Posts Tagged ‘Xi Jinping’

Trump puts America back in Asia

February 22, 2018


By Thitinan Pongsudhirak


Japan, U.S., Australia and India look to establish alternative to China’s Belt and Road Initiative

February 19, 2018


FEB 19, 2018

Japan, Australia, the United States and India are talking about establishing a joint regional infrastructure project as an alternative to China’s multibillion-dollar Belt and Road Initiative in an attempt to counter Beijing’s spreading influence, the Australian Financial Review reported Monday, citing a senior U.S. official.

In an interview Monday, Australian Foreign Minister Julie Bishop confirmed that senior officials from the four countries are discussing establishing a joint infrastructure plan.

The officials have discussed “a range of opportunities and challenges,” Bishop told Sky News. “There is an enormous need for infrastructure, particularly in our region.”

The unnamed official was quoted as saying the plan involving the four regional partners was still “nascent” and “won’t be ripe enough to be announced” during Australian Prime Minister Turnbull’s visit to the United States later this week.

Australian Prime Minister Malcolm Turnbull takes a selfie as he walks with Victorian Premier Daniel Andrews and members of the public during a parade as part of the Chinese New Year Festival in Melbourne, Australia, Sunday. | AAP / DAVID CROSLING / VIA REUTERS

The official said, however, that the project was on the agenda for Turnbull’s talks with U.S. President Donald Trump during that trip and was being seriously discussed. The source added that the preferred terminology was to call the plan an “alternative” to China’s Belt and Road Initiative, rather than a “rival.”

“No one is saying China should not build infrastructure,” the official was quoted as saying. “China might build a port which, on its own is not economically viable. We could make it economically viable by building a road or rail line linking that port.”

In her interview, Bishop echoed this sentiment, saying that any new “infrastructure initiative need not be at the expense of any other initiative.”

In Tokyo, Chief Cabinet Secretary Yoshihide Suga, asked at a news conference about the report of four-way cooperation, said Japan, the United States, Australia and India regularly exchanged views on issues of common interest.

“It is not the case that this is to counter China’s Belt and Road,” he said.

Japan, meanwhile, plans to use its official development assistance to promote a broader “Free and Open Indo-Pacific Strategy” — including “high-quality infrastructure” — according to a summary draft of its 2017 white paper on ODA. The Indo-Pacific strategy has been endorsed by Washington and is also seen as a counter to the Belt and Road Initiative.

First mentioned during a speech by Chinese President Xi Jinping to university students in Kazakhstan in 2013, China’s Belt and Road plan is a vehicle for the Asian country to take a greater role on the international stage by funding and building global transport and trade links in more than 60 countries.

Xi has heavily promoted the initiative, inviting world leaders to Beijing last May for an inaugural summit at which he pledged $124 billion in funding for the plan, and enshrining it into the ruling Communist Party’s constitution in October.

Local Chinese governments as well as state and private firms have rushed to offer support by investing overseas and making loans.

In January, Beijing outlined its ambitions to extend the initiative to the Arctic by developing shipping lanes opened up by global warming, forming a “Polar Silk Road”.

The Japan, the United States, India and Australia have recently revived four-way talks to deepen security cooperation and coordinate alternatives for regional infrastructure financing to that offered by China.

The so-called Quad to discuss and cooperate on security first met as an initiative a decade ago — much to the annoyance of China, which saw it as an attempt by regional democracies to contain its advances. The quartet held talks in Manila on the sidelines of the Association of Southeast Asian Nations and East Asia summits in November.

In January, U.S. Pacific Command chief Adm. Harry Harris, who was nominated the following month to be the next American ambassador to Australia, called China a “disruptive power” in the Indo-Pacific region and urged countries in the area to build capabilities and work together to ensure free and open seas — including via the Quad.

US needs better China strategy in real-life Game Of Thrones

February 19, 2018

By James Stavridis

In HBO’s Game Of Thrones, the most impressive single force on a very complex battlefield is the trio of dragons mastered by Queen Daenerys Targaryen. As she says: “We will lay waste to armies and burn cities to the ground!”

The symbol of China, of course, is the dragon. The US, whose symbol is the eagle, will need to learn to fly in uneasy company of the dragon in the decades ahead.

These metaphors can fly independently, but they are going to have to deconflict the airspace.

Let’s begin with a hopeful disclaimer: I do not believe we are headed towards a war with China. Our interests are far more likely to converge than to diverge overall, and our economies are deeply intertwined.

Yet the competition, assuming we can avoid outright conflict, will be fierce. A recent cover of The Economist talked about Chinese “sharp power”, meaning the combination of traditional “soft power” (hospitals, medical diplomacy, humanitarian operations) with more coercive tools (trade, economic domination, cyber piracy).

The United States needs a strategy to deal with a China that is increasingly comfortable engaging aggressively in the world. A good primer on this is Graham Allison’s recent book, Destined For War: Can America And China Escape Thucydides Trap?”

Professor Allison of Harvard’s Kennedy School of Government tells the story of China’s truly meteoric rise over the past three decades, and makes the point that while we are playing checkers, the Chinese are not simply playing chess – they are playing a different game altogether: Go.


It is a complex, multi-move, long-dwell game of strategy. While the US crafts a strategy for the next decade or so (see the Donald Trump administration’s new National Security Strategy), China is planning the 200-year future. It is playing a long, long game.

An F-18 Hornet fighter jet set for take-off from the flight deck of aircraft carrier USS Carl Vinson during a routine deployment in the South China Sea this month. The writer believes that while the US still has an overall military advantage over Chi

So what should the US do? Where are there zones of cooperation, and where must it confront? Is there a sensible strategy the US can pursue to ensure it is not incinerated in the dragon’s fire?

The strategy needs to leave behind the mode of “China versus the US” and into a truly integrated Asian coalition. We must not appear to encircle, contain, or intimidate China; we must avoid creating a stark choice between Washington and Beijing for our partners in the region. Rather, we want to build stronger coordinated approaches with Japan, South Korea, Australia, New Zealand, Singapore and other allies, friends and partners.

Let’s start with confrontation. At the top of the tactical watch list is the controversial set of Chinese claims over the South China Sea.

A body of water roughly the size of the Gulf of Mexico, it has billions of barrels of oil and trillions of cubic feet of natural gas under its normally placid waves. Acquisition of this rich trove of hydrocarbons would complete China’s strategic suite of cards in the 21st century.

The US rightfully opposes such an appropriation, and will continue to fly planes overhead and drive ships through what Beijing insists are its “territorial seas”. Similarly, both sides are in conflict in another dimension of time and space altogether: the cyberworld.

The Chinese habit of stealing intellectual property and pressuring US companies in the cybersphere is accelerating, despite assurances from President Xi Jinping to former president Barack Obama and President Trump that he would rein in Chinese activities.

Finally, the US will continue to fight with China over what constitutes “free and fair trade”, and find ways to bring its trade deficit more into balance. There will be confrontation and hard negotiations (and hopefully not a full-blown trade war) ahead.

Here’s the good news: We do have a set of shared interests, starting with perhaps the most important one, Mr Kim Jong Un. China wants to continue to see a divided Korean peninsula (fearing the creation of a powerful juggernaut in the form of a unified, Western-aligned democracy post-Kim). Beijing also wants to avoid a full-blown refugee crisis on the border. There is room to work together in crafting a compromise to solve the potentially catastrophic possibility of a war between the US and North Korea.

The two nations can also work together on a wide range of global problems from climate change (the Trump administration is even talking about re-entering the Paris Agreement) to peacekeeping (perhaps on the turbulent Horn of Africa, where China is building a military base and has real interests).

China and the US could conduct medical diplomacy together (both nations operate hospital ships) and humanitarian operations in Africa and Latin America. There is the possibility of working together to reduce tensions in South Asia, where the US is still at war in Afghanistan and China holds great influence over Pakistan.

None of these will be easy, but all are at least possible. The goal then is to craft a sensible strategic approach that confronts China where the US must, but cooperates where it can.

It should be developed together by the departments of Defence, State, Treasury and Homeland Security (for the cyberpiece), and led by National Security Adviser H.R. McMaster. The working group should take input from outside experts and strategists including Prof Allison; former ambassador to China and retired Navy four-star admiral Joe Prueher; current head of the US Pacific Command, Admiral Harry Harris (nominated to be the next US ambassador to Australia); and Dr Henry Kissinger.

It should feature six key elements:

• Use true long-term thinking. Like China, the US must stop thinking year-to-year or even over the current decade – where do we see the US-China relationship in a century? Two centuries? We are a Pacific nation, but sensible accommodations that can be made that reflect the power and reach of China. We need to think about long-term strategies and the resources necessary to execute them.

•Conduct international coalition-building. The strategy needs to leave behind the mode of “China versus the US” and into a truly integrated Asian coalition. We must not appear to encircle, contain, or intimidate China; we must avoid creating a stark choice between Washington and Beijing for our partners in the region. Rather, we want to build stronger coordinated approaches with Japan, South Korea, Australia, New Zealand, Singapore and other allies, friends and partners. Above all, we must work with India, the other emerging superpower of the 21st century and a fellow democracy.

•Retain a value-based approach. We must not surrender the importance of democracy, liberty, freedom of speech, gender equality, racial equality and other human rights. The US executes these values imperfectly, but they are the right ones and must be part of our strategic approach. Sometimes we think of this as a “war of ideas”, but that is not quite right. We are in a marketplace of ideas, and must compete with the alternate vision for structuring a society offered by China.

•Enhance our geo-economic posture. As the US becomes an energy superpower, revitalises its infrastructure (both physical and cyber), improves its global balance of trade, renegotiates important trade agreements, and uses Bretton Woods institutions – World Bank, International Monetary Fund – aggressively, it will have a more robust set of economic tools. Washington should use them with confidence in dealing with China, starting with returning to the idea of a multi-state Pacific trade agreement (a follow-on to the torpedoed Trans-Pacific Partnership) about which even Mr Trump has mused. Energising the private sector by defending its interests in China and US markets can provide leverage.

•Integrate the interagency. Today, various parts of the government are not well-coordinated in terms of an approach to China. The Defence Department is pursuing an aggressive strategy that names China (correctly) as a potentially dangerous peer-competitor; the State Department has a much softer approach. Treasury is hard-edged on currency manipulation, but the Department of Homeland Security is not aggressive enough in working on cyber defences. The US does not have a two-speed approach – it is more like a 10-speed bicycle

• Maintain a qualitative military edge. While the US still enjoys an overall military advantage over China, the margin is shrinking. It will require smart investments – especially in cyber, unmanned vehicles, advanced maritime platforms and fifth-generation fighters – to ensure it can succeed if forced into combat. Above all, it needs to move from a reactive China “policy” to a real strategy that connects ends, ways and means.

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America could easily take a page from Sun Tzu, the legendary Chinese strategist, who was known for his sophisticated blend of hard and soft power to win complex battles. Yet even he ultimately said: “In death ground, fight.”

We are not yet on a death ground with China, but we will need a new approach to ensure we don’t stumble onto one.


•The writer is a retired US Navy admiral, former military commander of Nato, and dean of the Fletcher School of Law and Diplomacy at Tufts University.

A version of this article appeared in the print edition of The Straits Times on February 19, 2018, with the headline ‘US needs better China strategy in real-life Game Of Thrones’.

Sale of $5bn lithium stake to test electric car hype

February 17, 2018

PotashCorp plans to sell a big stake in Chile’s SQM, a key supplier of the metal

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Henry Sanderson

Financial Times (FT)
February 16, 2018

When Canadian fertiliser company PotashCorp acquired shares in Chile’s SQM almost 20 years ago, the latter’s lithium business appeared an afterthought.

Controlled by Julio Ponce, the well-connected son-in-law of Chile’s former dictator, Augusto Pinochet, SQM was known as a fertiliser company. However, the then obscure lithium business is why the 32 per cent stake is now valued at $4.7bn.

Lithium has hitched a stunning ride on the wave of interest in electric cars, making it one of the world’s hottest commodities. SQM’s lithium business generates about 60 per cent of the profits for the company, which is in talks with Elon Musk’s Tesla over a deal to supply lithium, a key ingredient in electric car batteries.

It is against this backdrop that Potash is being forced by regulators to sell the stake as a condition of its merger with rival Canadian fertiliser producer Agrium. While only a handful of companies are likely to compete for the stake, the eventual price will be an important measure of how seriously the hype around electric cars is being taken.

“It’s a good barometer of where lithium is today,” Simon Moores, founder of London-based consultancy Benchmark Mineral Intelligence, says. “Anyone investing $5bn has to invest for the long term, on a 10- to 20-year horizon, and so there’s no doubt you have to be extremely bullish on lithium.”

The appeal of owning the stake is clear. It offers the buyer significant exposure to one of the lowest-cost producers of lithium in a country with the largest reserves of the metal in the world. Sociedad Química y Minera de Chile (SQM) accounts for more than 20 per cent of the world’s lithium supply, making it one of five companies that dominate the global market alongside China’s Ganfeng, Tianqi Lithium, FMC and Albemarle.

What is more, last month SQM and the Chilean regulator reached a deal that allowed it to more than quadruple its output by 2025, breaking with a previous practice in which SQM had to pour lithium-rich brine back into the desert to avoid exceeding its quota.

Those with a potential interest include Anglo-Australian miner Rio Tinto, according to people familiar with the matter. China’s Tianqi Lithium, which snapped up a 2 per cent stake in SQM for $38 a share in 2016, has also shown interest, they said. Chilean pension funds could also buy some of the shares, according to analysts.

However, analysts say the challenge for a buyer is twofold. Parting with several billion dollars requires taking as clear as possible a view on the future of electric cars, where hyperbole is common and forecasts vary wildly between optimism and caution.

The price for lithium carbonate from South America has more than doubled over the past two years to hit $14,500 a tonne, according to Benchmark Mineral Intelligence. If electric vehicles reach 5 per cent of car and light truck sales globally by 2025 from their current level of 2 per cent, then lithium prices will fall to $6,900 a tonne by 2025, according to consultancy Wood Mackenzie.

However, if that share, including plug-in hybrids, climbs to 12 per cent by 2025 lithium prices will remain at current levels and then move towards a long-term price of $13,600 a tonne, the consultancy forecasts.

Unlike commodities such as oil or copper, lithium is not traded on any exchange. Instead, pricing is set through long-term contracts with buyers or on the spot market in China, the world’s largest electric car market.

Wherever bidders end up sitting on the spectrum of forecasts, they will also be competing against a backdrop in which rising lithium prices have unleashed a surge in supply. Companies are hunting for the metal around the globe, including in Cornwall, Nevada, Mali and Australia, where there has been a rapid build-up of production. As a result, some analysts who follow the industry forecast a surplus for the next few years.

“Why would you buy a $5bn stake in a resource that is geologically abundant?” says one investor.

Shares in SQM, whose investors include Iridian Asset Management and New York-based Renaissance Technologies, according to filings, rose more than fourfold in the past two years, but have fallen 12 per cent since the middle of January to $56 a share.

Ben Isaacson, an analyst at Scotiabank in Toronto, says SQM’s share price reflects lithium prices well above the marginal costs of production “which isn’t realistic”. The lithium price will fall to a long-term average of between $8,000 and $10,000 a tonne, he forecasts.

“There’s a clock ticking on this deal,” he says. “This should be bought at a discount — this should not be bought at a premium.”

In December Mr Ponce signed a deal with Chile’s regulator Corfo to give up his control of SQM, which was exercised via a joint voting pact with Japan’s Kowa Group. He still maintains a 30 per cent stake in SQM through holding companies known as the cascadas, or “waterfalls”, for their complicated structure.

That opens the tantalising prospect for any buyer of the possibility of full control of SQM if Mr Ponce is willing to sell his shares.

“For someone investing in that stake they need to do it for a good return on investment or potentially as a stepping stone to take over the whole company,” says Howard Klein, a New York-based partner at RK Equity, which advises companies in the sector.

“Lithium is experiencing a far bigger demand shock,” he adds.

The sale of the SQM stake will reveal just how valuable the world thinks that shock is.


As China takes ‘center stage,’ Europe stands at a crossroads

February 16, 2018

China’s position as a global superpower is indisputable. As leaders gather to set the agenda of global security at the Munich Security Conference, the EU is at a crossroads between Washington and Beijing.

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Global leaders are converging on Germany this week for the 2018 Munich Security Conference at a time when the declining US influence in international politics continues to play out under President Donald Trump.

China, meanwhile, has increasingly been defined by a growing presence on the world stage, from the fight against climate change to global trade rules. The country’s rise to the position of a superpower may not be a new phenomenon, but the past year has seen its status cemented.

In a speech described by risk consultancy Eurasia Group as “the most geopolitically noteworthy event since Mikhail Gorbachev formally dissolved the Soviet Union,” Chinese leader Xi Jinping pronounced Beijing’s newfound status during China’s 19th Party Congress in October.

“With decades of hard work, socialism with Chinese characteristics has crossed the threshold into a new era,” Xi said. “It will be an era that sees China moving closer to the center stage and making greater contributions to mankind.”

Images of China's past and present leaders

During the 19th Communist Party Congress in October, Xi Jinping (pictured right) consolidated his rule in China

‘World leader, at all costs’

In the 1990s, under the late Chinese leader Deng Xiaoping, Beijing implemented a foreign policy that leaned toward slogans such as “hide our capacities and bide our time,” which meant  “maintaining a low profile” to focus on developing the country, according to the party-owned Global Timesnewspaper.

But Chinese historian Zhang Lifan told DW that such a strategy “is no longer suitable for China’s status of quo.”

“The current situation is China wants to be a world leader, at all costs,” Zhang told DW. “The United States is now employing the ‘America First’ policy. China and Xi Jinping want to seize this opportunity to become the leader of globalization.”

Read more: How Trump’s unreliability is pushing EU and China closer together

In many ways, China’s leadership role over the past year has been shaped by US foreign policy objectives under Trump. This has also seen China strengthening its position on strategic areas that will continue to drive international relations, including climate changeArctic securitycyberspaceinternational trade and space exploration.

China “seems to be the rational actor that’s fighting climate change, that is keeping markets open, that is continuing to praise the merits of globalization, which are undeniable,” Jan Gaspers, head of the European China Policy Unit at the Berlin-based Mercator Institute for China Studies (MERICS), told DW. “Of course, most of that is just rhetoric and they’re not living up to what they’re saying.”

Infographic showing China's lead in renewables

Europe’s lifeline?

For Europe, Beijing has tacitly started to fulfill a role that its traditional ally, the US, has seemingly cast aside under an “America First” doctrine. The Chinese government understands that by partnering with the EU, it can increase its legitimacy in the eyes of global stakeholders and ensure its influence in any shake-up of international leadership roles.

“China and the European Union are global powers: We have a joint responsibility to work together toward a more cooperative, rules-based global order,” Federica Mogherini, the EU’s top diplomat, said as she wrapped up an official visit to Beijing last year.

China is not seeking to undermine any kind of rules-based relationship in the near-term, and neither is Europe, especially as it redefines its position. But an increasingly relevant question is how the EU will position itself in what appears to “be a more conflicting relationship between the US and China.”

“It will be interesting how Europe will navigate those difficult waters, especially given that Europe itself is not actually united … and then there are growing differences between the EU and US on climate change, open markets and global trade,” Gaspers said.

An infographic showing Chinese Foreign Direct Investment in Europe

China’s ‘better alternative’

Besides the benefits of the EU being China’s largest trading partner, Beijing’s rise has also had an adverse affect in Europe. China’s strong leadership has found support within the EU from the likes of Hungarian Prime Minister Viktor Orban and Czech President Milos Zeman.

China has become much more confident in presenting its economic and political model as a “better alternative” to liberal democracy, Gaspers told DW, noting that China’s influence had extended beyond Europe’s political periphery.

Read more: Is the Czech Republic moving closer to China?

A report published by MERICS last year showed China “creating layers of active support for Chinese interests” by “fostering solid networks among European politicians, business, media, think tanks and universities,” including in Brussels, the heart of European politics.

“China’s rapidly increasing political influencing efforts in Europe and the self-confident promotion of its authoritarian ideals pose a significant challenge to liberal democracy as well as Europe’s values and interests,” the report said.

While the merits of a deep economic relationship will continue to push the China-EU relationship forward, serious concerns as to how this could develop at the political level, both domestically and globally, will impact the EU’s liberal aspirations and China’s ambitions to become a world leader.

Ju Juan of DW’s Chinese service contributed to this report.

Watch video42:45

China: Silk Road 2.0 | DW Documentary


Tesla’s China Dream Threatened by Standoff Over Shanghai Factory

February 14, 2018


Without a local partner, every Tesla sold in the world’s biggest EV market faces a steep import tax.
A Tesla Model S parked at one of the U.S. company’s electric charging stations in Beijing.

Photographer: Qilai Shen

Tesla Inc., the biggest-selling electric carmaker in the U.S., is in danger of being relegated to an expensive niche in China because Elon Musk can’t clinch a deal to open a factory there.

More than seven months after Tesla said it was working with Shanghai’s government to explore assembling cars, an agreement hasn’t been finalized because the two sides disagree on the ownership structure for a proposed factory, according to people with direct knowledge of the situation. China’s central government says the plant must be a joint venture with local partners, while Tesla wants to own the factory completely, the people said, asking not to be identified because the negotiations are confidential. Currently, all foreign automakers must partner with Chinese companies in order to manufacture locally.

Tesla’s sluggishness in starting local manufacturing means it’s fumbling a chance to capitalize on China’s hard sell for new-energy vehicles, including EVs, plug-in hybrids and fuel-cell vehicles. President Xi Jinping’s administration wants to scrub notorious air pollution and reduce dependence on imported oil, and it’s doling out billions of dollars in subsidies to entice consumers away from gas guzzlers.

“It’s a market they need to get a foothold in,” said Jeffrey Osborne, a New York-based analyst for Cowen & Co.  with an underperform recommendation on Tesla.

Tesla declined to comment on its negotiations with the Chinese government over local production. The Ministry of Commerce, National Development and Reform Commission, and the Shanghai Economy and Information Commission—which are all involved in the deliberations—didn’t reply to questions faxed at their requests.

The disagreement doesn’t mean a deal won’t be reached in the future. Tesla currently sells cars in China, but an import tax of 25 percent catapults the sticker price beyond the means of most consumers. A Tesla Model X made in the U.S. and shipped to China costs about 835,000 yuan ($132,000), providing openings for cheaper models from domestic rivals such as BAIC Motor Corp., Warren Buffett-backed BYD Co. and startups NIO and Byton.


A customer in Tesla’s Beijing showroom. The top-selling U.S. electric automaker risks being relegated to a luxury niche in China, the biggest market for electric vehicles.
Photographer: Tomohiro Ohsumi/Bloomberg

Tesla said in June it was working with the Shanghai government to explore local manufacturing, and it expected to more clearly define production plans by the end of 2017. The company said it needed to have local factories “to ensure affordability for the markets they serve.”

In November, Musk said during an earnings call the company was about three years away from starting production in China—meaning 2020 at the earliest. “Don’t set your watch by this,” he said.

Shares of local suppliers subsequently fell.

And the waiting game for Palo Alto, California-based Tesla may not end soon. Speaking with analysts after earnings were announced Feb. 7, Musk, the chief executive officer, didn’t talk about China, and the company didn’t mention its China plans in the update published with those results.

“Tesla has no strategic path,” said Yale Zhang, managing director of the Shanghai-based consulting company Automotive Foresight. “It has the halo of Elon Musk, and its products are slightly ahead of the competitors, but the others—especially the Chinese EV startups—are catching up rapidly.”

In the U.S., Tesla accounted for the majority of the 104,471 battery-powered cars, according to data compiled by Bloomberg.

In China, however, Tesla sold 14,883 vehicles, accounting for just 3 percent of the nation’s battery-powered EV sales of 449,431 units. Tesla ranked 10th behind leader BAIC’s affiliate, Beijing Electric Vehicle Co., which sold 102,341 cars, according to Bloomberg Intelligence. BYD sold 33,020 for third place.

Tesla said it currently has 31 retail stores across China and more than 1,000 Superchargers, which can recharge a model in 30 minutes.

Sales of new-energy vehicles—a category that includes battery-powered, plug-in hybrid and fuel-cell automobiles— reached 777,000 units last year and could surpass 1 million this year, the China Association of Automobile Manufacturers estimated. The government’s target is 7 million vehicles a year by 2025.

A Byton electric vehicle at the 2018 Consumer Electronics Show in Las Vegas.
Photographer: David Paul Morris/Bloomberg

Buyers say the generous handouts are working. Lily Li, a 36-year-old office worker from Shanghai, bought a BJEV car even though its driving range falls short of Tesla vehicles. Li paid less than 100,000 yuan for the EV160 model after incentives.

“I am very into Tesla for its battery technologies, but I can only afford a Tesla if its price falls below 300,000 yuan,” Li said. “It will take years before that happens, so I had to make do with a domestic EV.”

BYD’s top seller—the e5—costs 129,900 yuan after subsidies from the central government, according to its website. NIO and Byton also beat Tesla on price. NIO’s ES8, with a range of 355 kilometers (221 miles) on a single charge, sells for 448,000 yuan ($71,000).

Byton, a Nanjing-based company started by former BMW AG executives, unveiled a planned $45,000 SUV at last month’s CES in Las Vegas.

“It’s going to be a much narrower lane for Tesla,” said Bill Russo, CEO of Shanghai-based Automobility Ltd. “If you are double the price of the competition, then you are always going to be struggling.”

— With assistance by Craig Trudell

China’s Xi stresses military modernization in pre-new year visit — China should take the initiative in international competition — Create more “Chinese miracles”

February 13, 2018


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China stealth aircraft Chengdu J-20

Chinese President Xi Jinping has stressed military modernization and technological advances during meetings with servicemen and women ahead of the Lunar New Year, state media said.

Chinese leaders generally use the time around the festival to make inspection trips around the country where they flag important policy initiatives or areas of concern for the year ahead.

The weeklong holiday starts Thursday, the eve of the new year. It is the most important holiday in the Chinese calendar, when millions of people travel to their hometowns, many for the only time in the year.

Xi has made the upgrading of China’s armed forces a key policy plank, investing in a range of new technologies including stealth fighters, aircraft carriers and missiles.

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On a visit to a satellite launch site in southwestern China’s Sichuan province on Saturday, Xi told senior officers they should work with more commitment and be steadfast in building China’s strength in aerospace to create more “Chinese miracles,” the official Xinhua News Agency said late Monday.

Xi stressed “military training under combat conditions to build the country’s military into a world-class one and improve the country’s strength in aerospace,” the report added.

“Noting that technology was a core combat capability, Xi called for intensified work to make breakthroughs in core and key technologies so that China could take the initiative in international competition,” the news agency said.

Xi also chatted by video conference with soldiers stationed at an island in the Paracels, in the disputed South China Sea, asking them how they were preparing to celebrate the new year, Xinhua said.

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Chinese military bases near the Philippines

China claims a large swath of the South China Sea and has been ramping up its military deployments there, including reclaiming land on reefs and atolls to build military infrastructure such as air bases.

Xi is expected to visit to other parts of the country before and possibly during the holiday.


Recent aerial photos obtained by Inquirer showed that China was nearly done transforming disputed reefs in the South China Sea into island fortresses.

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Mischief Reef now an extensive Chinese military base

READ: EXCLUSIVE: New photos show China is nearly done with its militarization of South China Sea



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China has no greater rights than any other in the sea. China says it has sovereignty over all the South China Sea north of its “nine dash line.” On July 12, 2016, the Permanent Court of Arbitration  in The Hague said this claim by China was not valid. But China and the Philippine government then chose to ignore international law.

What China’s military air crashes really signal

February 12, 2018

Experts say rising incident rate shows China flexing military might, flying more missions

The deadly crash of a People’s Liberation Army Air Force (PLAAF) military plane in Guizhou province last month during a training exercise has raised questions about whether China’s relentless push for military modernisation has outpaced its actual capabilities.

The incident, which claimed the lives of at least 12 crew members onboard, has severely hit air force morale, as it happened just weeks after the crash of a J-15 aircraft carrier-based fighter jet, a source told the South China Morning Post.

“We must recognise that in China, there is a fatal gap between the air force’s combat-ready training and its imperfect aircraft development,” the source said.

Despite engine and aircraft design problems, pilots have been pushed to fly the warplanes “because there is this political mission to build a combat-ready fighting force”, explained the source.

The crashes are the latest in what appears to be a growing string of often-fatal accidents involving China’s military planes.

While the PLA does not openly report such incidents, there were at least seven known crashes in the last two years, including one last November that killed Ms Yu Xu, one of China’s first female fighter pilots.

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A J-15 fighter jet landing on the Chinese aircraft carrier Liaoning last year. China had more than 700 fourth-generation fighter jets last year, compared to 24 in 1996, the US-based Rand Corporation estimates.PHOTO: XINHUA

But rather than a sign of deteriorating capabilities, military experts told The Straits Times the accident rate shows a strengthening of PLAAF and its sister branch, the PLA Naval Air Force.


The PLA’s air programmes face significant challenges, not least because most of its warplanes are cloned from foreign designs.

While China may have succeeded in cracking design secrets and technical aspects of foreign jets, it is still grappling with cutting-edge jet engine production which requires high-precision manufacturing and deep materials engineering know-how, which China lacks, said analysts.

The J-15 fighter jet, for instance, is based on Russia’s Su-33. The new J-20 and J-31 stealth planes closely resemble America’s F-22 fighter jet and F-35 joint strike fighter, prompting United States lawmakers to accuse Beijing of stealing US designs.

While China may have succeeded in cracking design secrets and technical aspects of foreign jets, it is still grappling with cutting-edge engine production which requires high-precision manufacturing and deep materials engineering know-how, which China lacks, said analysts.

The use of ageing aircraft, such as the 1990s-era Tu-154, for long-distance maritime missions also shows a lack of confidence in the new models when it comes to longer missions, said S. Rajaratnam School of International Studies research fellow Wu Shang-Su.

A more deep-seated problem is the PLA’s graft-riddled past, which has likely compromised the quality of its fighter jet programmes.

Former PLA chief Guo Boxiong was sentenced to life imprisonment in 2016 for having amassed a fortune in bribes.

“As vice-chairman of the Central Military Commission over the past decade, Guo was in charge of R&D (research and development) and reports were that he took ‘tremendous bribes’ from the defence industry,” said PLA expert Arthur Ding of the Taipei-based Chinese Council of Advanced Policy Studies.

“If that’s the case, the technology and quality of platforms like jet fighters may not meet the PLA’s demands, and this can partially explain why they are suffering this kind of incident rate.”


But experts agreed that the biggest contributor to the PLA’s rising accident rate is that it has been tasked to take on more varied and demanding missions, alongside a vast expansion in its hardware and numbers. Since last year, the Chinese air force has conducted “island encirclement patrols” around Taiwan involving its fighter jets, bombers and surveillance planes. Such flights are the “new normal”, a PLAAF spokesman said in December.

Footage from state broadcaster CCTV in recent months also shows Beijing wants to regularise deployments of combat aircraft in the South China Sea, through the air and naval facilities it has built on disputed islands there, such as on Fiery Cross Reef in the Spratlys and Woody Island in the Paracel chain.

To support the greater range and number of missions, the PLA’s air assets have been significantly boosted over the past decade. China had over 700 fourth-generation fighter jets last year, compared to 24 in 1996, the US-based Rand Corporation estimated in a report. The PLA today has almost 3,000 aircraft, about the same number as that of Japan and South Korea combined, said Global Firepower, an index of countries’ military strength.

“More aircraft, more personnel, more missions, more training and a higher profile – these are all major factors that account for the incident rate,” said Mr Jon Grevatt, Asia-Pacific defence industry analyst for military publication IHS Jane. “One of the outcomes of the increase in these factors is unfortunately more accidents, but that holds true for all militaries around the world.”

More accidents in the short term also indicate President Xi Jinping’s effort to get the PLA to change its culture is succeeding, said Dr Ding.

Since he took office, Mr Xi has pushed to transform the PLA into a modern military “capable of fighting and winning” a 21st-century war.

Dr Ding noted that in the old days, PLAAF commanders would conduct highly scripted training scenarios that had minimal risk of casualties, unlike real combat scenarios, as casualty rates directly affected promotion prospects. Today’s exercises are much more complex, combat-realistic and integrated. Just last month, China conducted a series of training exercises involving the spectrum of its air assets – from the new J-20 fighter to the H-6K bomber and Y-20 transport aircraft.

“My impression is that (President Xi) has encouraged the top brass to face the reality that rigorous training will mean greater likelihood of incidents, and for the PLA, this mindset shift is probably a good one,” he said.

But this also means that countries in the region should be prepared for a more formidable Chinese air force in the coming years – one that is able to project air power far beyond China’s borders. “It’s probably not so good for China’s neighbours, because down the road, in the long term, it means China’s real combat and operations capability will be substantially improved.”

A version of this article appeared in the print edition of The Straits Times on February 12, 2018, with the headline ‘What PLA air crashes really signal’.

There’s a Global Race to Control Batteries—and China Is Winning

February 12, 2018

Chinese companies dominate the cobalt supply chain that begins at mines in Congo


A BYD Concept car is displayed during the first day of the 17th Shanghai International Automobile Industry Exhibition in Shanghai on April 19, 2017. AFP

KOLWEZI, Democratic Republic of Congo—Miners push bicycles piled high with bags of a grayish-blue ore along a dusty road to a makeshift market. There, they line up at wholesalers with nicknames such as Crazy Jack and Boss Lee.

Most of the buyers are Chinese. Those buyers then sell to Chinese companies that ship the bags, filled with cobalt, to China for processing into rechargeable, lithium-ion batteries that power laptops and smartphones and electric cars.

There is a world-wide race to lock up the supply chain for cobalt, which will likely be in even greater demand as electric-car production rises. So far, China is way ahead.

Chinese imports of cobalt from Congo, the world’s biggest producer of cobalt, totaled $1.2 billion in the first nine months of 2017, compared with just $3.2 million by India, the second-largest importer, government data show.

“We’re realizing that the Congo is to [electric vehicles] what Saudi Arabia is to the internal combustion engine,” says Trent Mell, chief executive of exploration company First Cobalt Corp. , based in Toronto. Chinese firms are keenly aware of Congo’s importance to electric vehicles, he says, and “trying to control the whole ecosystem…from cobalt mining to battery production.”

China already is the world’s largest electric-car market. In 2011, Beijing listed electric vehicles as one of seven “strategic emerging industries.” Developing a homegrown battery industry became a vital part of the government-sponsored push. The Chinese government provides subsidies to domestic battery makers, essentially locking out foreign companies.

Companies from China now dominate the first steps in the lithium-ion battery production process. Such firms produce about 77% of refined cobalt chemicals, up from 67% in 2012, according to commodities researcher CRU Group . George Heppel, a consultant at CRU, says Chinese companies could soon have more than 90% of the market.

About 54% of the global cobalt supply comes from Congo. Chinese companies dominate the network of middlemen who buy cobalt from freelance miners such as those lining up at the market in Kolwezi.

Congolese cobalt miners at a mine in 2015. Freelance miners, called creuseurs, produce more than 10% of the cobalt output in Congo.Photo: Kenny Katombe/REUTERS

The freelancers are known as creuseurs, the French word for diggers. They unearth cobalt with picks and shovels, earning about roughly $300 per ton of ore, up from $200 a year ago. U.S. and European companies have grown wary of cobalt suppliers who buy from creuseurs, partly because some of the miners are children. They rarely wear masks or other safety equipment. Crippling injuries are common.

“A stone fell on me,” says Jean Kayombo Asani, 20 years old, pointing to a big gash on his forehead. He has been a cobalt miner since he was 15. “There are enormous risks, like landslides. One can fall and die,” he adds.

Industry researcher Darton Commodities estimates that creuseurs produce as much as 14% of the cobalt output in the central African nation.

Tesla Inc. said last year its cobalt supplier in Congo is “very reputable,” without identifying the supplier. The auto maker sent a team to the country to make sure its supply chain doesn’t include child labor or cobalt mined by creuseurs. Tesla hasn’t said if it made any changes as a result.

For years, traders who bought cobalt from freelance miners often sold it to Congo DongFang International Mining, a unit of Chinese giant Zhejiang Huayou Cobalt Co. , according to human-rights group Amnesty International and other people familiar with Congo’s cobalt market.

A Zhejiang Huayou spokesman says it stopped buying last April from wholesalers who cater to creuseurs and is trying to buy more from industrial miners that have greater control over the production process. The company is making the changes with help from a nongovernmental organization called Pact, the Zhejiang Huayou spokesman adds.

Contemporary Amperex Technology Co., based in China’s coastal Fujian province, is one of the country\’s largest makers of electric-vehicle batteries.Photo: Qilai Shen/Bloomberg News

Few commodities have had more dramatic increases in demand than cobalt, primarily a byproduct of copper and nickel mining. Global cobalt production has quadrupled since 2000 to about 123,000 metric tons a year, according to the U.S. Geological Survey.

Demand is growing even faster and is expected to reach more than 200,000 tons by 2025, according to researcher Wood Mackenzie. Electric cars are a big reason why. About 1,300 metric tons of cobalt were used in electric vehicles in 2014, Morgan Stanley estimates. The total is expected to rise to 11,320 tons this year and 62,940 tons by 2025.

Such expectations have caused cobalt prices to more than double in the past year in London trading. Cobalt prices are up more than 230% since the end of 2015, according to Thomson Reuters.

“If our projections for electric vehicles are anywhere near close, there are going to be some serious issues in the cobalt market” after 2020, says Jack Bedder, an analyst who follows cobalt for the London market-intelligence firm Roskill. Tight supply would give China yet another advantage because of its strength in the cobalt supply chain.

Swiss miner Glencore PLC is the world’s largest cobalt producer, including 27,400 tons from Congo last year. Glencore expects its output to more than double in the next few years.

Much of the remaining 30,000 tons to 40,000 tons of Congolese cobalt comes from creuseurs, Chinese companies such as China Molybdenum Co. and Zhejiang Huayou, and small industrial producers, according to traders.

China Molybdenum last year purchased a giant copper and cobalt mine in Congo from U.S. mining giant Freeport-McMoRan Inc. The mine supplies a Freeport facility in Finland that produces about 20% of the processed cobalt sulfate used to make batteries. Analysts say the rest of global cobalt sulfate production is done in China.

“Some of the biggest American car companies are very pleased about how we manage the supply,” says Kalidas Madhavpeddi, CEO at CMOC International, the overseas operations of China Molybdenum.

Congolese state-run mining company Gécamines SA and China Nonferrous Metal Mining Group , known as CNMC, are jointly developing a cobalt- and copper-rich mine that likely will also help China. CNMC will build and operate the mine, owning a 51% stake, while Gécamines will own 49% and got a loan of $870 million from the Chinese company.

China’s State Reserve Bureau has accumulated about 5,000 tons of cobalt, or about 15 days’ global supply, for a reserve stockpile, according to Darton Commodities. In comparison, China has about three days’ global supply of crude oil in its strategic reserve.

“It’s very clear that the Chinese want to be at the center of electric vehicles. There’s no question there’s a laserlike focus,” says Anthony Milewski, chief executive of Cobalt 27 Capital Corp. , which is based in Toronto and owns about 3,000 tons of cobalt, one of the world’s largest stockpiles.

The shift to electric vehicles is happening faster than many experts anticipated just a few years ago, due in part to the rapid evolution of a global supply chain for key components in lithium-ion batteries. That has driven down prices and helped battery makers scale up production.

Baojun E100 all-electric battery cars last year at a plant operated by General Motors and its local joint-venture partners in the Chinese city of Liuzhou. China is the world’s largest electric-car market. Photo: Norihiko Shirouzu/REUTERS

Morgan Stanley says the price of a lithium-ion battery today is about $200 per kilowatt-hour, down from $1,200 two decades ago. It expects the price to fall to $100 by the early 2020s. Electric vehicles will account for 34% of global vehicle sales by 2030, Bank of America analysts forecast.


Battery production and the supply chain behind it remains fragmented, though, complicating efforts by auto makers to ensure supplies. One company mines the minerals, another refines it, a third makes the cells, a fourth combines the cells into a battery module, and a fifth buys the modules to assemble into a battery. Chinese companies are making major investments in each link of the supply chain.

Some companies and battery experts say technological shifts to make rechargeable batteries with less cobalt—or none at all—could make cobalt less important in battery production.

China is lining up behind nickel manganese cobalt batteries. They have a higher energy density than batteries without cobalt, giving cars greater driving range while taking up less space.

Global battery manufacturing capacity is about 110 gigawatt hours a year, mostly for consumer electronics, electric vehicles and electricity storage. In the past year, China has announced plans to add more than 150 gigawatt hours of production in the next three to four years, tripling current capacity. That dwarfs Tesla’s “gigafactory” in the Nevada desert, which aims to add 35 gigawatt hours by 2020.

“The Chinese manufacturers have targets set by the government,” says Luis Munuera, an analyst with the International Energy Agency. “It is not a market response. It is the amount of battery capacity the government wants to have.”

Most Chinese battery production is now focused on low-end, low-density batteries, and many battery makers are relatively small. But the Chinese government has made offers of support contingent on the energy density of the battery. That means more nickel manganese cobalt batteries.

U.S. consumers would benefit if the Chinese cobalt push drives down prices. Lithium-ion batteries “are very quickly becoming a commodity,” says Sam Wilkinson, an associate director for solar and energy storage research at IHS Markit.

A lithium battery pack at the Lexus booth during the Auto China 2016 auto show in Beijing.Photo: Damir Sagolj/REUTERS

After the Chinese government helped engineer a big export market in the solar industry, the cost of a residential rooftop solar array has fallen to $16,000 from $41,000 in 2010, according to the National Renewable Energy Laboratory. A large, 100-megawatt solar installation that cost $544 million to build in 2010 can now be built for $111 million.

About 65% of all solar modules are made in China, and seven of the top 10 module manufacturers are Chinese.

That has caused trade friction with the U.S. Last month, President Donald Trump imposed new tariffs of up to 30% on solar-panel imports after an independent panel concluded that American manufacturers were being unfairly harmed by Chinese rivals.

Some technology experts worry about what could happen as China gains more competitive muscle in the battery industry. They say too much price-cutting could stifle the innovation of better batteries.

“China controls the majority of global production of solar panels, wind turbines and batteries,” says Varun Sivaram, a technology fellow at the Council on Foreign Relations. “Really superior technologies have no chance of breaking in, and that worries me.”

—Alexandra Wexler contributed to this article.

Write to Scott Patterson at and Russell Gold at


China is winning the race to control lithium for electric vehicles    9:14 AM ET Tue, 5 Dec 2017 | 00:56

China is outpacing the U.S. and other countries in a global race to secure supplies of an all-important element for electric cars.

China has emerged as the leading market player for electric and hybrid cars, accounting for approximately half of global sales. And with the world’s second-largest economy keen to develop the industry within its own borders, Beijing is looking to import a lot more lithium.

“Lithium is coming of age in a big way. It’s the core ingredient to 99 percent of electric vehicles and as a result, demand is going through the roof,” Simon Moores, managing director at research and data provider at Benchmark Mineral Intelligence, told CNBC in a phone interview.

As demand for electric vehicles skyrockets, Chinese firms have rapidly been making deals in a bid to secure supplies of lithium — a vital component used in batteries for electric vehicles.

Demand for lithium had been “bubbling under the surface” for several years, Moores said, before a renewed interest in electric cars about 18 months ago triggered a “desperate” global pursuit.

China wants ‘to control electric vehicle supply chain’

Governments and car manufacturers worldwide have taken steps to electrify fleets and further phase out the combustion engine. The lithium-ion batteries are able to produce more electricity per unit than conventional batteries.

The global push to roll out electric cars — which emit less climate-warming carbon emissions — has been amplified by concerns over air pollution, particularly from diesel cars. And Beijing’s pursuit of lithium for electric cars appears aligned to the plans of Chinese President Xi Jinping, although industry analysts said cost, rather than environmental concern, was the primary reason for China to pivot toward alternative energy.


“Given the government’s power in China to direct the economy, if they want to become the world leaders in electric vehicles, they can likely achieve it,” Jay Jacobs, director of research at Global X, told CNBC in an email.

“China is not just focusing on electric vehicle manufacturing, but also buying up lithium projects and supporting the growth of battery producers, so they can control even more of the electric vehicle supply chain,” he said.

Electric vehicle revolution ‘grossly misunderstood’

Western companies have yet to show the same levels of interest in lithium supplies compared to their Chinese counterparts, analysts said.

Like Beijing, the U.S. and Europe also have limited lithium resources of their own and rely on imports from elsewhere. Lithium is most commonly mined from rocks in Australia as well as brine pools in South America, in countries such as Bolivia, Chile and Argentina.

Marcelo Perez del Carpio | Bloomberg via Getty Images

Employees shovel salt into mountains at the Salar de Uyuni (Uyuni Salt Flats) in Potosi, Bolivia, on Sunday, Dec. 11, 2016.

Some observers fear electric car makers, such as Tesla, could end up scrambling to secure crucial resources of lithium where China is the biggest player. However, Jacobs said even China recognized the global arms race for lithium supplies was unlikely to be a “winner-takes-all industry.”

“The move toward electric vehicles is grossly misunderstood and over-simplified in the markets. This is a transition that will take many decades, if it happens,” Jeffrey Christian, managing director at CPM Group, told CNBC via email.

“There are people who speak with great conviction about the future of electric vehicles and lithium batteries, but their convictions are based more on faith and beliefs than on concrete, knowable realities at this time.”

Japan issues stark warning on trade to Britain — May pitches trade with Britain after Brexit but China not buying

February 11, 2018
Koji Tsuruoaka, Japan's ambassador to Britain, warned that without a trade deal Japanese companies could leave the UK
Koji Tsuruoaka, Japan’s ambassador to Britain, warned that without a trade deal Japanese companies could leave the UK CREDIT: REUTERS

Japan has issued a stark warning to the Government over the risks Brexit poses to the county’s businesses operating in the UK.

Speaking after a Downing Street summit with 19 leaders from Japan’s biggest businesses with operations in the UK, the country’s ambassador raised the prospect of them pulling out of Britain.

“If there is no profitability of continuing operations in the UK – not Japanese only – then no private company can continue operations. It is as simple as that,” Ambassador Koji Tsuruoka said when asked whether Japanese companies could leave if no trade deal is agreed.

“This is all high stakes that all of us, I think, need to keep in mind,” the ambassador said, speaking outside No 10 following the meeting attended by Prime Minister Theresa May and International Trade Secretary Liam Fox.

Theresa May leads the meeting with top representatives from Japanese businesses with Uk operations
Theresa May leads the meeting with top representatives from Japanese businesses with UK operations CREDIT: PA


Top executives from companies including car makers Nissan, Honda and Toyota were at the meeting, along with Japanese banks including Nomura, Mizuho and Sumitomo Mitsui. Japanese companies working in sectors including life sciences and technology in the UK were also represented.

According to data from the Department for International Trade, Japan is the UK’s 11th largest trading partner accounting for 2.1pc of total trade. The most recent annual figures show Japanese investment into the UK hit £46.5bn in 2016, up 12.7pc on the previous year.

Nissan’s giant plant at Sunderland employs more than 7,000 staff – and several times that in the supply chain – producing half a million cars a year. The vast majority of the factory’s output is exported to Europe.

Because 80pc of all cars built in the UK are sold overseas, the automotive sector has been one of the most vocal calling for a “frictionless” trade deal, warning that tariffs and customs barriers could make it uncompetitive – potentially leading to plants such as Honda’s in Swindon and Toyota’s two in Wales and Derbyshire being shuttered.

Nissan Sunderland plant
Nissan’s Sunderland plant exports the vast bulk of the 500,000 cars it builds annually CREDIT: GETTY

When Japanese business were first lured to Britain 30 years ago, one of the key attractions was free trade access to European markets, something which could be under threat from Brexit.

In 2016 Nissan’s boss at the time, Carlos Ghosn, visited No 10 for talks with Mrs May, saying he had “received assurances” from the Prime Minister that left him “confident the Government will continue to ensure the UK remains a competitive place to do business.  I look forward to continued positive collaboration between Nissan and the UK Government.”

Shortly after Nissan announced it would build two new models at Sunderland, which was hailed as the first major foreign investment decisions since the referendum.

It remains unknown exactly what assurances were given to convince Mr Ghosn to make the huge investment to produce the new cars at Sunderland. The company is now run by Hiroto Saikawa.

In a statement before the meeting, Mr Fox said: “As we take control of our trade policy for the first time in 40 years, it’s important that we build upon our strong trade relationships with global partners like Japan.

“As an international economic department, engaging with Japanese buyers and investors is a key part of showcasing what the UK offers the world. Every penny of investment secured boosts local economies and creates new jobs back in the UK.”


May pitches trade with Britain after Brexit but China not buying

In the wake of the 2016 Brexit referendum, Theresa May is seeking new deals for an unmoored Britain. Without the EU’s backing, the UK prime minister’s negotiating position is diminished, Frank Sieren writes.

China: Theresa May and Xi Jinping

It must be hard to be in Theresa May’s shoes these days. There’s little breakthrough in sight in Brexit negotiations with the European Union, and, though new numbers have since emerged, studies into the economic damage that could occur once Brexit is complete have further fueled the rows at home. Britain needs to boost ties with its non-EU partners. Ahead of the 2016 referendum, Brexit’s proponents argued that Britain would benefit from bilateral agreements once it left the European Union. May was hoping that this would turn out to be true when she became the first European leader to visit Donald Trump after he became the US president. Her recent first state visit to China was in the same vein.

There was pressure at home for May to raise China’s poor human rights record during her visit. In an open letter, Chris Patten, the last British governor of Hong Kong, urged her to discuss the former colony, which has faced threats to basic freedoms, human rights and its autonomy since the United Kingdom handed control over to China’s government.

May voiced mild criticism behind closed doors, but she was praised by state media for sidestepping rights discussions

The prime minister’s agenda focused more on investment possibilities and securing a free trade agreement ahead of Brexit.

“There are huge trade opportunities in China that we want to help British businesses take advantage of,” May said.

May’s ‘golden era’?

The business delegation was the largest that Britain’s government had ever taken overseas.

There was renewed talk of a “golden era” in Sino-British relations at a meeting that May held with her Chinese counterpart, Li Keqiang, and President Xi Jinping  — much as had been discussed when Xi visited the UK in 2015 for negotiations with her predecessor, David Cameron. London was draped in red to welcome Xi, and plenty of deals were made. There were advantages for both sides: China would invest in Britain, which in turn would put in a good word for its new partner in Brussels.

Britain can no longer put in a good word for Beijing. And yet it needs Chinese investments more than ever. China has put almost €17 million into its UK endeavors in the past five years.

China’s government would have preferred for Britain to remain in the EU, and officials made this clear ahead of the Brexit referendum. After voters made their decision, Finance Minister Lou Jiwei warned that the result would “cast a shadow over the global economy.”

Lou had domestic firms in mind. China Telecom and China Unicom, the Bank of China, Sinopec, and many companies have their European offices in London — it used to be an ideal location for access to the EU market. Post-Brexit Britain is less interesting to China and thus less influential on the world stage.

Britain’s room for maneuvering has decreased. Deals amounting to over €10 billion ($12 billion) were signed during May’s visit — including one in which Chinese investors pledged over a billion euros in funding commitments to two British venture capital firms (Future Planet Capital and Eight Great Technologies) that are specialized in biotech and medicine.

China can afford to cherry-pick now. And the result is that May’s success was muted by comparison to Xi’s visit in 2015, when deals worth upward of €56 billion were signed.