China announces tariff plans for US soybeans, cars and orange juice

China has outlined plans to increase import tariffs on American goods in response to US plans to levy higher taxes on Chinese imports, according to BBC News.

Soybeans, cars and orange juice are among the 106 products Beijing indicated would be subject to a 25% tariff. Washington recently said 1,300 Chinese products would be hit with a 25% tariff on import, including televisions and motorcycles.

Earlier this year an initial wave of tariffs was announced by the US to target aluminium and steel imports. None of the tariffs have yet come into force.

US President Donald Trump claimed the tariffs were not intended to start a trade war between the US and China, but that the move was a bid to reduce the US trade deficit and that China had been sanctioning unfair intellectual property practices.

The Chinese government says it ‘strongly condemns and firmly opposes’ the proposed US tariffs, which it says are ‘unilateralistic and protectionist.’

The products targeted by Chinese tariffs were worth $50bn in 2017, according to the Chinese commerce ministry. They include chemicals, aircraft parts, corn products, whiskey, cigars, some types of beef, lubricants, propane, SUVs and some electric vehicles.

Economists warned the US President that increasing tariffs on Chinese imports was likely to provoke retaliation which could lead to higher prices for US consumers. Around 18.2% of all Chinese exports in 2016 went to the US.

Britain invites Chinese investors to bid for HS2 rail project

Chancellor of the Exchequer George Osborne has kick-started the bidding process for phase one of the UK governments HS2 rail project at an event in Chengdu, China, during his five day tour of the country.

HS2 is a major part of the government’s plan to rebalance the UK economy and create a Northern Powerhouse by providing high speed rail services from London to the Midlands and the North, which is expected to cut the travel time between London and Birmingham down from 1 hour 21 minutes, to 49 minutes. Phase 1 construction is due to start in 2017, following Royal Assent of the Phase 1 Hybrid Bill which is currently being considered by Parliament.

Construction of HS2 is expected to create 25,000 jobs and once the service is up and running, it will create around 3,000 jobs opportunities.

Osborne revealed on Thursday that at least seven new contracts will be opened up to companies, with a total combined value of GBP11.8bn. The announcement was aimed tempting Chinese firms to invest in the project, as well as other major UK infrastructure projects. The Chancellor also revealed that a new ‘HS2 partnering day’ will be held between British and Chinese firms to explore joining up on bids for contracts, as well as launching the Northern Powerhouse pitch book. 

The Chancellor is also inviting Chinese firms to participate in the HS2 skills college, which is due to open in 2017.  The government anticipates that a skills-swap programme would allow the UK to benefit from China’s expertise as a world leader on High Speed? Rail, as well as help investors from China to better understand the UK market.

Speaking while travelling on part of China’s vast network of high speed railways, Osborne stated: “This government is committed to rebalancing our economy and building a Northern Powerhouse, and improving transport links and launching HS2 is key to supporting long-term economic growth across the North and Midlands.

“That’s why I’m here in China today opening the bidding process for construction contracts worth £11.8 billion, which will propel HS2 forward.

“We are truly entering a golden era of cooperation between our two countries, and it’s crucial that businesses and communities from across the UK feel the full benefit of forging closer economic links with China.”

HS2 Ltd chief executive Simon Kirby added:

“The start of the civil engineering bidding process is a major milestone for HS2 as we continue to move towards the start of construction in 2017.

“Over the next decade, the winners of these contracts will go on to build 230km of bridges, tunnels and earthworks and create thousands of jobs across the construction industry.

“Together we will transform intercity rail travel in the UK, build specialist skills and expertise across the country, create at least 2,000 new apprenticeships and build a legacy to inspire the next generation of young engineers.”

UK-China civil nuclear partnership progresses

UK Chancellor of the Exchequer George Osborne and China’s Vice Premier Ma Kai have agreed to enhance the UK-China civil nuclear partnership, at the 7th UK-China Economic and Financial Dialogue in Beijing, the government announced on Monday.

The agreement is said to represent a significant milestone in the burgeoning civil nuclear industry partnership between the UK and China, potentially worth tens of billions of pounds.

Osborne has also declared a new government guarantee of up to USD2bn for Hinkley Point C nuclear power station, which is expected to pave the way for Chinese investment in UK nuclear power and help to secure the UK’s future power supply.

Deeper nuclear sector collaboration between the UK and China is anticipated to help UK companies access China’s rapidly growing nuclear market, with further ties being established between the UK’s Northern Powerhouse and China. The two countries will work together to co-fund a GBP50m cutting-edge nuclear research centre, which will be headquartered in the UK.

In addition, a regional collaboration agreement has been reached between Cumbria and Sichuan Province. Under the agreement, commercial ties between the province and the North West’s world-leading expertise in nuclear decommissioning and waste management will be strengthened.

On conclusion of the UK-China Economic and Financial Dialogue (EFD), the two countries have agreed to strengthen macroeconomic policy coordination and take appropriate policy measures in line with the economic and financial situation at home and abroad, as well as promote strong, balanced and sustainable growth of both countries.

Trade and investment agreements include the facilitation of further bilateral investment and optimisation of the investment environment. The UK and China also plan to strengthen discussion around the phase IV fuel efficiency regulation for cars, which take into account regulatory burdens on small volume automotive manufacturers. Also, China Development Bank and UKTI will build and oversee an investment/financing cooperation platform that will include both UK and Chinese Financial serving both UK and Chinese investors in the areas of infrastructure and energy.

In addition, The Eden Project is to build its first development outside the UK, in Qingdao, valued at GBP6m over 3 years, while Supergroup will formally launch its new partnership in China with Trendy International, which will involve a massive roll-out across China.

London is also being established as a major global centre for RMB business, with China and the UK agreeing to extend and expand the RMB/Sterling swap line, as well as entering into an agreement to carry out a feasibility study on a stock connect between London and Shanghai stock markets. It was also announced that the PBOC will issue a RMB denominated central bank note in London in the near future, the first outside of China; a Representative Office in the UK for China Development Bank is to open as soon as possible; both countries support China Foreign Exchange Trading System’s plans to establish a presence in London; and China’s commitment to ease the quota restrictions on
non-sovereign investment by qualified institutional investors was welcomed by the UK.

The Chancellor commented: “Our message to our Chinese counterparts is clear; I want the UK to be China’s best partner in the West. I want us to enjoy a golden decade where we help each other to grow, to create jobs and raise living standards.

“For the UK this means developing stronger links with dynamic economies such as China’s. And being able to take advantage of the opportunities that a growing, reforming, rebalancing Chinese economy offers.”

Caravaning catches on in China

UK exports of caravans to China have increased, with caravan makers achieving higher sales to Asian consumers, the Telegraph news company revealed on Monday.

According to the Telegraph, Hull-based caravan maker Swift Leisure, which makes touring caravans and motorhomes, has seen its export sales increase by a third to £12m.

Caravan holidays in countries such as Holland and Germany remain popular, but Swift has reportedly experienced growing interest from Asia and the company is said to be in talks with several dealers about potential partnerships in China, where caravans are currently a niche travel choice. Touring caravans are anticipated to surge in popularity in China, as the Chinese government is making investments to encourage its people to holiday at home rather than abroad.

With an overall turnover of £200m, Swift reportedly made 8,500 touring caravans and 2,500 motor homes in 2014. The company’s commercial director Nick Page was quoted as saying: “The market is very small, but even getting 0.1pc of the Chinese population would explode our business.”

Demand for touring caravans in the UK is also on the rise, with production at Suffolk-based holiday home maker Omar said to be on the rise. It was reported that this company is planning a 40,000 sq ft extension to its main facility in Brandon, which will double output within three years.

Omar’s chief executive Dean Westmoreland was cited as saying: “there had been a 40% rise in people looking to live in one of the 1,250 residential caravan parks across the UK.

He added that the company sees park homes as a solution to the housing shortage in the UK, and it’s becoming popular for people who have retired and looking to downsize, but said “The problem is, it’s near-impossible to get planning permission for new caravan parks.” The company’s luxury holiday lodges sell for between £75,000 and £500,000.

China’s Alibaba invests in US-based online shopping group ShopRunner — FT report

Chinese e-commerce firm Alibaba Group Holding Limited has taken an undisclosed minority stake in US online shopping services firm ShopRunner Inc for USD75m (EUR56.3m), the Financial Times reported, citing sources.

The investment was made as part of the buyer’s efforts to bolster its presence in big markets beyond China, ahead of its initial public offering, which, according to bankers, would take place in Hong Kong later this year or early next year, the paper said.

One of the sources explained that through the deal the buyer, which is headed by Yahoo! Inc (NASDAQ:YHOO)’s ex-CEO Scott Thompson, would be able to gain more knowledge about the operation of the US retail market. Alibaba and ShopRunner refused to comment.

IMF predicts slower economic growth for China

The International Monetary Fund (IMF) has lowered its forecast for China’s economy growth to 7.75% for this year,lower than the 8% forecast for 2013 that the IMF published in its World Economic Outlook in April this year, the BBC has reported.

This new forecast follows the IMF’s mission to Beijing, Shanghai, Guiyang and Anshun in China to hold discussions on prospects for the country’s economy and the challenges it faces.

During meetings with senior officials from the Chinese government, the People’s Bank of China, private sector representatives and academics, topics such as the effects of China’s policies globally and vice versa, in the context of the IMF’s analysis of policy spillovers from the top five systemic economies, were also discussed. David Lipton, the IMF’s first deputy managing director, joined the final policy discussions and met with vice premier Ma Kai, People’s Bank of China governor Zhou Xiaochuan, finance minister Lou Jiwei and National Development and Reform Commission vice chairman Liu He.

The mission concluded that despite weak and uncertain global conditions, the pace of China’s economy should pick up moderately in the second half of 2013, in line with a projected mild pick-up in the global economy and as the recent credit expansion gains traction. Inflation is expected to be around 3% by the end of this year, while the external current account surplus is predicted to remain the same at around 2.5% of GDP.

However the IMF reports that China faces economic challenges, despite the favorable near-term outlook, with a rapid growth in total social financing as well as the quality of investment and its impact on repayment capacity. The country’s growth is said to have become too dependent on the continued expansion of investment by the property sector and local governments, which in turn affects financial positions. Further signs that the current growth model should change include high income inequality and environmental problems.

According to the IMF, the new Chinese government has said that it intends to embark on a comprehensive reform agenda that will ensure more balanced, inclusive and environmentally friendly growth going forward.


Dutch TNT Express seeks buyers for Brazilian and Chinese operations

Netherlands-based TNT Express NV (AMS:TNT) is looking at divestment opportunities for its operations in Brazil and China, the express delivery company’s interim CEO Bernard Bot said in a financial results statement on Monday.

The executive noted that the outcome for the Chinese activities will soon be determined.

The company reported a fourth-quarter net loss of EUR148m (USD197.5m) a few weeks after the European Commission (EC) banned the USD7bn (EUR5.2bn) tie-up with US package delivery group United Parcel Service Inc (NYSE:UPS).

Bot stressed there are many positive options through which the company may bolster its profitability. A full update will be made on 25 March 2013, he added.

China’s sovereign wealth fund considers Daimler investment

Chinese sovereign wealth fund China Investment Corporation (CIC) is pondering the acquisition of an interest in German premium motor vehicles manufacturer Daimler AG (ETR:DAI), Chinese media reported.

The online platform of China’s The People’s Daily newspaper, The People’s Daily Online, has reported that the sovereign fund is poised to buy a minority stake of between 4% and 10% in Daimler.

Reuters said on Monday it could not reach Daimler immediately for comment on the matter.

Daimler is based in Stuttgart, Germany. The group is composed of five divisions namely Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Financial Services.

HSBC agrees to sell stake in Chinese insurer Ping An to Thailand’s Charoen in $9.4bn deal

British banking and financial services group HSBC Holdings Plc (LON:HSBA) on Wednesday announced a HKD72.74bn (USD9.4bn/EUR7.2bn) agreement for the sale of its 15.57% in Chinese insurer Ping An Insurance (Group) Company of China Ltd (HKG:2318).

The buyer is Thai diversified group Charoen Pokphand Group Company Limited (CP Group) which is carrying out the deal through indirectly fully-owned units All Gain Trading Limited, Bloom Fortune Group Limited, Business Fortune Holdings Limited and Easy Boom Developments Limited.

Under the terms of the transaction, HSBC will transfer a first tranche of 256.7m Ping An shares, or 20.8% of the shares, to the buyers on 7 December for HKD59.00 apiece in cash, while the rest of the stock will be delivered at the same price per share after securing the approval of China Insurance Regulatory Commission (CIRC) in January 2013, the vendor said.

HSBC said the sale is part of its strategy of delivering long-term value to shareholders. It expects the disposal to boost its core Tire 1 capital ratio by some 0.5% and the total capital ratio by around 1% based on ratios on 30 September 2012. The vendor plans to use the funds from the divestment to support the group’s overall strategy, HSBC said.

The buyer will finance the deal with cash and a debt facility from the China Development Bank Corporation (CDB).

UK luxury retailer Burberry stops production in China on concerns over worker’s conditions

The British owned luxury goods manufacturer Burberry has pulled production of its bags from a factory in the Guangdong Province of China, the Bureau has learnt.

The move follows concerns that working hours and conditions at the factory, operated by the Korean company Simone Accessories Collection, were in possible violation of Burberry’s ethical guidelines.

Burberry told the Bureau it has pulled out of the factory for a variety of reasons.

The China-based factory makes handbags for several western clothing and accessory brands. As well as Burberry, clients include Michael Kors and Coach.

The Chinese factory has been the centre of worker grievances in the past. In June 2011 workers staged a four-day strike protest. They complained about low pay and aggressive and verbally abusive behaviour by the factory’s new Korean management.

During the strike large numbers of police arrived to maintain order, and some strikers were arrested. Factory workers also claimed some people involved in the strike were dismissed from their jobs, though the Bureau was unable to substantiate these claims.

In June 2010, Burberry joined the ‘Ethical Trading Initiative’ and the company has incorporated the ETI Code into its own Ethical Trading Code of Conduct.

One section of the code states that ‘workers shall not on a regular basis be required to work in excess of 48 hours per week and shall be provided with at least one day off for every 7 day period on average.’

The Bureau, however, understands that workers at the Simone factory have been working up to 11 hours a day on a six-day working week.

The iconic brand confirmed this, telling the Bureau that ‘Burberry had been made aware of work hours exceeding 60 hours per week’. The company said it had advised Simone that it considered this to be non-compliance with its code of conduct.

Last year workers also complained that whilst the salary paid by the factory was above the minimum wage, the minimum wage itself does not constitute a ‘living wage’ as it has not been increased in line with China’s inflation. Workers also had complaints about the quality of food provided in the canteen.

Prior to pulling out of the Chinese factory, where Burberry accounted for about 3% of output, Pamela Batty, Director of Corporate Responsibility stated ‘we do recognise that more needs to be done and we thank the Bureau of Investigative Journalism for bringing these issues to our attention’.

The company received its last consignment of Simone-made products in July.

Last week Burberry was in the headlines after warning its profits would be at the bottom end of expectations. Growth was down in all three of its top markets. Despite this, Burberry still looks likely to improve on last year’s £376m profits.

The group was the subject of criticism when in 2007 it closed a factory in Treorchy in South Wales as part of a shift in manufacturing to China.

Luxury goods manufacturers Coach was unavailable for comment.

Michael Kors maintained it had a rigorous Code of Conduct policy in place and stated: ‘Our company policy is not to discuss individual vendor relationships. With all of our vendors we work in a constructive and diligent way to resolve all compliance issues.’

The company that runs the factory, Simone, did not respond to the Bureau’s repeated requests for comment.

Written by  for the Bureau of Investigative Journalism.