose papers were exposed in the leak.

Uruguay hopes to join China’s B&R initiative — Global Times
An interview with Fernando Lugris, the Uruguayan Ambassador to China, highlights the country’s interest in engaging formally with the Belt and Road Initiative, which so far no Latin American country has done.

Las 16 megaobras que China financiará y desarrollará en la Argentina — Ámbito Financiero
Argentina and China signed a “5 Year Infrastructure Cooperation Plan” last month in Beijing.  The plan, backed by China’s NDRC, calls for rail line rehabilitation, nuclear, solar, wind ,and hydro power plants, and electricity transmission lines. The announcement does not identify how these projects will be financed. 

Unit of China's BYD to invest $100 mln in Argentina — Reuters
Automobile manufacturer CTS Auto, a subsidiary of China's BYD Co Ltd,, plans to invest an initial $100 million to build electric buses in Argentina. The deal came on the heels of President Mauricio Macri’s visit to China.

Chile-China MOU will boost mutual trade — Fruitnet
Chile’s domination of the Chinese fruit market continues. Asoex — Chile’s export association — has signed a Memorandum of Understanding with the China’s Association for the Promotion of Quality and Safety of China’s Consumer Products (CPQS), part of AQSIQ, to increase cooperation on trade between the two countries. The signing ceremony took place during an official tour of President Michelle Bachelet to China and Indonesia. The MOU commits both sides to share information in several areas related to the fruit trade such as quality and safety management systems and quarantine and inspection standards.

China Econ/Policy

Wanda Backs Away From London Project as Deal String Slows — Mingtiandi
Dalian Wanda has let a lock-out period expire on talks to acquire a second site in south-central London next to its One Nine Elms project. Wanda failed to reach agreement to purchase the 10.2 acre project after exclusive talks to acquire the residential site expired without a deal.  Wanda already owns the One Nine Elms mixed-use project directly adjacent, but has struggled to make progress on construction on that project, while slackening demand for homes in the neighborhood has led to a decline in prices in the area.

China Minsheng Buys 80% Stake in SF Bayside Project for Reported $100M — Mingtiandi
A real estate developer controlled by China’s Minsheng Investment Group acquired an 80 percent interest in a fully entitled luxury residential site located two blocks away from the Bay Bridge for approximately $100 million. Minsheng is in a joint venture with a fund controlled by New York-based real estate firm Paramount Group and an affiliate of Chicago-based developer The John Buck Company. The joint venture plans to develop the site into a 21-storey, 120-unit luxury condominium project with a ground-floor restaurant, designed by Skidmore, Owings & Merrill (SOM).

Trade pact dumped by Trump could be revived at Asia-Pacific meeting — Reuters
Zombie TPP stumbles forward — Bloggings boy Boz
Trade ministers will talk on the sidelines of this weekend’s APEC meeting in Hanoi about reviving the TPP without the United States. As Boz says: 

TPP-11 would be an important way for Asian and Latin American economies to integrate with each other and increase trade to new markets. It would be a significant counter-weight to the RCEP agreement being promoted by China. RCEP negotiations are supposed to conclude this year but are being held up by several difficult final pieces including some tough negotiation positions by India.

Trump Trade Reboot Spurs U.S. Push by China’s Sovereign-Wealth Fund — WSJ
China Investment Corp. is opening a New York office on Friday, in a sign that relations across the Pacific may not be as bad as some feared. Some key quotes from the head of CIC:

“There is a potential for Chinese companies to make more investments in the U.S. and vice versa,” said President Tu Guangshao in an interview. “We want to build up mutual trust.”

CIC had avoided a U.S. presence for years, frustrated by the investment environment there. “U.S. regulators have been hard on us,” Mr. Tu said. “We can’t even name one symbolic direct investment in America.”

Mr. Tu said CIC is now casting an eager eye at U.S. projects such as highways, rail lines and high-tech manufacturing plants, looking to generate steady, long-term returns.

Asia-Latin America Round-up — 12 May 2017

Highlights

Chinese construction giant to buy stake in Hudson Square dev site in $140M deal — The Real Deal
China Construction America (CCA) entered contract this week to acquire the vast majority of a development site at 537 Greenwich Street and 110 Charlton Street, with 229,000 buildable square feet. The deal for an undisclosed amount would value the site at north of $140 million, or $625 per buildable square foot, sources told The Real Deal. Cape Advisors, the other owners, plans for a 27-story, 167-unit residential property on the site. The article says CCA has also recently approved $1 billion worth of equity investment in public-private partnership projects.

Jack Ma courts Midwest America in bid to raise exports to China — FT
The Alibaba chief has begun laying out plans to bring 1m small businesses to the group’s platform, talking about them on a conference call earlier this week. His comments touched on the June conference Alibaba will host in Detroit, the “first key driver” of a campaign to encourage US farmers and businesses to export to China:

Mr Trump was “very excited and supportive” of the plan, said Mr Ma, who supports his bid to promote “made in America” products. 

“[Trump] said the American Midwest is the centre, where there are so many small and medium-sized companies,” said Mr Ma on a conference call with reporters. “China has 300m middle class [shoppers]. We need good stuff from outside China . . . Trump said Midwest America is definitely the place.” 

In a Beijing ballroom, Kushner family pushes $500,000 ‘investor visa’ to wealthy Chinese — Washington Post
Jared Kushner’s Sister Highlights Family Ties in Pitch to Chinese Investors — NYT
Last weekend the Kushner Companies held an event — along with the Chinese company Qiaowai, which connects U.S. companies with Chinese investors — to pitch investment in their Journal Square project in New Jersey. They are looking to get Chinese investors under the EB-5 via program, that allows foreign investors a visa if they invest half a million dollars in specially defined projects. Highlighting the fact that Jared Kushner is the US President’s son-in-law was received poorly by observers.

China-Latin America

Ecuador dips toe into Chinese mango market — Fruitnet

Ecuador is evaluating the results of its first mango campaign in China after securing access to the market late last year. Having taken their first tentative steps with small volumes of airflown fruit, shippers are assessing the performance of different varieties and fine-tuning their programmes in preparation for next season.

China, key partner for Argentina's agricultural sector — Xinhua
Argentina has been named the guest of honor at SIAL China 2017 — Asia's largest food innovation exhibition, to be held in Shanghai from May 17-19 — in celebration of the 45th anniversary of the establishing of diplomatic ties. Last week Argentina's Agency of International Investments and Trade (AAICI) signed a deal with Chinese e-commerce giant, Alibaba, so that products from Argentinean SMEs could be sold on Alibaba's electronic platform.

Xiaomi expands in Latin America via Mexico — CNET
TheChinese smartphone maker on Tuesday said it would start selling two of its phones, the Redmi Note 4 and the Redmi 4X, in Mexico. Xiami also launched a mobile app for its fans called the "Mi Community LATAM.” Mexico is a first step for deeper penetration of Latin America, per the firm:

"Mexico is a really important market for us and acts as our starting point to reach the rest of Latin America," Donovan Sung, director of product management and marketing for Xiaomi Global, said in a press release. "We hope to continue growing our presence here with the constant support of our passionate Mi fans.”

Mexico warns U.S. of alternatives on trade, points to China — Reuters
Mexico’s economic minister is using upcoming bilateral meetings with China to send a message to the current US administration that Latin America's No. 2 economy "has lots of other alternatives" amid tense trade negotiations.

China Econ/Policy

Music Video: The Belt and Road is How — New China TV
Kids from Belt and Road countries get you ready for next week’s conference with a song and video (with rap break) that has been on constant rotation in the Novam Portam offices.

B&R can build links to South America — Global Times
Jorge Heine, Chile’s Ambassador to China, pens an op-ed in an official paper ahead of next week’s meeting. He notes that for Brazil, Chile and Peru, China is already their No.1 trading partner, and that if Southern Cone nations want to increase their share in the Chinese market, they need to invest in infrastructure. He says Chinese construction companies are especially well-positioned to build that infrastructure, and entities such as the Asian Infrastructure Investment Bank, the Chinese policy banks or the China-Latin America funds should be available for such projects.

Tightened Belt: China Skimps on Its Grand Trade Plan — WSJ
China faces resistance to a cherished theme of its foreign policy — The Economist
These pieces highlight some of the strategic shortcomings of the One Belt One Road project. Per the Economist, the scheme is running into three linked problems: it is unclear what its priorities are, or who is running it; finding enough profitable projects to match its vaulting ambitions; and locals in some countries are angry about what they view as China’s heavy-handedness. There’s also an interesting bit in the Economist about how the project’s name has evolved from “Silk Road economic belt” to "Yidai Yilu" (One [land] Belt, One [maritime] Road) to now the Belt and Road Forum — which the magazine helpfully points out becomes BARF as an acronym.

Opinion | China is bent on world domination — but not in the way you think — Washington Post
The Post’s conservative op-ed writer Fred Hiatt rings the alarm bell on China’s global pretensions:

China is bent on world domination — not with its missiles and aircraft carriers, but by controlling solar energy, cloud computing and other industries of the future. 

That is an only slightly exaggerated version of a warning coming from the American chamber of commerce in China. It sent a delegation to Washington last week to warn that “China’s aggressive mercantilist policies are one of the most serious threats facing the future of U.S. advanced technology sectors,” as their policy paper says — and that the U.S. government isn’t doing enough to counter the threat.

Chinese Millennials—Already Big Homeowners—Use Apps to Snap Up Overseas Property — WSJ
According to the WSJ, about 70% of Chinese millennials, own a home, the highest share of respondents from nine countries and regions who were surveyed in a recent HSBC study. Chinese parents often register home purchases under their child’s name to prepare the child for marriage and raising a family, which likely boosts the percentage. Purchases abroad are increasing, as a hedge against yuan depreciation and to find affordable homes in cities with cleaner air.

Is China the World’s New Colonial Power? — NYT
Betteridge's law of headlines states: "Any headline that ends in a question mark can be answered by the word no.” However, this extensive profile of China’s eoncomoic and commercial presence in Africa highlights many practices — importing Chinese workers, ignoring environmental issues, buying off local decision-makers, among others — that local policy-makers in Latin America have expressed to us as they consider engaging China. Addressing these challenges, both on the investing side and on the host country side, will be key to ensuring that Chinese investment overseas continues to be welcomed.

Warren Buffett has many fans in China but few true followers — The Economist
A brief article highlighting the activities of Chinese businessmen who have been likened to the Oracle of Omaha, including Guo Guangchang, chairman of Fosun, and Wu Xiaohui of Anbang. The article points out that these entrepreneurs have been acting in a very un-Buffett-like way, taking on debt and making speculative investments. Companies which have been more Buffett-like tend to be "big, boring, mainly state-owned insurers. Hewing to official rules, they have been more cautious about using debt."

Chinese Estates Buys Listed London Building for ₤175M — Mingtiandi
Hong Kong based China Estates has bought 11-12 St James’s Square, a listed commercial building in London’s West End from the Employees’ Provident Wealth Fund of Malaysia for ₤174.9 million ($227 million).

Sino-Ocean Land Buys SF Office Building From Gaw Affiliate for $42M — Mingtiandi
Beijing-based Sino-Ocean Land — a subsidiary of food processing conglomerate COFCO — purchased 1161 Mission Street, a 65,000 square foot office building in San Francisco for $42 million, or $640 per square foot.

American Universities Are Welcoming China’s Trojan Horse — Foreign Policy
Article highlights some of the problems that universities have had with China’s Confucius Institutes. The author says Confucius Institutes serve as a vehicle for Chinese propaganda, restricting what the teachers they supply from China can say, distorting what students learn, and pressuring American professors to censor themselves. As a result, the University of Chicago, Penn State, Sweden’s Stockholm University, France’s Lyon University, and McMaster University in Canada have all closed their Confucius Institutes.

A Chinese Giant Is on a Global Buying Spree. Who’s Behind It? — NYT
A good background of the HNA group, that has grown from a early 90s founding to go on a global spending spree. The hook is accusations last week by Mar-a-lago gadfly Guo Wengui that relatives of a senior Chinese leader, Wang Qishan, had a stake in the company.

Why Tencent will be the biggest company in the world by 2025 — Vito Petan
A profile of Tencent Holdings, the WeChat owner that in April broke into top 10 largest companies in the world with a $305 billion valuation.

Asia-Latin America Round-up — 5 May 2017

Highlights

Chinese Conglomerate HNA: ‘Everyone Is Passionate, Full of Hormones, Dying to Achieve Things’ — WSJ
Chinese Conglomerate HNA Becomes Deutsche Bank’s Biggest Shareholder — WSJ
The Wall Street Journal has profiled the acquisitive HNA Group, noting that after $6 billion in overseas acquisitions to the end of 2015, last year the company spent almost $30 billion outside of China. The company's total assets, at around $146 billion in 2016, grew more than four times since 2010, when the company first started acquiring overseas companies. Separately, HNA has now become the largest shareholder in Deutsche Bank, raised its stake to 9.92% through a UK subsidiary. 

China’s scrutiny of capital outflow could crush trophy US deals: former China Orient exec — The Real Deal
Ludwig Chang, the recently retired co-founder of COAMC International, a subsidiary of leading state-owned asset management firm China Orient Asset Management, said the Chinese government is taking a skeptical look at moves to buy major real estate assets in the U.S. – and that clampdown may have already caused some casualties:

“Some insurance companies, who shall remain unnamed, have had two or three failed transactions,” he said. “One was a building on Fifth Avenue that was quite well known. I think those are the handiwork of the new insurance regulatory regime.”

After Failed Talks With Kushner, More Trouble for a Chinese Tycoon — NYT
Rumors circulate of Chinese government detaining Anbang chief Wu Xiaohui — The Real Deal
Anbang Threatens Lawsuits, Denies Reports of Wu’s Detainment — Mingtiandi
After pulling out of a potential deal to invest in Kushner Co’s 666 Fifth Avenue, Anbang Insurance has had a bad week. First, there were rumors that chief Wu Xiaohui had been detained by Chinese authorities. This follows a similar incident over a year ago in which the head of Fosun was detained at Shanghai airport for 48 hours to “assist in an investigation.” More concerning are allegations made in Caixin, as reported by the NYT:

“Anbang’s shareholder structure is like a maze,” Caixin said in an article published online on Saturday and in print on Monday. It said that Anbang’s meteoric growth and acquisitions raised suspicions of financial sleight of hand, including capital injections coming from companies linked to Mr. Wu. “The left hand has been helping the right hand to inflate capital,” the article said.

China-Latin America

China’s Warming Relations with Mexico — Inter-American Dialogue
After years of what many have considered to be strained relations between China and Mexico, the two countries are slowly warming to one another. A series of deals and agreements—some of them with hefty price tags—have materialized in recent months in a number of potentially growth-promoting sectors.  As of 2015, Mexico exported around $6 billion to China, but imported over $60 billion from the Asian nation. the IFC’s China-Mexico Fund made its first investment in Mexico— a $140 million commitment to US-backed Citla Energy—just last year. The $1.2 billion fund also plans to target Mexico’s manufacturing, agribusiness, services, and banking sectors. Huawei is a critical partner in Red Compartida, a Mexican government initiative to build an open-access wholesale wireless network that will cover 92.2% of the country’s population. 

Alibaba continues to expand its platform with new Argentina agreement — The Street
Alibaba: acuerdo con el Gobierno y planes para abrir una oficina — Clarín
Jack Ma paid a courtesy call to Argentina President Mauricio Macri in Buenos Aires this week. They signed an MOU that declares Alibaba's e-commerce platforms “official channels” for two of Argentina’s main exports: wine and fresh foods. According to Clarín, "next month, Ma plans to analyze the possibility of putting an Alibaba office in Argentina”

Asia-Latin America

1st Japan House promotion center opens in Sao Paulo — The Mainichi
Sao Paulo, the Japanese cultural hub of Latin America — The Japan Times
The first Japan House communication center to promote the country's culture and arts overseas held an opening ceremony Sunday in Sao Paulo attended by Brazilian President Michel Temer and Japanese Deputy Prime Minister Taro Aso. Japan also plans to open the cultural promotion facility in London and Los Angeles this year. São Paulo is reputed to be the city with the largest population of people of Japanese descent outside of Japan.

Infosys plans to hire 10,000 U.S. workers after Trump targets outsourcing firms — Reuters
India-based IT services firm Infosys plans to hire 10,000 U.S. workers in the next two years and open four technology centers in the United States, starting with a center this August in Indiana. 

Miami’s real estate drawing Middle Eastern buyers — Miami Herald
Local broker Farid Moussallem notes that every month, the Miami Association of Realtors announces the top 10 foreign countries that use its website to search for Miami real estate. This list typically features the “usual suspects” month after month, such as Colombia, Canada, Brazil, Venezuela, Argentina and France. However, the most recently published report (from January 2017) included an unfamiliar newcomer: Turkey, ranked at No. 7. Despite the rhetoric in Washington DC, according to Moussallem: "The prosperous Middle Eastern individuals with whom I work do not feel unfairly ‘targeted' in any respect and feel no need to protest or complain."

China Econ/Policy

Can China Become the World’s Clean Energy Leader? — CFR
China holds a third of the global market share for hydropower, wind power, and solar energy. The country’s private sector invested $32 billion in 2016 toward international clean energy projects, adding to the $102.9 billion invested a year prior by the government into domestic renewable energy. Many of these investments were made in major developing countries, including Brazil. The surge has been driven by two primary factors: the first is air pollution; the second factor is energy security. The authorities see diversifying energy sources, especially building up clean energy, will be key for China’s energy security.

Huawei, Chinese Technology Giant, Is Focus of Widening U.S. Investigation — NYT
The Gray Lady Seems Pretty Gray About Export Law — Export Law Blog
Late last year the US Treasury's Office of Foreign Assets Control (“OFAC”) sent a subpoena to Chinese telecom manufacturer Huawei. The subpoena, according to the newspaper, asks for information on the company’s dealings with “Cuba, Iran, Sudan and Syria over the past five years.” Worth noting that Huawei has not been accused of wrongdoing — as an administrative subpoena, the Treasury document does not indicate that the Chinese company is part of a criminal investigation.

CIC Plans to Boost Overseas Investment — Bloomberg
One fourth of CIC’s $800 billion in AUM is invested outside of China. CIC see itself as a potential matchmaker between companies it is investing in overseas and the Chinese market. In this video, CIC EVP Bin Qi also sees the need for China to improve attractiveness to institutional investors.

China’s Credit Slowdown Poses a Threat to Global Growth — WSJ
Given China’s weight in the global economy, the constraints on credit growth and currency exports being pursued by the authorities are seen as weighing down on the global economy, and in particular Latin American companies: "The reason to be concerned about China now is that a slowdown in credit hurts growth and could spread to the rest of the world, piling pressure on commodity producers."

Trump, who likes to do business by phone, is acquiring a reputation for pestering Xi, China's president — NYT
Live by the phone, die by the phone. Apparently Donald Trump, known for liking the personal touch that phone calls give him, is being a little too thirsty with reaching out to President Xi Jinping. Chinese officials state that Xi does not appreciate being treated like a midlevel official.

Asia-Latin America Round-up — 28 Apr 2017

Highlights

Ant Financial sees rich opportunities — China Daily
Alibaba’s financial arm, Ant Financial, is to extend its indigenous mobile payment technologies to economies along the Belt and Road Initiative and unveil a number of Alipay-like services this year. The firm is counting on partners outside China to bring its model of online finance and local services to its target markets in emerging Asia.

Alibaba quer entrar no mercado de crédito no Brasil — Estado de São Paulo
Jack Ma syas he wants to provide credit services in Brazil - "We want to invest in e-commerce, logistics and inclusive financing.” However, details on the investment and what credit services they would provide are not spelled out. Per the Estadão, Alibaba started operations in Brazil in 2014 but has faced hurdles over logistics and the monitoring of product authenticity on its website.

International millennial buyers are eyeing Miami luxury real estate: AREAA panel — The Real Deal
According to panelists at an the Asian Real Estate Association of America event, a small, high net-worth segment of millennials are increasingly shopping for homes in South Florida. Karen Chau, Asia general manager for real estate tech company Investorist, says that Chinese millennials are bullish on real estate.

China-Latin America

China: Shenzhen is first choice port of entry for Chilean cherries — Fresh Plaza
The Chilean cherry juggernaut continues. In the five months ending in March, 75,600 tons were exported to China, a 25% increase on the same period last year. Shenzhen alone received 61,000 tons, or 80% of all Chilean cherries exported to China in that period, an increase 41%.

China Communications Construction Company plans to invest in Brazil — Macauhub
China Communications Construction Company (CCCC) intends to expand its presence in Brazil, the largest market in Latin America, by carrying out projects from scratch, Chang Yunbo, chief executive of CCCC South America, told the Brazilian press recently. Last year CCCC acquired a stake of 80% in Brazilian company Concremat – Soluções Integradas de Engenharia and signed a contract to buy 51% of a new port in São Luís, Maranhão state, to be built under a partnership with WPR, a subsidiary of Brazilian group WTorre. The port construction will cost an estimated 1.7 billion reais (US$545 million) and will take three years to complete.

Avocado imports soar as China develops taste for ‘butter fruit’ — FT

Exports of avocados from Latin American (especially Mexico and Chile) are growing by about 250 per cent a year, from just 154 tonnes in 2012 to more than 25,000 tonnes in 2016. Chile has the advantage of a free-trade agreement with China, while Mexico faces a 10 per cent tariff on fruit imports. Yum China, which operates 5,000 KFC stores in the country, last month launched an “avocado series” of chicken burgers and wraps slathered with guacamole to help upgrade the image of its fried chicken chain, sourcing the fruit from Mexico. Peru is getting into the act, with the first batch of Peruvian “Big Mac” avocados flown to China this month.

Chinese enterprises widen frontiers in Latin America winning appraisal — Xinhua
Interesting, if a little platitudinous, profiles of the experiences of seven Chinese companies doing business in Latin America, including Haier, JAC Motors, China Southern, CRRC, Gree (China's largest air conditioner producer), Yanjian Group, and China National Electronics Import & Export Corp. (CEIEC). However, the most interesting part may be the last paragraph:

Many Chinese enterprises in Latin America believe there are still great challenges for them to do business in the continent, due to long distance, disparate standards, absent policy backup and financial constraints. But the big market and the local people will keep them staying on, no matter how hard it will be.

China becomes Brazil's biggest investor so far in 2017 — Xinhua
Through mid-April, Chinese investors spent $5.67b on M&A in Brazil, representing 37.5% of total investment in the country.

China makes record investment in Argentina’s mining sector — Latin Lawyer
State-owned Chinese mining company Shandong Gold is to purchase a 50% stake in Barrick Gold’s Veladero mine for $960m. The deal will also see the two firms look at jointly developing the nearby undeveloped Pascua-Lama gold and silver project which straddles the border of Argentina and Chile, as well as additional investment opportunities on the El Indio Gold Belt. Shandong Gold is affiliated with the provincial government of Shandong.

Asia-Latin America

Zee forays into Latin America — India Today
Zee Entertainment Enterprises — the Indian content company — has launched an expansion into Latin America with its Spanish-language Bollywood movie channel, Zee Mundo, in Mexico and Ecuador. Zee Mundo is headquartered in Miami.

China Econ/Policy

China lifts renminbi capital controls as outflows pressure eases — FT
China Eases Capital Controls – But Not Very Much — Mingtiandi
Financial institutions are no longer required to maintain a balance of inflows and outflows when processing cross-border renminbi payments, reversing a decision made by the PBOC (China’s Central Bank) in January. This may suggests the authorities are increasingly confident they have weathered the country’s worst-ever bout of capital outflow. David Green-Morgan, Global Capital Markets Research Director at JLL in Singapore tells Mingtiandi that it’s a small tweaking that won’t substantially change things, however that’s not necessarily bad, because there are deals still being done: “There’s still a number of Chinese deals going on around the world, so I suspect this is just maybe tweaking the fine print slightly. I think it’s such a small change in the regulations that I don’t see it significantly impacting on the amount of money that’s flowing. Certainly in the real estate space we continue to see pretty strong demand from China on the residential side and the commercial side,” he says.

China Seeks Arrest of Billionaire Who Accused Officials’ Relatives of Graft — NYT
He Tweeted About Chinese Government Corruption. Twitter Suspended His Account — NYT
The plot around Guo Wengui thickens. The former Chinese crony, later Chinese corruption whistleblower, and more recent Mar-a-Lago gadfly would seem to see the Chinese noose tightening around him. The Chinese government says it has asked Interpol to issue a so-called red notice to its member countries for Guo’s arrest, but his name does not appear on Interpol’s wanted list (a country can request that wanted notices not be publicized). Ominously, Guo’s Twitter account was apparently suspended for about four hours before it was restored

Will China-led development banks get the coveted boost to shape a new financial world order? — SCMP
The BRICS Bank (technically the New Development Bank) and the Asian Infrastructure Investment Bank (AIIB), are seeking credit ratings from Moody’s, Standard and Poor’s and Fitch, a vital step for them to borrow money in global capital markets and a key factor in deciding their financing costs. This will allow them to diversify the lending products they provide for development in the Emerging Markets they work in.

Chinese ambassador says relationship with US is improving, and that’s good for NYC real estate — The Real Deal
China’s ambassador to the United States Cui Tiankai says the relationship between the two countries has improved markedly since Donald Trump and Chinese Premier Xi Jinping met in Florida earlier this month:

“Frankly, maybe many of you were a bit concerned at the end of last year and the beginning of this year about where this relationship was going. I think for a while the word uncertainty dominated discussions about this relationship. But fortunately, thanks to the joint effort of so many people, things have turned for the better.”

China, Sending a Signal, Launches a Home-Built Aircraft Carrier — NYT
China’s first domestically built aircraft carrier slipped into the sea for the first time this week. It won’t be seaworthy for at least another three years, but is a powerful symbol for the growing strength of China on the global stage.

The Rise of China's New Consumer Class — Goldman Sachs
A little dated, but well-put together infographic on the rise of China’s middle class and it’s potential. The Chinese consumer market has seen enormous growth—and only 11% of the population has reached the middle class. As their ranks swell, so will their effect on the global economy. There will be huge opportunities for the entertainment, food service, technology and other industries.

Asia-Latin America Round-up — 21 Apr 2017

Highlights

A Farmer Just Criticized Alibaba’s Push Into The Countryside — Fortune
Alibaba has been pushing to develop a rural e-commerce platform, Rural Taobao. In late 2014, it announced a five year plan to invest $1.6 billion to create 100,000 so called Rural Taobao centers. However, recently the push has slacked. Farmers who joined the service are complaining about meager incomes and Alibaba’s scaling back of commissions last year. There’s a growing cynicism about Alibaba’s intentions of helping rural villages sell their wares to the richer cities. The criticism is that Rural Taobao is looking more like a way to connect city sellers to the countryside than the other way around.

China’s Second-Richest Man Says the Government Scuttled His Deal for Dick Clark Productions — Fortune
Dalian Wanda founder Wang Jianlin, one of China's richest men, said in an interview with the FT that the country's recent capital controls prevented his company from acquiring Hollywood's Dick Clark Productions in what was expected to be a $1 billion deal. More interestingly, Wang also said pressure from certain players in the U.S. hampered the deal, though he did not identify who: “Policies have changed on both sides, so we gave up the acquisition,” Wang told the paper. “Both countries have changed their policy. Some people in the United States did not agree with our acquisitions, and some of the policies in China are changing.” Wanda's $8 billion production studio in Qingdao, which Wang has called "Hollywood of the East," is expected to open this summer.

PortMiami traffic with Asia rises 11% — Miami Today
PortMiami’s dredging is beginning to payoff. Asian service and volumes rose 11% in 2016 alone, said Assistant Port Director Kevin Lynskey. The growth comes as a result of $1.3 billion in capital infrastructure investments made to handle larger post-Panamax ships, according to the port. The port can now handle six post-Panamax ships a week.

China-Latin America

New flight route to boost China-Mexico tourism, trade — Xinhua
China Southern Airlines Vice President Han Wensheng was in Mexico for the inauguration on Tuesday of the carrier's new Guangzhou-to-Mexico City route, which will operate a Boeing 787 three times a week. This is the beginning of a greater turn to the region for China Southern, for both business and tourism, and they recognize they need to get the word out in China. Says Han: "Currently we are in talks with Mexico's Tourism Promotion Board, since the main goal is to increase knowledge about Mexico among the Chinese market to draw more passengers." 

China Development Bank approves loan for Argentine productive sectors — BNamericas
China’s policy banks are at it again. Argentina’s investment and foreign trade bank BICE and China Development Bank (CDB) signed an agreement under which BICE will receive a US$150mn loan for financing investment projects. The credit line will be used for financing productive investments such as SMEs, renewable energy projects, energy infrastructure, and agricultural and manufacturing goods.

China's CMG in talks for Advent's Brazil port stake — Reuters
China Merchants Group Ltd is in advanced talks to buy Advent International Corp's 50% stake in TCP Terminal de Contêineres de Paranaguá, Brazil’s second-busiest container port. Advent is supposed to be looking for at least R$3.5b ($1.1b) for the stake. Dubai-based DP World - which is looking to buy out Odebrecht's share of the Embraport container terminal at Brazil’s largest port, Santos - was also in the running for the stake, but those negotiations have "hit a snag."

Chinese drone-maker DJI looks to expand in LatAm — Shanghai Daily
DJI - which has 70% of the global drone market - is looking to expand in Latin America. They’ve seen notable growth of clients for electrical and telephone line inspections, as well as agriculture. Online sales of DJI drones in Latin America began in 2014, but the company had no physical presence in the region until January 2016 - although the article doesn’t bother to mention where they have a presence. According to a DJI rep, most sales in Latam are corporate, as the region's "very high tax burden" discourages average citizens from purchasing drones.

China’s HNA said buying stake in Brazil’s second busiest airport — South China Morning Post
China’s HNA Group goes on a global shopping spree — The Economist
HNA Group — owner of Hainan Airways and increasingly a global real estate empire — is rumored to be combining it’s two loves by picking up troubled construction company Odebrecht’s 30% stake in Rio’s international airport, Galeão. Timing and size of the deal still unclear. The Economist also profiled the group, noting that it is rumored to be bidding for Forbes magazine.

Asia-Latin America

Jamaica to Benefit from Japan-Funded Energy Project — Jamaica Information Service
Japan International Cooperation Agency’s (JICA) is launching a ¥300m ($2.7m) grant-funded energy efficiency project in the Caribbean. The three-year technical cooperation project will bolster the Government’s efforts to boost the country’s renewable energy generation capacity while enhancing energy efficiency. Barbados, Jamaica, St. Kitts and Nevis, and Trinidad and Tobago are the countries targeted.

China Econ/Policy

R&F Properties Adds 2 Silicon Valley Projects to $9.6B in 2017 Deals — Mingtiandi
Looks like R&F Properties has picked up its fifth and sixth US property projects, adding a pair of Silicon Valley sites to the $9.6 billion in new overseas developments it has committed to this year. Last week it acquired the Park View Towers and North San Pedro Tower 3 residential projects in San Jose, California from local developer Swenson for an undisclosed sum. The already-entitled projects have more than 1 million square feet for over 500 residences across three acres. 

Few major Western leaders to attend Chinese summit — Miami Herald
Leaders of 28 countries are set to attend next month’s "One Belt, One Road” summit, but the only bold-faced names are Vladimir Putin of Russia, Recep Tayyip Erdogan of Turkey and Spain's Mariano Rajoy. It is unclear who will be attending from Latin America The program is closely linked to the Asian Infrastructure Investment Bank, China's version of a global financial institution that faced US skepticism when it was announced in 2013.

One reason Trump changed his tune on China? He really likes the Chinese president — CNN
An analysis of the results from the Mar-a-Lago summit earlier this month show that the biggest driver of decision-making in the White House is personal relationships, and it turns out President Xi is a charmer.

For a true view of Chinese economy, look from the sky: N.Y. Fed — Reuters
Is Chinese Growth Overstated? — Liberty Street Economics
Mike’s former colleagues at the FRBNY use some innovative measures to track Chinese economic growth - looking at nighttime satellite images. Their research shows that despite fears sparked by the 2015 Chinese stock market correction, the Chinese economy did not go into downturn then, and now "there are few immediate indications that Chinese growth is being systematically overestimated."