Ugandan government is now at risk of losing its main state assets to China over unpaid huge increasing loans from Chinese government.
But according to Ugandan government, the growing debt is sustainable, and the country is not at risk of losing state assets to China, the country’s finance minister, Matia Kasaija.
News reported in December last year that Kenyan government risks losing the lucrative Mombasa port to China if the country fail to repay huge loans advanced by Chinese lenders, but both Chinese and Kenyan officials have dismissed that the port’s ownership is at risk.
Others think Chinese government are in some ways gangsters, taking over mines all over Africa, sending thousands of Chinese workers, destroy environment, bring the minerals such as copper, sink, gold, silver, diamonds etc home, and make deals with corrupt politicians to plunder the countries.
“The case is one of the examples of China’s ambitious use of loans and aid to gain influence around the world and of its willingness to play hardball to collect,” says the New York Times in December 12, 2017.
At a time in Somalia when local fishermen are struggling to compete with foreign vessels that are depleting fishing stocks, the government has granted 31 fishing licenses to China.
But Uganda’s auditor-general warned in a report released this month that public debt from June 2017 to 2018 had increased from $9.1 billion to $11.1 billion.
The report — without naming China — warned that conditions placed on major loans were a threat to Uganda’s sovereign assets.
It said that in some loans, Uganda had agreed to waive sovereignty over properties if it defaults on the debt — a possibility that Kasaija rejected.
“China taking over assets? … in Uganda, I have told you, as long as some of us are still in charge, unless there is really a catastrophe, and which I don’t see at all, that will make this economy going behind. So, … I’m not worried about China taking assets. They can do it elsewhere, I don’t know. But here, I don’t think it will come,” he said.
China is one of Uganda’s biggest country-lenders, with about $3 billion in development projects through state-owned banks.
In December 2017, the Sri Lankan government handed its Hambantota port to China for a lease period of 99 years after failing to show commitment in the payment of billions of dollars in loans.
Also in September 2018, News reported that China was taking over Zambia’s state power company and Kenneth Kaunda International Airport over unpaid debt rippled across Africa, despite government denials.
China’s Exim Bank has funded about 85 percent of two major Ugandan power projects — Karuma and Isimba dams. It also financed and built Kampala’s $476 million Entebbe Express Highway to the airport, which cuts driving time by more than half. China’s National Offshore Oil Corporation, France’s Total, and Britain’s Tullow Oil co-own Uganda’s western oil fields, set to be tapped by 2021.
Economist Fred Muhumuza says China’s foot in Uganda’s oil could be one way it decides to take back what is owed.
“They might determine the price, as part of recovering their loan,” he said. “By having a foot in there they will say fine, we are going to pay you for oil. But instead of giving you $60 a barrel, you owe us. We’ll give you $55. The $5 you are paying the old debt. But we are reaching a level where you don’t see this oil being an answer to the current debt problem.”
In Washington this week, the US and China are due to hold their highest level talks since the two sides struck a temporary truce to their trade war.
They have until 1 March to come up with some sort of compromise or tariffs will be hiked again, and we march back into a trade fight that affects us all.
China watchers tell me Beijing is under increasing pressure to make a deal.
A slowing economy:
The trade war may not have caused China's slowdown, but it is definitely making things worse.
Growth data released last week showed China posted the slowest growth rate since 1990 but that in itself is not as worrying as other data points, including that consumer sentiment and retail sales are flatlining or weakening fast.
Small and medium-sized companies in China are feeling the chill with lower orders and inventories.
How worrying is China's slowdown?
A quick guide to the US-China trade war
Just how much pressure the Communist Party is facing because of a weakening economy was reflected in a rare acknowledgement by President Xi Jinping, whose legitimacy is based in part in keeping China strong.
Losing its factory lustre?
There is also evidence to show that foreign firms are diversifying their sourcing, production and supply chains away from China, if not pulling out altogether.
This recent survey conducted by QIMA, a leading Asian supply chain auditor, shows that 30% of more than 100 global businesses are diverting their sourcing from China to other countries.
As many as three-quarters of these companies have started sourcing suppliers in new countries.
If this trend continues then jobs in Chinese factories are at risk - a recent report looking at China's economy by JP Morgan points to rising unemployment as a major near-term risks.
Social stability is predicated on China's economic stability, and the Communist Party is well aware that its credibility lies in delivering the Chinese dream to its people.
The Huawei factor:
The fate of Huawei also hangs in the balance, both from a business and diplomatic standpoint.
China is big on symbolism and "doesn't believe in coincidences" Einar Tangen, an advisor on economic affairs for the Chinese government, told me on the line from Beijing.
Mr Tangen pointed to the arrest of Meng Wanzhou, the daughter of Huawei founder, which took place on the day President Xi and US President Donald Trump met at the G20 summit and declared the temporary truce between the two sides, setting the 90 day deadline for talks.
What's going on with Huawei?
The Huawei exec trapped in a gilded cage
Another date looms next week, with the latest round of talks taking place on the day the US has to file the extradition treaty for Ms Meng.
"Both of these dates are seen as attempts by the US to use Huawei as leverage in the trade talks," says Mr Tangen.
The US is also reportedly preparing an investigation into Huawei which could see it banned from buying American chips, a move that crippled China's ZTE last year.
Mr Tangen warns that pushing Beijing will backfire.
"The Chinese see this as the US trying to push China down," he says.
"This is not about right or wrong. They view this in context of the 100 years of humiliation they suffered at the hands of the West and they don't want that repeated."
American firms want a deal But the US is also under pressure to make a deal.
American firms in China have complained about the impact of Trump's tariffs on their business but want the US to make a good deal.
"This administration has been willing to risk the health of the US economy with tariffs," says Stephen Kho, international trade partner at law firm Akin Gump in Washington DC.
"So now that we've come this far, businesses want to take advantage of this moment and walk away from these talks with something significant. They will want to see China's offer to buy more American goods along with promises of systemic changes."
A solution to the US-China trade war is good for us all.
The longer these two superpowers slap tariffs on each other's goods, the more expensive products will be for us, companies will report lower profits, and global growth will slow.
Both sides are under pressure to make a deal. But this is ultimately, as Mr Kho also points out, "a game of chicken." Whoever blinks first could also be the biggest loser.
China's economy grew at its slowest rate since 1990, stoking fears about the impact on the global economy.
China expanded at 6.6% in 2018, official figures out Monday showed.
In the three months to December, the economy grew 6.4% from a year earlier, down from 6.5% in the previous quarter.
The data was in line with forecasts but underlines recent concern about weakening growth in the world's second-biggest economy.
China's rate of expansion has raised worries about the potential knock-on effect on the global economy. The trade war with the US has added to the gloomy outlook.
The official figures out Monday showed the weakest quarterly growth rate since the global financial crisis.
China's economic slowdown is not news in itself. Beijing has broadcast this for several years, that it's going to focus on the quality not quantity of growth.
But still, we should be worried.
Slower growth in China means slower growth for the rest of the world.
It accounts for one-third of global growth. Jobs, exports, commodity producing nations - we all depend on China to buy stuff from us.
Slower growth in China also means it is harder for China to address its mountain of debt, even with the Communist Party's undoubted ability to be able to support the economy.
Growth has been easing for years, but concern over the pace of the slowdown in China has risen in recent months as companies sound the alarm over the crucial market.
Earlier this month Apple warned weakness in China would hit its sales.
Carmakers and other firms have spoken out on the impact of the trade war with the US.
Policymakers in China have stepped up efforts in recent months to support the economy.
Those measures to boost demand include speeding-up construction projects, cutting some taxes, and reducing the level of reserves banks need to hold.
Capital Economics China economist Julian Evans-Pritchard said the Chinese economy remained weak at the end of 2018 "but held up better than many feared".
"Still, with the headwinds from cooling global growth and the lagged impact of slower credit growth set to intensify... China's economy is likely to weaken further before growth stabilises in the second half of the year."
2018 was a year characterised by abysmal stock-market performances all over the world. South African shares lost more than 11% this year. Europe had its worst year since the financial crisis, and in the USA, barring a drastic upswing on New Year's Eve, the same is likely to be true.
One nation's stock market, however, takes the crown as the world's worst in 2018: China.
The CSI 300, China's benchmark share index, finished trading for the year on Friday, December 28, and at its close had lost roughly 27% of its value, almost double the fall of its closest rival, Japan's Nikkei 225, which slid 14%.
Reasons for the Chinese stock market's slump are numerous, with global factors such as the continued tightening of monetary policy in developed nations and the ongoing trade dispute between Washington and Beijing helping to subdue stocks in the country.
Chinese investors, however, have also been forced to contend with a whole other set of concerns.
Investors realised the blockbuster growth China has enjoyed over the last decade is on the decline, and that things are likely to slow down to a strong, but not stellar, rate.
That view was exacerbated by the rise of the trade war between the US and China, which has seen the world's two largest economies exchange tit-for-tat tariffs, which now apply to goods totaling close to a cumulative $300 billion.
Many economists see the trade war having a major negative impact on Chinese growth, with JPMorgan in October saying a full-blown trade war could have a 1% shrinking effect on the economy. Tensions may have thawed a little after the Xi-Trump summit in Argentina, but 2019 could see the fight kick off once again.
Not only is the trade war helping to subdue the Chinese economy, there are also fears that something much more devastating is lurking beneath the surface. Numerous major institutions have warned of worrying trends, with the ratings agency S&P Global in October highlighting a hidden debt pile in the country worth as much as $6 trillion.
China's Iranian oil imports are set to rebound in December after two state-owned refiners in the world's largest oil importer began using the nation's waiver from U.S. sanctions on Iran, according to industry sources and data on Refinitiv Eikon.
Sinopec resumed Iran oil imports shortly after Tehran's biggest crude buyer received its waiver in November, while China National Petroleum Corp (CNPC)will restart lifting from its own Iranian production in December, three sources with knowledge of the matter told Reuters.
Reuters reported in November that China's waiver on U.S. sanctions allows it to buy 360,000 barrels per day (bpd) of oil for 180 days.
Top Chinese energy group CNPC, which has invested billions of dollars in Iranian oilfields, is ready to load its full share of production from December, said an oil executive with direct knowledge of CNPC's Iran activities.
The executive, who asked not to be named, estimated CNPC will load at least two million barrels a month from December, doubling previous levels to help compensate for cuts made before sanctions on Iran's oil exports went into effect on Nov 5.
Before the waivers had been announced, Sinopec, Asia's largest oil refiner, had planned to stop loading Iran oil in November, but resumed imports within days of getting the exemption, a second source said, also asking to remain unnamed.
"We continued lifting Iranian oil in November because we received the waiver," the second source said.
Sinopec and CNPC will likely use up the 360,000 bpd of Iranian oil imports allowed to China under the waiver.
Another source said Iranian oil is "attractively priced" versus rival supplies from the Middle East.
For November and December, Iranian Heavy crude sold to Asia has been priced at $1.25 a barrel below Saudi's Arab Medium, a discount not seen since 2004.
The source also said many Chinese refiners were geared toward processing Iranian crude grades.
At 360,000 bpd, China's purchases would still be 45 percent less than the average 655,000 bpd imported during the January-September period.
The rise in Iranian oil supply and surging production from the United States, Russia and OPEC countries has pulled down crude oil prices by almost a third since October.
Ahead of the sanctions being implemented in early November, China's crude oil imports from Iran fell to 1.05 million tonnes (247,260 bpd) in October, the lowest since May 2010, Chinese customs data shows.
Data from Refinitiv Eikon, however, shows that 2.77 million tonnes of Iranian crude were discharged into Chinese ports in October, including into bonded storage tanks in Dalian.
By December, China's Iran oil imports could reach almost 3 million tonnes, the Eikon data showed. A total 2.51 million tonnes of Iranian crude were discharged into Dalian in October and November, according to the data.
Other major Iranian oil buyers, including India, South Korea and Japan, are also increasing or resuming orders.
It is still not clear whether Iran will be able to export much oil after the U.S. sanctions waivers expire around the start of May.
U.S. Trade Representative Robert Lighthizer will lead negotiations with China over tariffs, market access and structural changes to intellectual property practices over the next 90 days, the White House has confirmed, potentially signaling a harder U.S. line.
On Saturday, U.S. President Donald Trump and Chinese President Xi Jinping declared a trade truce, agreeing to hold off on new tariffs following months of escalating tension. The two sides also agreed to negotiate over the next 90 days.
Lighthizer leading the talks marks a shift from the administration's previous approach to China trade talks that had been largely led by U.S. Treasury Secretary Steven Mnuchin. Lighthizer, an experienced trade negotiator and having just completed a new agreement with Canada and Mexico, is one of the administration's most vocal China critics.
"Robert Lighthizer, the ambassador, USTR, is in charge of these negotiations," White House trade adviser Peter Navarro told National Public Radio. "He's the toughest negotiator we've ever had at the USTR and he's going to go chapter and verse and get tariffs down, non-tariff barriers down and end all these structural practices that prevent market access."
A White House official also confirmed the decision to have Lighthizer lead the negotiations.
Mnuchin had said the negotiations with China would be led by Trump, with an "inclusive team" of administration officials, including himself and other cabinet officials.
Mnuchin led some past rounds of talks due to his relationship as the counterpart to Chinese Vice Premier Liu He, the top economic adviser to Chinese President Xi Jinping. U.S. Commerce Secretary Wilbur Ross also led a failed round of talks in Beijing in June, while mid-level Treasury officials hosted a round of discussions in August.
The White House said on Saturday that the talks would cover structural changes in China on forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.
Most of these issues were identified in USTR's "Section 301" investigation of China's intellectual property practices, which formed the basis of the U.S. tariffs imposed on Chinese goods.
Lighthizer said last week that China had failed to alter the "unfair, unreasonable" practices at the heart of the trade dispute.
President Donald Trump seemed ready to escalate the trade war with China in an interview with The Wall Street Journal on Monday.
Trump said it was "highly unlikely" that a planned meeting with Chinese President Xi Jinping at the G20 summit would yield a deal to prevent an increase in tariffs.
Trump also said he was prepared to hit another $267 billion worth of Chinese goods with tariffs — which would include duties on consumer goods like iPhones.
President Donald Trump seems ready to escalate the trade war with China even further as a crucial meeting with Chinese President Xi Jinping nears.
In an interview with The Wall Street Journal on Monday, the president said it was "highly unlikely" that the US and China would reach a deal to prevent the 10% tariffs on $200 billion worth of Chinese goods from increasing to 25% on January 1.
In addition, Trump told The Journal that if planned weekend talks with Xi at the G20 summit in Argentina did not go well, more tariffs could be on the way.
"If we don't make a deal, then I'm going to put the $267 billion additional on," Trump said.
Trump first announced tariffs on Chinese goods in March, ostensibly to punish the country for the theft of US intellectual property.
After failed negotiations on a trade deal with China, the first round of tariffs on $50 billion worth of Chinese goods went into effect in July.
A second round of tariffs on another $200 billion of goods went into effect in late September, and Trump has repeatedly threatened to impose a third round on the remaining imports not subject to tariffs.
While Trump said the third round would hit another $267 billion in goods, some reports peg the remaining amount at $257 billion.
After mostly avoiding consumer goods in the first two rounds of tariffs, Trump said he was also willing to place tariffs on items such as Apple's iPhone and laptops imported from China. The administration backed off plans to impose tariffs on some Apple products as part of the previous round after the tech giant lobbied the president.
Economists warn that tariffs on consumer goods would drive up prices for Americans, curtail consumer spending, and eventually hurt US economic growth. Trump disagreed with that assessment, instead suggesting that a low tariff rate on such goods would go unnoticed by consumers.
"I mean, I can make it 10%, and people could stand that very easily," he told The Journal.
In addition to the tariffs, the Trump administration is employing a suite of other measures to crack down on China's economic practices. For instance, the Department of Commerce is considering stricter rules on which types of technology can be exported to China, and the Justice Department has charged some Chinese companies and people with economic espionage.
While there were hopes a Trump-Xi meeting could deescalate the trade tensions, recent moves by the administration seem to point to a sustained trade war.
Perhaps most significant, US Trade Representative Robert Lighthizer last week released an update to the investigation into Chinese intellectual-property theft that kicked off the tariff battle. It found China had not changed any of the practices that precipitated Trump's tariff decision.
China is minting a billionaire every three days as tech boom unlocks ‘stealth wealth’
Posted on October 29, 2018 by Admin
The total number of billionaires reached 2,158 last year, up 9% from 2016, according to a new report from UBS and PwC.
The growth was fastest in Asia, with China minting roughly one new billionaire every three days.
Asian billionaires will be wealthier than their American peers in less than three years.
The rich are getting richer and more numerous.
The world added 332 billionaires last year, with their cumulative wealth increasing 19% to a record $8.9 trillion, according to an annual survey from UBS and PwC.
What’s behind this phenomenon? Explosive wealth creation in China.
“China is where we’re seeing unbelievable and unprecedented growth,” said John Mathews, head of ultra high net worth Americas for UBS Global Wealth Management. For the first time ever, billionaire growth in Asia Pacific outpaced that of the US last year.
In 2006, there were just 16 Chinese billionaires. But in 2017, the tally hit 373 – a fifth of the global total. The US still leads regionally, with 585 billionaires, but wealth creation in the region is slowing. The US created 53 billionaires in 2017, compared with 87 in 2012.
In China, 106 people became billionaires in 2017 (although a number dropped off the list from 2016). That comes out to roughly one new billionaire every three days.
If current trends hold, Asian billionaires’ wealth will surpass that of their American counterparts in three years.
That growth has been driven by self-made entrepreneurs in China, particularly in the technology industry.
More than 300 Chinese companies went public last year, unlocking what UBS deems “stealth wealth,” the difficult-to-measure wealth of individuals in private markets with little transparency.
About 97 percent of Chinese billionaires are self-made, and, at 56 years old on average, they’re about a decade younger than their North American counterparts.
US entrepreneurs could play catch-up next year, though. Mathews said major anticipated initial public offerings in 2019, including Uber, could reveal more stealth wealth, potentially adding more billionaires to the US’s count. Of the 53 new billionaires in the US last year, 30 were self-made.
After 9 years of construction and controversy, China has officially unveiled the world's longest sea bridge, built at a cost of R286.4 billion.
At more than 54.7km long, the Hong Kong-Zhuhai-Macau Bridge is part of a master plan to create a global science and technology hub by connecting two Chinese territories, Hong Kong and Macau (the world's largest gambling center), to 9 nearby cities.
With an economic output of R21.5 trillion, the new mega-region - known as the Greater Bay Area - is positioned to rival Silicon Valley. The plan also includes the construction of a R157.5 billion bullet train, which opened in September.
The bridge is expected to open to traffic on Wednesday, though only certain vehicles - shuttles, freight cars, and private cars with permits - are allowed to cross. Pedestrians and bicyclists are prohibited.
While some have criticised the structure as a waste of taxpayer dollars, others tout its ability to connect up to 70 million people in the region.
The title of world's largest sea bridge previously belonged to the Jiaozhou Bay Bridge, which stretches 42.3km.
The Hong Kong-Zhuhai-Macau Bridge is designed to last for more than a century, with the capacity to withstand major storms and earthquakes.
The structure should hold up in the face of 340km winds. That claim was put to the test in September, when Typhoon Mangkhut swept through Hong Kong, destroying roofs, shattering windows, and toppling trees.
The bridge is made of 420,000 tons of steel — enough to build 60 Eiffel Towers.
Perhaps the biggest financial market story in 2018 so far is the colossal fall from grace of the Chinese stock market, which has witnessed losses in excess of 30% since the start of the year.
The fall, which has seen the benchmark Shanghai Composite index drop to its lowest level in almost four years this week, is generally explained through the prism of investors realising that the blockbuster growth China has enjoyed over the last decade is on the wane, and that things are likely to slow down to a strong, but not stellar, rate.
Such a view has been exacerbated by the rise of the trade conflict between the US and China, which has seen the world's two largest economies exchange tit-for-tat tariffs, which now apply to goods totalling close to a cumulative $300 billion (about R4.3 trillion).
Many economists see the trade war having a major negative impact on Chinese growth, with JPMorgan earlier in October saying a full-blown trade war could have a 1% shrinking effect on the economy.
While these two factors are evidently at play, there's reason to believe that another factor could soon come into play, and force Chinese stocks even deeper into bear market territory - forced selling.
In China, hundreds of companies use their shares as collateral for loans, but when share prices fall they are forced to sell in order to maintain a certain level of balance in brokerage accounts, used to lend the companies money.
According to the Report available, about 4.18 trillion yuan (R8.6 trillion) worth of shares have been put up by company founders and other major investors as collateral for loans, accounting for about 11% of the country's stock market capitalisation, based on calculations using China Securities Depository and Clearing Corporation data.
The South China Morning Post, citing a report by Tianfeng Securities, said earlier in the week that more than 600 company stocks have fallen to levels where forced sales may kick in.
"It's a vicious cycle: share drops lead to liquidation and liquidation leads to further share drops," Wang Zheng, chief investment officer at Jingxi Investment Management told the South China Morning Post earlier in the week.
"The recent declines, particularly in small caps, are blamed for the problem arising from share pledges."