1. Trump threatens to reinstate tariffs if no progress with China
The US President sent out another round of mixed messages on the ongoing trade tensions with Beijing this morning, both raising hopes of extending the 90-day truce and promising to implement more tariffs if China does not offer a “REAL deal,” Reuters reports
Trump wrote in a tweet that if China is willing to propose such a deal, then “we will get it done.”
“But if not remember, I am a Tariff Man,” he added.
The comments sent markets back down after rallying on Monday. The Dow Jones dropped 3% and the tech-heavy Nasdaq fell 3.8%.
The president also affirmed that negotiations had already begun, and made mention that the truce period could go on past the designated 90 days following his “wonderful and very warm dinner with President Xi.”
TECH & POLITICS
2. China unveils measures to tackle intellectual property theft
China has prepared a list of punishments aimed at deterring companies from engaging in theft of intellectual property by restricting access to loans and state funding, Bloomberg reports.
The news comes in the wake of President Xi Jinping’s meeting with US counterpart Donald Trump at the G20, after which Xi pledged to address the US’s “reasonable concerns” regarding China’s IP practices. The theft of technology secrets has been a central gripe of US lawmakers in recent years.
The list, released by China’s chief planning body and co-signed by the central bank and supreme court, includes 38 different punishments and will take affect sometime this month.
Although a key issue in the trade war, some analysts are waiting before being too upbeat on the impact of the policy changes.
“We’ve been down this road with China many times on IP. The attention companies pay to IP theft has risen dramatically, and despite the great attention it’s getting the violations have increased,” said Scott Kennedy, an analyst at the Center for Strategic and International Studies.
3. Renminbi enjoys strongest two-day rally in 13 years
The Chinese currency has soared since the beginning of this week as markets reacted positively to Washington’s decision to hold off on further tariffs, with the yuan seeing its largest two-day rise since its revaluation in 2005.
The onshore renminbi, traded on China’s domestic markets, gained 1.8% across Monday and Tuesday, the Financial Times reports. It now sits at around 6.83 per dollar, stepping back from its close call with the psychologically significant Rmb 7 level.
In addition to the tariff truce announcement, the yuan has been buoyed by comments from Federal Reserve chair Jay Powell that interest rates were “just below” the target neutral rate. The remarks stung the greenback, sending it 1.4% lower from mid-November highs.
4. Chinese investors sold off over $1 billion in US real estate last quarter
Chinese property investors continued their retreat from high-profile US real estate in the third quarter, the Wall Street Journal reports, dumping more than $1 billion worth as Beijing clamps down on overseas acquisitions and capital outflows.
Investors sold $1.05 billion and bought only $231 million of real estate in the period from June through September, according to data firm Real Capital Analytics. This marks the second consecutive quarter where sales outweighed purchases, and only the second such quarter in a decade.
Skyrocketing corporate debt and concerns over currency stability have pushed the government to shore up flows of money overseas and impose tighter restrictions on large foreign acquisitions.
“This has to do more with a change in how capital is permitted to behave rather than Chinese investors saying ‘I don’t like the US,’” said Jim Costello, senior vice president at Real Capital.
5. Chinese lithium miner closes landmark Chile deal
China’s Tianqi Lithium Corp has finally received approval to complete its $4 billion investment in Chilean mining group Sociedad Quimica y Minera de Chile (SQM), a deal that will tighten Tianqi’s control of global lithium supplies, Caixin reports.
Tianqi will acquire a 23.77% stake in SQM from Canadian fertilizer company Nutrien Ltd, the company stated in a filing to the Shenzhen Stock Exchange.
The Chinese company has had to overcome a series of regulatory obstacles to complete the deal, as Chilean authorities worried about the degree of control Tianqi and SQM would gain over the global market for lithium, a key input for rechargeable batteries used in electric vehicles, as well as energy storage units for renewable energy solutions.
Tianqi finally won over the Chilean government by promising not to appoint directors to SQM’s board or disclose any of the company’s confidential information, ensuring that it would not gain too much influence over the company.
The investment is likely to prove a windfall for Tianqi, as SQM owns some of the world’s largest and purest lithium reserves, and the company could as much as triple production over the next decade.
Daimler eyes expanding stake in China joint venture [Bloomberg]
The German carmaker has shown interest in taking a higher stake in its partnership with Chinese partner BAIC, according to industry sources, taking advantage of relaxed rules relating to foreign ownership in the auto market.
HSBC is planning to greatly expand its China research business [TechNode]
The bank wants to quadruple the number of mainland Chinese companies covered by its Chinese research aim over the next two years, building on its recent acquisition of a majority stake in its mainland securities company.
Xi Jinping lauds Portuguese ties and investment opportunities during visit [SCMP]
The Chinese president met with his Portuguese counterpart Marcelo Rebelo de Sousa where Xi promised to strengthen cooperation and emphasised the country’s role as a link with Europe.
SoftBank’s Vision Fund expands presence in China [Reuters]
Vision Fund, the $100 billion fund led by Japanese investment group SoftBank, is expanding its footprint in China by hiring a new mainland team and opening its first Chinese offices in Shanghai, Beijing and Hong Kong.
Biomass producer Kaidi could face liquidization as debt calls loom [Caixin]
Wuhan-based Kaidi Ecological has already defaulted on over Rmb 1 billion of loan repayments this year, and has hundreds of million dollars more lined up for this month.