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  • When China and Saudi Arabia meet, nothing matters more than oil | CNN Business

    When China and Saudi Arabia meet, nothing matters more than oil | CNN Business

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    Hong Kong
    CNN Business
     — 

    Chinese President Xi Jinping is visiting Saudi Arabia this week for the first time in nearly seven years, during which he is expected to sign billions of dollars of deals with the world’s largest oil exporter and meet leaders from across the Middle East.

    The visit is a sign that China and the Gulf region are deepening their economic relations at a time when US-Saudi ties have crumbled over OPEC’s decision to slash crude oil supply. As Xi wrote in an article published in Saudi media, the trip was intended to strengthen China’s relations with the Arab world.

    China is Saudi Arabia’s biggest trading partner and a source of growing investment. It’s also the world’s biggest buyer of oil. Saudi Arabia is China’s largest trading partner in the Middle East and the top global supplier of crude oil.

    “Energy cooperation will be at the center of all discussions between the Saudi-Chinese leadership,” said Ayham Kamel, head of Eurasia Group’s Middle East and North Africa research team. “There is great recognition of the need to build a framework to ensure that this interdependence is accommodated politically, especially given the scope of energy transition in the West.”

    Governments around the world have committed to drastically cutting carbon emissions over the coming decades. Countries such as Canada and Germany have doubled down on renewable energy investments to expedite their transition to net-zero economies.

    The United States has significantly increased domestic oil and gas output since the 2000s, while accelerating its transition to clean energy.

    The Russian invasion of Ukraine in February has triggered a global energy crisis that has left all countries racing to shore up supplies. And the West has further scrambled the oil markets by slapping an embargo and price cap on the world’s second biggest exporter of crude.

    Energy security has also increasingly become a key priority for China, which is facing significant challenges of its own.

    Last year, bilateral trade between Saudi Arabia and China hit $87.3 billion, up 30% from 2020, according to Chinese customs figures.

    Much of the trade was focused on oil. China’s crude imports from Saudi Arabia stood at $43.9 billion in 2021, accounting for 77% of its total goods imports from the kingdom. That amount also makes up more than a quarter of Saudi Arabia’s total crude exports.

    “Stability of energy supplies, in terms of both prices and quantities, is a key priority for Xi Jinping as the Chinese economy remains heavily reliant on oil and natural gas imports,” said Eswar Prasad, a professor of trade policy at Cornell University.

    The world’s second largest economy is heavily reliant on foreign oil and gas. 72% of its oil consumption was imported last year, according to official figures. 44% of natural gas demand was also from overseas.

    At the 20th Party Congress in October, Xi stressed that ensuring energy security was a key priority. The comments came after a spate of severe power shortages and soaring global energy prices following Russia’s invasion of Ukraine.

    As the West shunned Russian crude in the months that followed the invasion, China took advantage of Moscow’s desperate search for new buyers. Between May and July, Russia was China’s No. 1 oil supplier, until Saudi Arabia regained the top spot in August.

    “Diversity is a key ingredient for China’s long-term energy security because it cannot afford to put all of its eggs in one basket and turn itself into a captive of another power’s energy and geostrategic interests,” said Ahmed Aboudouh, a nonresident fellow with the Middle East Programs at the Atlantic Council, a research institute based in DC.

    “Although Russia is a source of cheaper supply chains, nobody can guarantee, with utmost certainty, that the China and Russia relationship will continue to shore up 50 years from now,” Aboudouh said.

    The Saudi Press Agency cited Saudi energy minister Prince Abdulaziz bin Salman as saying Wednesday that the kingdom would remain China’s “credible and reliable partner in this field.”

    Saudi Arabia also has strong motivations to deepen energy ties with China, according to Gal Luft, co-director of the Institute for the Analysis of Global Security.

    “The Saudis are concerned about losing market share in China in the face of a tsunami of heavily discounted Russian and Iranian crude,” he said. “Their goal is to ensure China remains a loyal customer even when the competitors offer [a] cheaper product.”

    Oil prices have fallen back to where they were before the Ukraine war on fears of a sharp global economic slowdown. The extent to which the Chinese economy can pick up pace next year will have a huge bearing on how bad that slump will be.

    Beyond security of supply, Saudi Arabia could offer Beijing another prize with bigger geopolitical ramifications.

    Riyadh has been in talks with Beijing to price some of its oil sales to China in the Chinese currency, the yuan, rather than the US dollar, according to a Wall Street Journal report. Such a deal could be a boost to Beijing’s ambitions to expand the Chinese currency’s global influence.

    It would also hurt the long-standing agreement between Saudi Arabia and the United States that requires Saudi Arabia to sell its oil only for US dollars and to hold its reserves partly in US Treasuries, all in return for US security guarantees. The “petrodollar system” has helped preserve the dollar’s status as the top global reserve currency and payment medium for oil and other commodities.

    Although Beijing and Riyadh never confirmed the reported talks, analysts said it was logical that the two sides would be exploring the possibility.

    “In the near future, Saudi Arabia could sell some of its oil and receive revenues in Chinese yuan, which makes economic sense as China is the kingdom’s top trading partner,” said Naser Al Tamimi, senior associate research fellow at ISPI, an Italian think tank on international affairs.

    Some believe it’s already happening, but that neither China nor the Saudis want to highlight it publicly.

    “They know too well how sensitive this issue [is] for the United States,” said Luft. “Both parties are overexposed to the US currency and there is no reason for them to continue to conduct their bilateral trade in a third party’s currency, especially when this third party is no longer a friend of either.”

    Xi’s visit could mark another step “in the erosion of the dollar’s status” as reserve currency, he added.

    Nonetheless, there are limits to the growing ties between Riyadh and Beijing.

    “The Biden administration’s approach to the Middle East has concerned the Saudis, and they see a growing relationship with China as a hedge against potential US abandonment and a tool for leverage in negotiations with the United States,” said Jon B. Alterman, director of the Middle East Program at the Center for Strategic and International Studies, a Washington DC-based think tank.

    The Biden administration has reoriented its policy priorities with a focus on countering China. At the same time, it has indicated its intention to downsize its own presence in the Middle East, sparking worries among allies there that the United States may not be as committed to the region as it used to be.

    “All that being said, Chinese-Saudi ties pale in both depth and complexity to Saudi-US ties,” Alterman said. “The Chinese remain a novelty to most Saudis, and they are additive. The United States is foundational to how Saudis see the world, and how they have seen it for 75 years.”

    Despite the possibility of shifting to yuan transactions, it’s too early to say Saudi Arabia would ditch the dollar in pricing its oil sales, analysts said.

    Eurasia Group’s Kamal believes it’s “highly unlikely” that Saudi Arabia would take such a step, unless there is an implosion on the US-Saudi relationship.

    “In essence there could be discussion on pricing of barrels to China in yuan, but this would be limited in size and probably only correspond to bilateral trade volumes,” he said.

    Prasad from Cornell University said countries like China, Russia, and Saudi Arabia are all eager to reduce their dependence on the dollar for oil contracts and other cross-border transactions.

    “However, in the absence of serious alternatives and with few international investors willing to place their trust in these countries’ financial markets and their governments, the dollar’s dominant role in global finance is hardly under serious threat,” he said.

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  • US trade deficit edged up to $78.2 billion in October | CNN Business

    US trade deficit edged up to $78.2 billion in October | CNN Business

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    New York
    CNN Business
     — 

    The US trade gap edged only slightly higher in October than the month before, to $78.2 billion.

    The latest reading was up just 5.4%, less than half the pace of increase from the revised September reading, when the trade deficit jumped by 12.7% to $74.1 billion.

    A strong dollar and weaker global demand weighed on exports both months. A strong dollar makes US goods more expensive to foreign buyers and it also makes imports more affordable for US buyers. But economic slowdowns in overseas markets also hit US exports in the most recent readings.

    The latest report shows exports fell 0.7% in October compared to the month before, and are down nearly 2% from the record exports set in August. Most of the drop was in the export of goods, rather than services, which fell 4.4% compared to August.

    Oil prices have come down since earlier this year, according to data released in the report. The average price of crude oil imports in the month was $82.05 a barrel, down 5.7% from September, and down 21.7% from the peak in June.

    But the United States now exports more petroleum products, by dollars, than it imports. So a lower price of crude no longer helps the trade deficit the way it might have done in the past, when crude and petroleum product imports vastly exceeded exports.

    The deficit in the movement of goods between the United States and China narrowed significantly in the latest report, falling 22.6% to $28.9 billion from $37.3 billion, one factor in the smaller trade gap increase.

    Although most of that narrowing was due to a 31.3% jump in the export of US goods to China, compared to September, a 9.5% decline in US imports of Chinese goods was also a factor in the smaller trade deficit between the two countries.

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  • DOJ antitrust regulators should look at Apple, Google’s handling of TikTok, says FCC commissioner | CNN Business

    DOJ antitrust regulators should look at Apple, Google’s handling of TikTok, says FCC commissioner | CNN Business

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    Washington
    CNN Business
     — 

    Apple and Google’s continued hosting of TikTok on their app stores, despite US national security concerns about the short-form video app, reflects the tech giants’ “gatekeeper” power and should be made part of any antitrust reviews the app stores may face, a member of the Federal Communications Commission wrote to the Justice Department last week.

    The previously unreported letter — sent on Dec. 2 to DOJ antitrust chief Jonathan Kanter and obtained by CNN — said that continuing to make TikTok available on the app stores risks harming consumers, whose personal information US officials have worried may be being fed to the Chinese government.

    Beyond possible consumer harm, TikTok’s continued presence on app stores also undercuts Apple and Google’s arguments that their dominance in app distribution leads to better user security and privacy, FCC Commissioner Brendan Carr wrote in the letter.

    It’s the latest attempt by Carr, a top Republican at the FCC, to pressure Apple and Google to remove TikTok. Last month, Carr called for the US government to ban TikTok over the bipartisan concerns that China could wield its influence over TikTok’s parent, ByteDance, to gain access to US user data or to disseminate propaganda and disinformation. Now, Carr is trying a new tack by framing the TikTok matter as an antitrust issue.

    “Apple and Google are not exercising their ironclad control over apps for the altruistic or procompetitive purposes that they put forward as defenses to existing antitrust or competition claims,” Carr wrote. “Instead, their conduct shows that those rationales are merely pretextual — talismanic references invoked to shield themselves from liability.”

    DOJ’s Antitrust Division should consider that “to the extent that it assesses the reasonableness of Apple’s and Google’s anticompetitive actions,” Carr added.

    Google declined to comment. Apple the Justice Department didn’t immediately respond to a request for comment.

    The FCC does not regulate app stores or social media, focusing instead on telecommunications and traditional media such as radio and television broadcasters and cable operators. But Carr has become the most vocal commissioner to speak out on TikTok, drawing what he’s said are lessons from the FCC’s own decisions to block Huawei, ZTE and other telecom companies with ties to China from the US market.

    His remarks also echo those by prominent lawmakers of both parties, including Virginia Democratic Sen. Mark Warner and Florida Republican Sen. Marco Rubio, who together lead the Senate Intelligence Committee.

    Carr’s call comes as Apple and Google’s critics have increasingly sought to apply the nation’s antitrust laws against the tech giants. Third-party software developers have long alleged that Apple and Google’s app store fees and rules are monopolistic and anticompetitive. A high-profile 2020 lawsuit along those lines brought by Epic Games, the maker of video game “Fortnite,” has so far proven largely unsuccessful, though an appeal is pending.

    More recently, Apple’s conservative critics have accused the company of abusing “monopoly” power by allegedly threatening to remove Twitter from its app store — a claim that Twitter’s new owner Elon Musk has made without evidence and that he says has since been resolved thanks to a conversation with Apple CEO Tim Cook. Apple has not commented on Musk’s allegation or purported exchange with Cook.

    For years, TikTok has been negotiating with the Committee on Foreign Investment in the United States, a multi-agency US government panel charged with reviewing the national security implications of foreign investment deals, to arrive at an agreement to allow TikTok to operate in the US market despite the security concerns.

    TikTok has said Project Texas, its plan to migrate US user data exclusively to cloud servers hosted by Oracle, is a core part of the solution. Last week, TikTok CEO Shou Zi Chew said at a conference hosted by the New York Times that “no foreign government has asked us for user data before, and if they did, we would say no.”

    In congressional testimony, TikTok has said it maintains robust data controls but has sought to sidestep questions about its parent company and declined to stop letting China-based employees access US users’ data.

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  • India on track for record $100 billion in remittances, says World Bank | CNN Business

    India on track for record $100 billion in remittances, says World Bank | CNN Business

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    New Delhi
    CNN Business
     — 

    The extensive Indian diaspora will help the South Asian country reach a special milestone this year.

    Asia’s third largest economy is on track to receive more than $100 billion in yearly remittances in 2022, according to a World Bank report published Wednesday. This will be the first time a country will reach that milestone figure, it said.

    Remittances, or money transfers from migrant workers to families back home, are an important source of income for households in poorer countries. They not only reduce poverty in developing nations but have also been associated with higher school enrollment rates for children in disadvantaged households.

    Over the last few years, the World Bank report said, Indians have moved to high-skilled jobs in high-income countries such as the United States, United Kingdom, and Singapore — from low-skilled employment in Gulf countries such as Saudi Arabia, Kuwait and Qatar — and sending more money back home as a result.

    India had received $89.4 billion in remittances in 2021, according to the World Bank, making it the top recipient globally last year.

    “Remittance flows to India were enhanced by the wage hikes and a strong labor market in the United States,” and other rich countries, the bank said.

    Despite being poised to reach the record figure, India’s remittance flows are expected to account for only 3% of its GDP in 2022, it said.

    Apart from India, the other top recipient countries for remittances in 2022 are expected to be Mexico, China, and the Philippines. The next year may be more challenging for Indian diaspora, however.

    2023 will “stand as a test for the resilience of remittances from white-collar South Asian migrants in high-income countries,” because of rising inflation in the United States and slowing global growth, according to the report.

    Globally, remittances to low and middle income nations are expected to grow an estimated 5% to $626 billion this year, it added.

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  • Huge trade partner and ‘systemic rival.’ Europe has a China problem | CNN Business

    Huge trade partner and ‘systemic rival.’ Europe has a China problem | CNN Business

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    London
    CNN Business
     — 

    Europe is becoming increasingly reliant on China for trade, and many of its top companies are eager to invest in the world’s second biggest economy despite the disruption caused by Covid lockdowns.

    But a souring relationship with an increasingly unpredictable Beijing, regret about the price Europe has paid for getting too close to Russia, and rising geopolitical tension has some EU officials considering whether the bloc should start to reduce its exposure.

    It’s a calculation EU Council President Charles Michel is weighing up Thursday as he visits Chinese leader Xi Jinping for talks aimed at shoring up diplomatic ties.

    A lot has happened since the last time an EU president — appointed by the leaders of the 27 EU member states — met with Xi in person four years ago.

    The Covid-19 pandemic, Russia’s invasion of Ukraine, and tit-for-tat sanctions between China and EU lawmakers have strained relations since. The United States, which imposed controls on exports of semiconductors to China in October, is reportedly exerting pressure on Europe to adopt a similarly hard line.

    Michel’s spokesperson, Barend Leyts, said in a statement last week that Michel’s visit provides a “timely opportunity” for Europe and China to engage on matters of “common interest.” He did not specify which subjects would be discussed.

    But some within Europe are growing wary of close relations with China. The bloc has been badly burned this year by its historic reliance on Russia as its main energy supplier, and diversification has shot up the political agenda.

    Those concerns bubbled up last month when German Chancellor Olaf Scholz flew to Beijing with a delegation of top business leaders to meet Xi, a move intended to shore up Germany’s second biggest export market after the US.

    The bloc is in a similar bind.

    “Any problems you have from a political and strategic level [between the EU and China], they tend to spill over to the economic level,” Ricardo Borges de Castro, associate director at the European Policy Centre, told CNN Business.

    Both sides have a lot invested in their partnership. The total value of the goods trade between China and Europe hit €696 billion ($732 billion) last year, up by nearly a quarter from 2019.

    China was the third largest destination for EU goods exports, accounting for 10% of the total, according to Eurostat data. China is Europe’s biggest source of imports, accounting for 22% in 2021.

    “The European market’s importance as a destination for Chinese exports is around double that of the Chinese market for Europeans,” Jörg Wuttke, president of the EU Chamber of Commerce in China (ECCC) wrote in a September report.

    Overall, the relationship is simply “too big to fail,” according to Borges de Castro. Europe is not seeking to decouple from the lucrative Chinese market, he added.

    “I don’t see [the EU’s strategy] as a decoupling strategy. I think the EU strategy, for the moment, is a diversification strategy… the lesson [from Russia] is that you cannot have a single provider,” he said.

    Machinery, vehicles, chemicals, and other manufactured goods account for the vast bulk of goods traded between the two powers, according to Eurostat.

    “European companies have done extremely well here and the overall long term outlook is very positive,” ECCC Secretary General Adam Dunnett told CNN Business, adding that he expects European company revenues to keep growing in China over the next decade.

    There are areas where Europe is dependent on Beijing, namely for the supply of rare earth metals required to make hybrid and electric vehicles, and wind turbines. Europe’s solar panels are also mostly manufactured in China.

    But those dependencies shouldn’t be exaggerated, Dunnett said.

    “When you look at some of the broader things that China exports to the EU such as furniture and consumer goods, a lot of those things you can get elsewhere,” he said.

    Even so, the United States may exert more pressure on Europe to pull away from China, Borges de Castro noted. In early October, Washington banned Chinese firms from buying its advanced chips and chip-making equipment without a license.

    Benjamin Loh, the head of Dutch chipmaker ASM International, told the Financial Times on Wednesday that the US was “putting a lot of pressure” on the Dutch government to take a similarly tough stance.

    The pressure may already be beginning to show. Germany last month blocked the sale of one of its chip factories to a Chinese-owned tech company because of security concerns.

    Economic ties between Brussels and Beijing, though mutually beneficial, have frayed in other ways in recent years.

    Last year, Chinese direct investment into the European Union dropped to its second lowest level since 2013, only behind 2020, according to analysis by the Rhodium Group, a research firm. It has fallen almost 78% since 2016.

    “The level of Chinese investment in Europe is now at a decade low,” Agatha Kratz, director at Rhodium Group, told CNN Business, citing Beijing’s strict capital controls and greater scrutiny by EU regulators.

    EU investment into China has also become more concentrated. Between 2018 and 2021, the top 10 European investors in China, including those from the United Kingdom, made up almost 80% of the continent’s total investment in the country, Rhodium Group data shows.

    And just four German companies — automakers Volkswagen

    (VLKAF)    , BMW, and Daimler

    (DDAIF)    , and chemicals giant BASF

    (BASFY)     — made up more than one third of all European investment in those four years.

    An investment deal between Beijing and Brussels was shelved last year after EU lawmakers slapped sanctions on Chinese officials over alleged human rights abuses, prompting China to retaliate with its own penalties.

    The deal, agreed in principle in 2020 after years of talks, was designed to level the playing field for European companies operating in China, who have long complained that Beijing’s subsidies have put them at a disadvantage.

    EU diplomats said in April that a “growing number of irritants” were hurting relations, including China’s tacit acceptance of Russia’s war in Ukraine. They have described China as “a partner for cooperation and negotiation, an economic competitor and a systemic rival.”

    The most pressing issue for European businesses in China, according to Dunnett, is its stringent zero-Covid policy.

    “For the last year, it’s been the Covid carousel, [the] Covid rollercoaster,” he said. “Every time you think [it was] about to open up, something pulls us back,” he added.

    Over the weekend, thousands of protestors took to streets across China in a rare series of demonstrations against the country’s strict Covid controls. Some restrictions have since been lifted in Shanghai and other major cities.

    Beijing’s uncompromising approach is helping to further dampen foreign investment in the country, especially among smaller companies, Raffaello Pantucci, a senior associate fellow at the Royal United Services Institute, a security research group, told CNN Business.

    “The general business environment in China is perceived as becoming harder to navigate, and while companies still feel they have to engage given its size and potential, increasingly small to medium sized companies are giving up,” he said.

    — Laura He contributed reporting.

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  • The US-China chip war is spilling over to Europe | CNN Business

    The US-China chip war is spilling over to Europe | CNN Business

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    Hong Kong
    CNN Business
     — 

    Two European chip deals have run into trouble over their links with China, a sign of concern spreading in the West over potential Chinese control of critical infrastructure.

    Last week, the new owner of Britain’s biggest chipmaker was ordered to unwind its takeover, just days after another chip factory sale was blocked in Germany. Both transactions were hit by national security concerns, and had involved acquisitions by Chinese-owned companies.

    In the United Kingdom, Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, was told by the government to sell at least 86% of its stake in Newport Wafer Fab, more than a year after taking control of the factory. Staffers have since been protesting the decision, saying it puts nearly 600 jobs at risk.

    In Germany, the economic ministry barred Elmos Semiconductor, an automotive chipmaker, from selling its factory in the city of Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

    Chipmaking was already emerging as a new front in US-China tensions. Now the two troubled deals illustrate how the pressure is also rising in Europe, particularly as Western officials face calls for key sectors to be kept out of Chinese control.

    “These decisions mark a shift towards tougher stances regarding Chinese investment in critical industries in Europe,” said Xiaomeng Lu, director of geo‑technology at Eurasia Group.

    “US pressure definitely contributed to these decisions. [A] growing sense of technology sovereignty also likely prompted these moves — governments around the world are increasingly [viewing the] semiconductors industry as a strategic resource and seek to protect them from foreign takeovers.”

    Legal experts said the two decisions were notable because each deal was initially thought to have been cleared.

    The Newport Wafer case is “the first completed acquisition” that needs to be unwound under a UK national security and investment (NSI) act, which took full effect in January, according to Ian Giles, head of antitrust and competition for Europe, the Middle East and Asia for Norton Rose.

    Nexperia said last week that it was “shocked” by the decision, and that “the UK government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site.”

    The company added that it had offered to avoid “activities of potential concern, and to provide the UK government with direct control and participation in the management of Newport,” a 28-acre site in south Wales.

    The factory makes silicon wafers, the basis for making computer chips. Many of its products eventually power cars and medical equipment. Nexperia has indicated that workers at the facility now face an uncertain future.

    In an open letter to the UK government last Thursday, the Nexperia Newport Staff Association said that it was “in disbelief” that employees’ livelihoods had been “put in jeopardy in the run-up to Christmas.”

    “This is clearly a deeply political decision,” the group wrote, rejecting the idea that the deal would undermine British security. “You must see sense and protect our jobs by allowing Nexperia to keep their Newport factory.”

    For Elmos, German authorities had initially indicated that they would issue a conditional approval, and even shared a draft approval after an intense review process lasting about 10 months, the company said in a statement following the injunction.

    Tim Schaper, head of antitrust and competition for Germany at Norton Rose, said government intervention was also significant given that “Elmos’ technology is said to be quite old, state of the art in the 1990s, and allegedly not of great industrial importance.”

    “The transaction became the plaything of a public debate about Chinese investors’ acquiring stakes in key German technologies,” he said.

    A company sign of Elmos Semiconductor, seen on Nov. 9 in the German city of Dortmund.

    It’s possible that regulators were concerned about an outflow of technical know how, according to Alexander Rinne, the Munich-based head of international law firm Milbank’s European antitrust practice.

    “Elmos is known for making chips for the automotive sector, which is Germany’s core industry and the pride of the country,” he said in an interview.

    Elmos and Nexperia both declined interview requests. A Nexperia spokesperson told CNN Business on Tuesday that it was “considering its options regarding the UK government’s decision.”

    Chips are a growing source of tension between the United States and China. Washington has declared a shortage of the materials a national security issue, and highlighted the importance of remaining competitive in advanced technology capabilities.

    This year, the United States ramped up its own restrictions and pressed allies to enact their own, according to Lu. In August, the US government ordered two top chipmakers, Nvidia

    (NVDA)     and AMD

    (AMD)    , to halt exports of certain high-performance chips to China.

    Two months later, the Biden administration unveiled sweeping export controls that banned Chinese companies from buying advanced chips and chip-making equipment without a license. The rules also restricted the ability of American citizens or US green card holders to provide support for the development or production of chips at certain manufacturing facilities in China.

    The pressure is mounting. On Monday, NATO Secretary General Jens Stoltenberg urged the West to “be careful not to create new dependencies” on China. Speaking at a NATO parliamentary assembly in Madrid, Stoltenberg said he was seeing “growing Chinese efforts” to control Western critical infrastructure, supply chains, and key industrial sectors.

    “We cannot give authoritarian regimes any chance to exploit our vulnerabilities and undermine us,” he said.

    China has pushed back on the handling of the two European semiconductor cases.

    “We firmly oppose the UK’s move, and call on the UK to respect the legitimate rights and interests of Chinese companies and provide a fair, just, and (a) non-discriminatory business environment,” Chinese Foreign Ministry Spokesperson Mao Ning told a press briefing last Friday when asked about the Newport Wafer order. “The UK has overstretched the concept of national security and abused state power.”

    Zhao Lijian, another Chinese Foreign Ministry spokesperson, called on Germany and other countries to “refrain from politicizing normal economic and trade cooperation” at a press conference earlier this month, without addressing Elmos specifically.

    Germany has shown greater scrutiny of Chinese buyers this year. Last month, a bid by Chinese state shipping giant Cosco for a stake in a Hamburg port terminal operator sparked similar controversy. Under pressure from some members of the government, the size of the investment was later limited.

    Attorneys say if the chipmakers appeal, they could face an uncertain battle that may drag on for years.

    In each case, they would need to file a challenge in court within roughly a month of regulators’ decisions, barring exceptional circumstances, according to Norton Rose.

    Both Britain and Germany have recently added rules that expand government oversight over such decisions, making outcomes harder to predict. In Germany, a change to foreign direct investment rules in 2020 meant the government can intervene in prospective deals “if there is a ‘probable impairment of public order and security,’” said Schaper.

    Previously, by contrast, it could only impose restrictions “if there was an ‘actual, sufficiently serious threat to public order and security,’” he told CNN Business.

    In the UK, the ability of the government to retroactively review deals under the NSI Act “was really something that was considered surprising and far-reaching,” said Andrea Hamilton, a London-based partner at Milbank.

    “If challenged, as Nexperia apparently intends, it will also become a test case as to [the] extent of the NSI Act’s limits,” she said.

    Elsewhere, attention is shifting to the Netherlands. The Dutch government is currently facing pressure from the United States to limit exports to China, particularly from ASML

    (ASML)    , a semiconductor equipment maker that holds a dominant position in the lithography machine market, according to Lu at Eurasia Group.

    “It will become the next case study,” she told CNN Business.

    The Netherlands has made clear it will form its own position.

    Asked about the issue this month, Dutch Minister for Foreign Trade Liesje Schreinemacher said the country would “not copy the US export restrictions for China one-to-one.”

    “We make our own assessment,” she said in an interview with Dutch newspaper NRC.

    — CNN’s Zahid Mahmood, Rose Roobeek-Coppack and Laura He contributed to this report.

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  • Opinion: ‘Africa’s COP’ made some big promises. Here’s how to deliver | CNN

    Opinion: ‘Africa’s COP’ made some big promises. Here’s how to deliver | CNN

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    Editor’s Note: Adjoa Adjei-Twum. She is the Founder & CEO of the Africa-focused and UK-based advisory firm Emerging Business Intelligence and Innovation (EBII) Group for global investors interested in Africa and emerging markets.
    The opinions expressed in this article are solely hers.



    CNN
     — 

    The recently-concluded COP27 was dubbed the “African COP” – with the continent center stage in the global effort to fight the causes and effects of climate change.

    As negotiations in the Egyptian resort of Sharm el-Sheikh spilled over into the weekend, there was a significant breakthrough on one of the most fractious elements – creating a fund to help the most vulnerable developing nations hit by climate disasters.

    The backdrop for COP27 was a series of catastrophic global weather events including record-breaking floods in Pakistan and Nigeria, the worst droughts in four decades in the Horn of Africa, and severe European heatwaves and hurricanes in the US.

    The loss and damage fund – to pay for the sudden impacts of climate change which are not avoided by mitigation and adaptation – has been a major obstacle in COP talks.

    The richest, most polluting nations have been reluctant to agree to a deal, worried that it could put them on the hook for costly legal claims for climate disasters.

    I welcome progress here, as African nations are bearing the brunt of climate change. The continent contributes around 3% of global greenhouse gas emissions, according to the UN Environment Programme and the International Energy Agency (IEA).

    Climate change is estimated to cost the continent between $7bn and $15bn a year in lost economic output or GDP, rising to $50bn a year by 2030, according to the African Development Bank (AfDB).

    But my joy is muted – the devil is in the detail, as ever. As an African diaspora entrepreneur whose work focuses significantly on the impact of climate change on the risk profile of African financial institutions and nations, I am concerned about the lack of detail about how the fund would work, when it will be implemented, and the timescale. I fear these could take years.

    During a recent visit to the US, I discussed reparation money with US Democrat Congresswoman Rep. Ilhan Omar. She said it was important for the US and other countries to make heavy investments, which could come in the form of reparations.

    She spoke about the importance of consulting impacted communities in Africa to avoid exploitation and the need for countries such as the US and China to end fossil fuel expansion and phase out existing oil, gas, and coal in a way that is “fair and equitable.”

    Adaptation is Africa’s big challenge – the AFDB estimates that the continent needs between $1.3 to $1.6 trillion by 2030 to adapt to climate change.

    The bank’s Africa Adaptation Acceleration Program, in partnership with the Global Center on Adaptation (GCA), aims to mobilize $25bn in finance for Africa, for projects such as weather forecasting apps for farmers and drought-resistant crops.

    It is now time for African nations to levy a climate export tax on commodities, such as cocoa and rubber, to help pay for climate adaptation. But it still falls short of the money Africa needs.

    Adaptation is all about building resilience and capacity, and I believe our governments, banks, and businesses must also adapt.

    I am calling on our governments, institutions, and companies to boost efforts to attract green finance and make Africa more resilient by improving governance, tax systems, anti-corruption efforts, and legal compliance.

    Sustainability is not a business tax, it is essential for business survival. Only companies focused on the changing world around us – from regulation to consumer and investor attitudes – will survive the climate crisis.

    Businesses that ignore this can expect fines, boycotts, and limited access to funding. Banks will suffer too. So the financial sector must be better prepared and more agile.

    This message will be reinforced when I meet CEOs, banking executives, and Nigeria’s central bank at the 13th Annual Bankers’ Committee Retreat, organized by the Nigerian Bankers Committee, in Lagos next month. The aim is to support the country’s biggest banks as they navigate new international sustainability rules.

    Increasingly, investment funds must conform to green taxonomies – a system that highlights which investments are sustainable and which are not. In other words, banks will only support investments by institutions in G20 countries if they conform to national or supranational rules, such as the European Union’s Green Taxonomy.

    This will not only help tackle greenwashing but also help companies and investors make more informed green choices. Additionally, G20 countries are asking their banks to forecast how risky their loans are due to climate change.

    African nations must implement robust systems to mobilize private capital and foreign direct investment in key sectors. Governments must ensure they have an enabling environment for increased green investments.

    Regulators must strengthen their capacity to develop and effectively enforce climate-related rules. Companies, especially banks, should strengthen climate risk management teams, regulatory compliance expertise, and preparation of bankable projects for international climate finance. This is the foundation for a successful transition to a low–carbon economy.

    Looking ahead, there are other actions we can take. The African Continental Free Trade Area (AfCFTA) – the world’s largest free trade area and single market of almost 1.3bn people – could protect Africa from the adverse impacts of climate change, such as food insecurity, conflict, and economic vulnerability.

    It could lead to the development of regional and continental value chains, inter-Africa trade deals, job creation, security, and peace. A single market could drive less energy-intensive economic growth while keeping emissions low, for example by developing regional energy markets and manufacturing hubs.

    But we need much better pan-Africa coordination, like the European Union, to accelerate the AfCFTA. I urge our governments to work together and take swift and concrete actions to ensure the full and effective implementation of the AfCFTA. There is no time to waste.

    This will not be popular with some African regimes because they will be forced to be more transparent and accountable with their public finances.

    This year’s COP may have been marred by chaos, rows between rich and poorer nations, and broken multi-billion-dollar pledges by developed countries who created the climate crisis.

    Many observers point out the final deal did not include commitments to phase down or reduce the use of fossil fuels.

    But, the deal to create a pooled fund for countries most affected by climate change is significant, and as UN secretary general António Guterres warned, it was no time for finger-pointing.

    It is also no time for the blame game. It is a wake-up call for African governments, banks, institutions, and companies to unite, step up, and adapt to a new climate reality.

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  • Why foreign workers in the US are especially vulnerable to the Twitter turmoil | CNN Politics

    Why foreign workers in the US are especially vulnerable to the Twitter turmoil | CNN Politics

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    CNN
     — 

    Twitter employees who are relying on the company for work visas have been left in limbo, finding themselves at the whims of its new billionaire owner, knowing if they quit, they may have to leave the United States.

    Earlier this week, Elon Musk gave remaining staff an ultimatum to commit to working “hardcore” or to leave. But some staff who would like to leave the company feel like they can’t because doing so, may leave them no choice but to depart the US, multiple former Twitter employees told CNN.

    Tech companies in the US, including Twitter, have leaned on an employment-based visa, known as H-1B, to bring skilled foreign workers into the country. The program allows companies in the US to employ foreign workers in high-skilled occupations like architecture, engineering, mathematics, among other fields.

    In fiscal year 2022, Twitter had nearly 300 people approved to work on H-1B visas, according to US Citizenship and Immigration Services data. It’s unclear how many have chosen to stay.

    Facebook – another company that’s undergoing mass layoffs – had more than 1,300 people approved to work on H-1B visas, the data shows.

    Employees on temporary visas, like H-1B or other work visas, are especially vulnerable to the layoffs happening at Twitter and across the tech industry. Some staff who were on employment-based visas and have already been laid off by Musk have found themselves scrambling.

    “Firing folks who are on a H-1B in a major economic downturn is not just putting them out of the job, it’s tantamount to ruining their lives,” one former employee told CNN, adding that some people who had accepted Musk’s ultimatum had accepted it “out of self-preservation.”

    Twitter users are flocking to Mastodon. What is it?

    Fiona McEntee, an immigration lawyer based in Chicago, represents immigrants who are on H-1B visas and are part of the recent tech layoffs.

    While McEntee stressed everyone’s situation is unique, one of the primary challenges employees on H-1B visas face is that they have a limited window of time to find a new employer, adjust to another visa, or leave the United States. The 60-day grace period usually starts from the last day of employment.

    “It’s a short time period to line these things up.” McEntee said, noting that filing a visa transfer, for example, can take time. McEntee’s firm has been receiving multiple calls from people affected by the layoffs who are concerned about next steps.

    “A layoff is hard enough on people to begin with but when you’re faced with having to leave what’s been your home for a significant time, it adds a whole layer of trauma to this,” she told CNN.

    One former Twitter employee described the challenges facing a former colleague who is in the US with his family on an employment-based visa and now faces the prospect of having to leave.

    For that reason, some staff at Twitter who are on H-1B visas are staying on despite wanting to leave the company, a former employee told CNN, adding that they’re “concerned with being forced into a flooded job market where they may be unable to find a job and before being forced out of the country.”

    The US Department of Homeland Security issues 65,000 H-1B visas annually as mandated by Congress, in addition to another 20,000 for those who have a masters’ degree or doctorate from a US university. The visa can be granted for up to six years.

    “These are people who didn’t just necessarily arrive last year or the year before, or even when they were approved,” said David Bier, associate director of immigration studies at the Cato Institute. Bier noted that some people may have been working for Twitter under a different visa before being hired on an H-1B.

    “Many of these people will have been in this country for over a decade,” Bier said.

    One former Twitter employee stressed the importance of visa holders and their contribution to US innovation and technological leadership.

    “For companies to turn their backs on them now is particularly callous and destructive and undermines the trust talented people have around in the world in the hope of America and its opportunities,” they added.

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  • Global investors are bullish again on China as Beijing switches to damage control | CNN Business

    Global investors are bullish again on China as Beijing switches to damage control | CNN Business

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    Hong Kong
    CNN Business
     — 

    Market sentiment on Chinese stocks hit rock bottom just weeks ago after President Xi Jinping secured a historic third term in power and stacked his top team with loyalists in a clean sweep not seen since the Mao era.

    But in the past week, a series of unexpected steps by Beijing — the easing of draconian zero-Covid restrictions, moves to salvage the ailing property sector and Xi’s personal return to the world stage -— have triggered a huge rally.

    Hong Kong’s benchmark Hang Seng

    (HSI)     Index has gained 14% since last Friday, putting it squarely into bull market territory, or more than 20% above its recent low. A key index of Chinese stocks in New York jumped 15% during the same period.

    On the tightly controlled mainland markets, Shanghai and Shenzhen stocks have also advanced more than 2%.

    “China continued to see a barrage of upside activity… as reopening measures are a clear buy signal,” said Stephen Innes, managing partner for SPI Asset Management. “We are in a sea change after China’s more progressive policy evolution arrived unexpectedly.”

    Investors now have a “tactically constructive” view on China after key concerns were addressed by credible policy actions, according to Bank of America’s monthly survey of Asian fund managers released on Wednesday.

    Some investment banks even upgraded their China growth forecasts following the policy changes. On Wednesday, ANZ Research hiked its China GDP forecast to 5.4% for 2023 from 4.2% previously.

    “The changes reflect the party leadership’s intention to stop losses. They want to correct the market’s perception of China’s economic outlook, as President Xi Jinping interacts with global leaders at G20,” it said.

    Investors sold off China stocks in October due to fears that Xi’s tightening grip on power would lead to the continuation of existing policies, such as zero-Covid and the common prosperity campaign, that have dragged down the economy and battered financial markets.

    A leadership team loyal to Xi also suggested that China may continue to prioritize ideology over the kind of pragmatic decision-making that had enabled the country’s swift economic rise over the past four decades.

    But the latest policy shifts, although not a full-throated economic opening, have been enough to excite investors and analysts waiting for any sign of China easing its rules.

    From Bali to Bangkok, Xi returned to the world stage after a near three-year absence. There were encouraging signs, in particular, coming from the historic meeting between Xi and US President Joe Biden on Monday, which fueled expectations for stronger economic ties between the two major world powers.

    “The US’s willingness to set a ‘floor’ on US-China relations likely means the US is keen to find common ground with China to prevent extreme outcomes,” said Jefferies analysts in a research note earlier this week.

    Chinese companies on Wall Street have been hammered by delisting risks since last year because of a simmering spat between the two countries over audits. In December, US regulators finalized rules to ban trading in shares of Chinese companies if they can’t access their audit papers, a request that had been denied by Beijing on national security grounds.

    “We believe the Xi-Biden meeting could reduce the risk of Chinese ADRs being delisted,” the Jefferies analysts added.

    In August, the two countries reached an agreement to allow US officials to inspect the audit papers of those firms, taking a first step toward resolving the dispute.

    Reuters also reported Wednesday that US regulators gained “good access” in their review of auditing work done on New York-listed Chinese firms during a seven-week inspection in Hong Kong.

    Despite this week’s rally, some analysts remain cautious. Qi Wang, CEO of MegaTrust Investment in Hong Kong, said the recovery may be driven by a lot of buying to close out previous short positions and money chasing quick returns.

    “I don’t think the long-term appetite for China and Hong Kong shares will return so quickly. Right or wrong, there were some fatal blows to global investor confidence earlier this year,” Wang said.

    “There is some good news recently, but the big institutional money still need time to assess the situation, including the economic prospect for next year,” he added.

    Including the recent surge, the Hang Seng index is still down 23% this year, making it one of the world’s worst performing indices. The Nasdaq Golden China Index, a popular index tracking Chinese companies in New York, has plunged more than 33% so far in 2022.

    “This week’s rally is a strong over-reaction to mildly positive news,” said Brock Silvers, Hong Kong-based chief investment officer at Kaiyuan Capital, a private equity investment firm. “The market was desperate for good news, but it’s foolish to think that once Covid is behind us we’ll return to the go-go days of high octane growth.”

    Silvers added that the economic factors and political risks that made China “uninvestable” a month ago are still prevalent and are likely to reassert themselves before long.

    China is still dealing with Covid outbreaks and remains firmly committed to measures long abandoned by most other nations. Even more serious is the real estate crisis and the risks that poses for the banking sector, he said, adding that the 16-point rescue plan Beijing announced last Friday did not go far enough.

    Hao Hong, chief economist for Grow Investment Group, described the rally as sentiment-driven and technical in nature, because the market was previously oversold to an epic level.

    But as winter is coming, Covid cases are set to rise.

    “Whether we could deal with the resurgence with adequate medical facilities and without panic remains to be seen,” he said, adding it also remains uncertain how effective the new property support measures are and whether the developers can “rise from ashes.”

    If China re-tightens Covid restrictions or US-China tension flares up again, market sentiment could plummet once more, he said.

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  • Taylor Swift ticket snafu caused by Ticketmaster abusing its market power, Senate antitrust chair says | CNN Business

    Taylor Swift ticket snafu caused by Ticketmaster abusing its market power, Senate antitrust chair says | CNN Business

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    New York
    CNN Business
     — 

    Senator Amy Klobuchar criticized Ticketmaster in an open letter to its CEO, saying she has “serious concerns” about the company’s operations following a service meltdown Tuesday that left Taylor Swift fans irate.

    In the letter to CEO Michael Rapino, the Democrat from Minnesota and chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, wrote that complaints from Swift fans unable to buy tickets for her upcoming tour, in addition to criticism about high fees, suggests that the company “continues to abuse its market positions.”

    “Ticketmaster’s power in the primary ticket market insulates it from the competitive pressures that typically push companies to innovate and improve their services. That can result in the types of dramatic service failures we saw this week, where consumers are the ones that pay the price,” Klobuchar wrote.

    Ticketmaster and Live Nation, the country’s largest concert promoter, merged about a decade ago. Klobuchar noted that the company at the time pledged to “develop an easy-access, one-stop platform” for ticket delivery. On Thursday, the senator told Rapino that it “appears that your confidence was misplaced.”

    “When Ticketmaster merged with Live Nation in 2010, it was subject to an antitrust consent decree that prohibited it from abusing its market position,” Klobuchar wrote. “Nonetheless, there have been numerous complaints about your company’s compliance with that decree.”

    The letter includes a list of questions for Rapino to answer by next week. Ticketmaster did not immediately respond to a request for comment from CNN Business.

    On Tuesday, the company said “there has been historically unprecedented demand with millions showing up” to buy tickets for Swift’s tour and thanked fans for their “patience.”

    Klobuchar is the latest high-profile politician to openly criticize Ticketmaster for the ticketing disaster that left bad blood between Swift fans and the company.

    “@Ticketmaster’s excessive wait times and fees are completely unacceptable, as seen with today’s @taylorswift13 tickets, and are a symptom of a larger problem. It’s no secret that Live Nation-Ticketmaster is an unchecked monopoly,” Rep. David Cicilline, currently the chairman of the Antitrust Subcommittee, tweeted on Tuesday.

    “Daily reminder that Ticketmaster is a monopoly, its merger with LiveNation should never have been approved, and they need to be reined in,” tweeted Rep. Alexandria Ocasio-Cortez.

    Complaints about the company’s monopoly power go back long, long before Tuesday’s ticket problems, when the platform appeared to crash or freeze during presale purchases for Swift’s latest tour.

    In 1994, when Taylor Swift was only four years old and ticket purchase queues were in person or on the phone, not online, the rock group Pearl Jam filed a complaint with the Justice Department’s antitrust division asserting that Ticketmaster has a “virtually absolute monopoly on the distribution of tickets to concerts.” It tried to book its tour only at venues that didn’t use Ticketmaster.

    The Justice Department and many state attorneys general have made similar complaints over the years.

    Despite those concerns, Ticketmaster continued to grow more dominant. Pearl Jam’s complaint was quietly dismissed. The Justice Department and states allowed the Live Nation Ticketmaster merger to go through despite a 2010 court filing in the case raising objections to the merger. In the filing, the Justice Department said that Ticketmaster’s share among major concert venues exceeded 80%.

    – CNN Business’ Chris Isidore contributed to this report.

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  • G20 leaders’ declaration condemns Russia’s war ‘in strongest terms’ | CNN

    G20 leaders’ declaration condemns Russia’s war ‘in strongest terms’ | CNN

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    Bali, Indonesia
    CNN
     — 

    Russia’s international isolation grew Wednesday, as world leaders issued a joint declaration condemning its war in Ukraine that has killed thousands of people and roiled the global economy.

    The Group of 20 summit in Bali, Indonesia, concluded Wednesday with a leaders’ statement that “deplores in the strongest terms the aggression by the Russian Federation against Ukraine and demands its complete and unconditional withdrawal from the territory of Ukraine.”

    Speaking after the closing of the summit, Indonesian President and G20 host Joko Widodo told a news conference that “world leaders agreed on the content of the declaration, namely condemnation to the war in Ukraine” which violates its territorial integrity. However, some of the language used in the declaration pointed to disagreement among members on issues around Ukraine.

    “This war has caused massive public suffering, and also jeopardizing the global economy that is still vulnerable from the pandemic, which also caused risks for food and energy crises, as well as financial crisis. The G20 discussed the impact of war to the global economy,” he said.

    The 17-page document is a major victory for the United States and its allies who have pushed to end the summit with a strong condemnation of Russia, though it also acknowledged a rift among member states.

    “Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy,” it said. “There were other views and different assessments of the situation and sanctions.”

    Jokowi said the G20 members’ stance on the war in Ukraine was the “most debated” paragraph.

    “Until late midnight yesterday we discussed about this, and at the end the Bali leaders’ declaration was agreed unanimously in consensus,” Jokowi said.

    “We agreed that the war has negative impact to the global economy, and the global economic recovery will also not be achieved without any peace.”

    The statement came hours after Poland said a “Russian-made missile” had landed in a village near its border with Ukraine, killing two people.

    It remains unclear who fired that missile. Both Russian and Ukrainian forces have used Russian-made munitions during the conflict, with Ukraine deploying Russian-made missiles as part of their air defense system. But whatever the outcome of the investigation into the deadly strike, the incident underscored the dangers of miscalculation in a brutal war that has stretched on for nearly nine months, and which risks escalating further and dragging major powers into it.

    Waking up to the news, US President Joe Biden and leaders from the G7 and NATO convened an emergency meeting in Bali to discuss the explosion.

    The passing of the joint declaration would have required the buy-in from leaders that share close ties with Russian President Vladimir Putin – most notably Chinese leader Xi Jinping, who declared a “no-limits” friendship between their countries weeks before the invasion, and India’s Prime Minister Narendra Modi.

    While India is seen to have distanced itself from Russia, whether there has been any shift of position from China is less clear. Chinese leader Xi Jinping has called for a ceasefire and agreed to oppose the use of nuclear weapons in a flurry of bilateral meetings with Western leaders on the sidelines of the G20, but he has given no public indication of any commitment to persuade his “close friend” Vladimir Putin to end the war.

    Since Russian tanks rolled into Ukraine in February, Beijing has refused to label the military aggression as an “invasion” or “war,” and has amplified Russian propaganda blaming the conflict on NATO and the US while decrying sanctions.

    When discussing Ukraine with leaders from the US, France and other nations, Xi invariably stuck to terms such as “the Ukraine crisis” or “the Ukraine issue” and avoided the word “war,” according to Chinese readouts.

    In those meetings, Xi reiterated China’s call for a ceasefire through dialogue, and, according to readouts from his interlocutors, agreed to oppose the use of nuclear weapons in Ukraine – but those remarks are not included in China’s account of the talks.

    China’s Foreign Minister Wang Yi later told Chinese state media that Xi had reiterated China’s position in his meeting with Biden that “nuclear weapons cannot be used and a nuclear war cannot be fought.”

    In a meeting with his Russian counterpart Sergey Lavrov Tuesday, Wang praised Russia for holding the same position. “China noticed that Russia has recently reaffirmed the established position that ‘a nuclear war cannot be won and must never be fought,’ which shows Russia’s rational and responsible attitude,” Wang was quoted as saying by state news agency Xinhua.

    Wang is one of the few – if not only – foreign officials to have sat down for a formal meeting with Lavrov, who has faced isolation and condemnation at a summit where he stood in for Putin.

    On Tuesday, Lavrov sat through the opening of the summit listening to world leaders condemn Russia’s brutal invasion. Indonesian President and G20 host Widodo told world leaders “we must end the war.” “If the war does not end, it will be difficult for the world to move forward,” he said.

    Xi, meanwhile, made no mention of Ukraine in his opening remarks. Instead, the Chinese leader made a thinly veiled criticism of the US – without mentioning it by name – for “drawing ideological lines” and “promoting group politics and bloc confrontation.”

    Compared with the ambiguous stance of China, observers have noted a more obvious shift from India – and the greater role New Delhi is willing to play in engaging all sides.

    On Tuesday, Indian Prime Minister Narendra Modi called for leaders to “find a way to return to the path of ceasefire and diplomacy in Ukraine” in his opening remarks at the summit.

    The draft of the joint declaration also includes a sentence: “Today’s era must not be of war.” The language echos what Modi told Putin in September, on the sidelines of a regional summit in Uzbekistan.

    “If the Indian language was used in the text, that means Western leaders are listening to India as a major stakeholder in the region, because India is a country that is close to both the West and Russia,” said Happymon Jacob, associate professor of diplomacy and disarmament at the Jawaharlal Nehru University in New Delhi.

    “And we are seeing India disassociating itself from Russia in many ways.”

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  • Biden steps into G20 aiming to unite leaders in opposition to Russia’s war on Ukraine | CNN Politics

    Biden steps into G20 aiming to unite leaders in opposition to Russia’s war on Ukraine | CNN Politics

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    Bali, Indonesia
    CNN
     — 

    President Joe Biden is confronting competing issues at home and abroad while he’s at the Group of 20 Summit in Bali this week, using the moment on the world’s stage to lean into international support for condemning Russia’s aggression while also facing the prospect of hearing Donald Trump announce his next run for the presidency.

    Administration officials previewing Biden’s G20 summit activities have their sights set on the coalition’s efforts to voice its opposition against the war in Ukraine, which could send a powerful signal amongst a group that’s so far had fragmented approaches to the Kremlin’s aggression.

    This marks the first time the group has gathered in-person since the start of the invasion, and most G20 members are expected to sign onto a statement condemning Russia’s war in Ukraine “and the human suffering it has caused both for Ukrainians and for families in the developing world that are facing food and fuel insecurity as a result,” a senior administration official said.

    Such an expression of condemnation has been the work of months of diplomacy between G20 leaders. However, it’s not clear yet exactly which countries will sign onto the declaration.

    Although the G20 is comprised of world powers who have long backed Ukraine during the war, it also includes other nations that have been tepid in their response to Russia’s aggression – including India, China, Saudi Arabia and Indonesia, the host of this year’s summit. The coalition, which is broadly focused on the global economy, also includes Russia itself. But Russian President Vladimir Putin is not making an appearance at the summit this year.

    Since the spring, US officials have anticipated a showdown at this year’s G20 over the war. Biden has stated Russia should no longer be a member of the bloc, though expelling Moscow would require support from all of the G20’s members.

    As of now, no official “family photo” is listed on a schedule, a sign of the deep acrimony within the G20 spurred by the war in Ukraine.

    The president’s diplomatic Tuesday – a day working alongside leaders that’s capped off with a gala dinner – is expected to precede a 2024 presidential campaign announcement by Biden’s predecessor, Trump, from the other side of the world. The prospective announcement would set the stage for a two-year battle for the American presidency, having the power to cast a shadow over Biden’s efforts to unify world leaders – some already personally stung by Trump’s nationalist approach.

    Biden and his team have already spent time during his multi-leg, cross-continental trip abroad addressing domestic politics, suggesting the issue has not only loomed on their minds, but also among their foreign counterparts in meetings throughout their travels.

    On Sunday, US national security adviser Jake Sullivan told reporters that “many leaders” at the ASEAN Summit addressed the midterms with Biden, that many leaders were “following them closely” and that the president now feels he has a strong position on the international stage.

    Vote counts for midterm races last Tuesday continue to trickle in, with Democrats only securing their continued majority in the US Senate this past weekend and the future of the US House of Representatives remaining up in the air. But Biden – who has frequently cast the US’ dynamic with other world powers as a global fight between democracy and autocracy – brought up the political headwinds working in his favor on Monday in Bali after he took part in a roughly three-hour meeting with Xi Jinping.

    At a news conference after his meeting with Xi, Biden sought to cast the election results seen so far as a victory for the future of American democracy – a matter he had said was at stake at the polls.

    “The American people proved once again that democracy is who we are. There was a strong rejection of election deniers at every level from those seeking to lead our states and those seeking to serve in congress and also those seeking to oversee the elections,” Biden said at the start of his remarks after the Xi meeting.

    On Tuesday, Biden will participate in working sessions and a luncheon with leaders at the summit. He’ll also co-host an event on the Partnership for Global Infrastructure and Investment, which the White House said “aims to mobilize $600 billion in the next five years with G7 partners to deliver sustainable infrastructure and advance U.S. national security and economic security interests.” The president will later meet with Prime Minister Giorgia Meloni of Italy and end the night at a gala dinner.

    The meeting with Meloni will be Biden’s first chance to confer the new Italian prime minister in person since she took office in October – when she became the country’s most far-right leader since Benito Mussolini.

    The two leaders undoubtedly have differences on LGBT rights, abortion rights and immigration policies. But they’re expected to focus on shared interests – in particular, their support of Ukraine. According to the White House, Biden and Meloni will discuss “cooperation on shared global challenges, including those posed by the People’s Republic of China, and our ongoing efforts to help Ukraine defend itself against Russian aggression.”

    The global infrastructure initiative event follows a launch in 2021 amongst G7 partners to better position the US and its allies to compete with China.

    China’s Belt and Road Initiative, first announced in 2013 under Xi, aims to build ports, roads and railways to create new trade corridors linking China to Africa and the rest of Eurasia. The Chinese-funded, cross-continental infrastructure initiative has been seen as an extension of the country’s sharp ascent to global power.

    At the summit, Biden is also expected to “speak to energy security as a core issue facing the global economy,” calling for a price cap as a “key way that we can help to preserve global energy security.”

    Other topics at the summit, the senior administration official said, include economic coordination, climate change, and the Covid-19 pandemic, with new announcements expected on digital infrastructure in the Indo-Pacific and solar power in Honduras.

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  • Germany blocks sale of chip factory to China over security fears | CNN Business

    Germany blocks sale of chip factory to China over security fears | CNN Business

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    London/Berlin
    CNN Business
     — 

    The German government has blocked the sale of one of its semiconductor factories to a Chinese-owned tech company because of security concerns.

    Germany’s economic ministry said in a statement that it had prohibited Elmos Semiconductor, which makes chips for the automotive industry, from selling its factory in Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

    The decision had been taken “because the acquisition would have endangered the public order and safety of Germany,” the ministry said in a statement.

    Silex announced in December that it had signed an agreement with Elmos to buy the factory for €85 million ($85.4 million).

    Silex did not immediately respond to CNN Business’ request for comment. Elmos said in a statement that both companies regretted the government’s decision.

    “The transfer of new micromechanics technologies … from Sweden and significant investments in the Dortmund location would have strengthened semiconductor production in Germany,” Elmos said, adding that it was considering whether to take legal action.

    Sia Microelectronics said in a statement Thursday that it “deeply regretted” the decision by the German government. Its shares fell more than 9% in Shenzhen.

    “We have to take a close look at company acquisitions when important infrastructure is involved or when there is a risk of technology flowing to acquirers from non-EU countries,” German economy minister Robert Habeck said at a press conference.

    He added that the semiconductor industry in Europe, in particular, needed to guard its “technological and economic sovereignty.”

    The planned deal had rattled German authorities concerned that Chinese investment in its critical infrastructure could compromise its intellectual property and leave it exposed to political pressure from Beijing.

    Similar concerns motivated the German government to intervene in plans by Chinese shipping giant Cosco to buy a 35% stake in the operator of a Hamburg port terminal last month.

    Officials limited the planned investment in Hamburger Hafen und Logistik to 24.9%. Several government ministers, including Habeck, has pushed for the deal to be blocked entirely.

    The tensions have arisen at a difficult time for the German economy, which is sliding into a recession triggered by the crisis over Russian energy. Germany’s manufacturers and exporters are eager to maintain their close relationship with China.

    Only last week, Chancellor Olaf Scholz met with Chinese leader Xi Jinping in the first visit by a G7 leader to Beijing in roughly three years, a trip designed to shore up export markets as Germany’s ties with Russia — once its biggest supplier of natural gas — continue to unravel.

    A delegation of top industry CEOs, including the bosses of Volkswagen

    (VLKAF)    , Siemens

    (SIEGY)     and chemicals giant BASF

    (BASFY)    , traveled with Scholz to Beijing to meet with Chinese business executives.

    But Habeck struck a note of caution on Wednesday. Addressing the blocked chip deal, he stressed that “Germany is and will remain an open investment location” but that it was not “naive”.

    The visit came just a month after the United States introduced stringent controls on chip exports to China, a move designed to protect its national security and bolster its domestic semiconductor industry.

    In early October, the Biden administration banned Chinese firms from buying advanced chips and chip-making equipment without a license.

    The rules threaten to strike a huge blow to China’s ambitions to become a tech superpower as they not only bar exports of chips made anywhere in the world using US technology, but also the export of the tools used to make them.

    — Laura He contributed reporting.

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  • China’s exports shrink unexpectedly as global slowdown jolts demand | CNN Business

    China’s exports shrink unexpectedly as global slowdown jolts demand | CNN Business

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    China’s exports and imports unexpectedly contracted in October, the first simultaneous slump since May 2020, as surging inflation and rising interest rates hammered global demand while new COVID-19 curbs at home disrupted output and consumption.

    The bleak October trade figures highlight the challenge for policymakers in China as exports had been one of the few bright spots for the struggling economy .

    Outbound shipments in October shrank 0.3% from a year earlier, a sharp turnaround from a 5.7% gain in September, official data showed on Monday, and well below analysts’ expectations for a 4.3% increase. It was the worst performance since May 2020.

    The data suggests demand remains frail overall, heaping more pressure on the country’s manufacturing sector and threatening any meaningful economic revival in the face of persistent COVID-19 curbs, protracted property weakness and global recession risks.

    Chinese exporters weren’t even able to capitalize on a further weakening in the yuan currency and the key year-end shopping season, underlining the broadening strains for consumers and businesses worldwide.

    “The weak export growth likely reflects both poor external demand as well as the supply disruptions due to COVID outbreaks,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, citing COVID disruptions at the Foxconn factory, a major Apple supplier, in Zhengzhou as one example.

    Apple

    (AAPL)     said it expects lower-than-anticipated shipments of high-end iPhone 14 models following a key production cut at a virus-blighted plant in China.

    “Looking forward, we think exports will fall further over the coming quarters. The shift in global consumption patterns that pushed up demand for consumer goods during the pandemic will probably continue to unwind,” said Zichun Huang, economist at Capital Economics.

    “We think that aggressive financial tightening and the drag on real incomes from high inflation will push the global economy into a recession next year.”

    Almost three years into the pandemic, China has stuck to a strict COVID-19 containment policy that has exacted a heavy economic toll and caused widespread frustration and fatigue.

    Feeble October factory and trade figures suggested the world’s second-biggest economy is struggling to get out of the mire in the last quarter of 2022, after it reported a faster-than-anticipated rebound in the third quarter.

    Chinese policymakers pledged last week to prioritize economic growth and press on with reforms, easing fears that ideology could take precedence as President Xi Jinping began a new leadership term and disruptive lockdowns continued with no clear exit strategy in sight.

    Tepid domestic demand, weighed down by fresh COVID curbs and lockdowns in October as well as the cooling property market, hurt imports too.

    Inbound shipments declined 0.7% from a 0.3% gain in September, below a forecast 0.1% increase — the weakest outcome since August 2020.

    China’s imports of soybeans fell and coal imports slipped, as the strict pandemic measures and a property slump disrupted domestic output.

    The overall trade figures resulted in a slightly wider trade surplus of $85.15 billion, compared with $84.74 billion in September, missing a forecast of $95.95 billion.

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  • Germany’s leader and top CEOs have arrived in Beijing. They need China more than ever | CNN Business

    Germany’s leader and top CEOs have arrived in Beijing. They need China more than ever | CNN Business

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    Hong Kong/London
    CNN Business
     — 

    German Chancellor Olaf Scholz arrived in China on Friday with a team of top executives and a clear message: business with the world’s second largest economy must continue.

    Scholz met with Chinese leader Xi Jinping at Beijing’s Great Hall of the People after landing in the capital Friday morning, according to a Chinese state media account. The German chancellor is also expected to meet with Premier Li Keqiang.

    Joining Scholz for the whirl-wind one day visit is a delegation of 12 German industry titans, including the CEOs of Volkswagen

    (VLKAF)    , Deutsche Bank

    (DB)    , Siemens

    (SIEGY)     and chemicals giant BASF

    (BASFY)    , according to a person familiar with the matter. They are set to meet with Chinese companies behind closed doors.

    The group entered China without participating in the usual seven-day hotel quarantine. Images showed hazmat-clad medical workers greeting their jet at Beijing’s Capital International Airport to test the official delegation for Covid-19.

    During the Friday morning meeting between the two leaders, Xi called for Germany and China to work together amid a “complex and volatile” international situation, and said the visit would “enhance mutual understanding and trust, deepen pragmatic cooperation in various fields and plan for the next phase of Sino-German relations,” according to a readout from state broadcaster CCTV.

    Scholz’s visit — the first by a G7 leader to China in roughly three years — comes as Germany slides towards recession. But it has fired up concerns that the economic interests of Europe’s biggest economy are still too closely tied to those of Beijing.

    Since the invasion of Ukraine this year, Germany has been forced to ditch its long dependence on Russian energy. Now, some in Scholz’s coalition government are growing nervous about the country’s deepening ties with China. Beijing has declared its friendship with Russia has “no limits,” while China’s relations with the United States are deteriorating.

    The tension was highlighted recently by a fierce debate over a bid by Chinese state shipping giant Cosco to buy a 35% stake in the operator of one of the four terminals at the port of Hamburg. Under pressure from some members of the government, the size of the investment was limited to 24.9%.

    The potential deal has raised concerns in Germany that closer ties with China will leave critical infrastructure exposed to political pressure from Beijing, and disproportionately benefit Chinese companies.

    But Germany is hardly in a position to rock the boat with Beijing as it grapples with the challenge of reviving its struggling economy. Its consumers and companies have borne the brunt of Europe’s energy crisis, and a deep recession is looming.

    If the European Union and Germany were to decouple from China, it would lead to “large GDP losses” for the German economy, Lisandra Flach, director of the ifo Center for International Economics, told CNN Business.

    The Kiel Institute for the World Economy estimates that a major reduction in trade between the European Union and China would shave 1% off of Germany’s GDP.

    Germany needs to shore up its export markets as ties with Russia, once its main supplier of natural gas, continue to unravel.

    When it comes to China, Germany won’t want to “lose also this market, this economic partner,” said Rafal Ulatowski, an assistant professor of political science and international studies at the University of Warsaw.

    “They [will] try to keep these relations as long as it’s possible.”

    As Western countries have imposed swingeing economic sanctions on Russia, China has publicly maintained its “neutrality” in the war while ramping up its trade with Moscow.

    That has triggered a backlash in Europe, where some companies are already becoming wary of doing business in China because of its stringent “zero Covid” restrictions.

    Pressure on Berlin is also mounting over China’s human rights record. In an open letter Wednesday, a coalition of 70 civil rights groups urged Scholz to “rethink” his trip to Beijing.

    “The invitation of a German trade delegation to join your visit will be viewed as an indication that Germany is ready to deepen trade and economic links, at the cost of human rights and international law,” they wrote in the memo, published by the World Uyghur Congress. Based in Germany, the organization is run by Uyghurs raising awareness of allegations of genocide in China’s Xinjiang region.

    It suggested Berlin was “loosening economic dependence on one authoritarian power, only to deepen economic dependence on another.”

    In an op-ed published in a German newspaper on Wednesday, Scholz said he would use his visit to “address difficult issues,” including “respect for civil and political liberties and the rights of ethnic minorities in Xinjiang province.”

    A spokesperson for the German government addressed wider criticism last week, saying at a press conference that it had no intention of “decoupling” from its most important trading partner.

    “[The chancellor] has basically said again and again that he is not a friend of decoupling, or turning away, from China. But he also says: diversify and minimize risk,” the spokesperson said.

    Last year, China was Germany’s biggest trading partner for the sixth year in a row, with the value of trade up over 15% from 2020, according to official statistics. Together, Chinese imports from, and exports to, Germany were worth €245 billion ($242 billion) in 2021.

    Still, the furore surrounding the Hamburg port deal is a reminder of the tradeoffs Germany has to confront if it wants to maintain close ties with such a vital export market and supplier.

    A spokesperson for Hamburger Hafen und Logistik (HHLA), the company operating the port terminal, told CNN Business on Thursday that it was still negotiating the deal with Cosco.

    Flach, of the ifo Center for International Economics, said the deal warranted scrutiny because “there is no reciprocity: Germany cannot invest in Chinese ports, for instance.”

    A container ship from Cosco Shipping moored at the Tollerort Container Terminal owned by HHLA, in the harbor of Hamburg, Germany on Oct. 26.

    However, it is easy to overstate the impact of the potential agreement, said Alexander-Nikolai Sandkamp, assistant professor of economics at the Kiel Institute for the World Economy.

    “We’re not talking about a 25% stake in the Hamburg harbor, or even the operator of the harbor, but a 25% stake in the operator of a terminal,” he told CNN Business.

    Jürgen Matthes, head of global and regional markets at the German Economic Institute, told CNN Business that critics were no longer simply weighing the business benefits of Chinese investment in the country.

    “Politics and economics have to be looked at together and cannot be taken separately any longer,” he said. “When geopolitics comes into play, the view of China has very much declined and become much more negative.”

    China’s recent treatment of Lithuania has also deepened concerns that Beijing “does not hesitate to simply break trade rules,” Matthes added. The small, Eastern European nation claimed last year that Beijing had erected trade barriers in retaliation for its support for Taiwan.

    China has defended its downgrading of relations with Lithuania, saying it is acting in response to the European nation undermining its “sovereignty and territorial integrity.” This year, after a Lithuanian official visited Taiwan, Beijing also announced sanctions against her and vowed to “suspend all forms of exchange” with her ministry.

    As the German delegation touches down on Friday, they will be faced with another issue, which has become the single biggest headache for companies across China.

    “The biggest challenge for German businesses remains China’s zero-Covid policy,” said Maximilian Butek of the German Chamber of Commerce in China.

    “The restrictions are suffocating economic growth and heavily impact China’s attractiveness as a destination for foreign direct investment,” he told CNN Business.

    An aerial view of the urban landscape in Shanghai on Sept. 25. The city underwent a months-long Covid lockdown earlier this year.

    He said the broader restrictions were so stifling that some companies had moved their regional headquarters to other locations, such as Singapore. “Managing the whole region without being able to travel freely is almost impossible,” he added.

    In a brief statement, Volkswagen told CNN Business that its CEO was attending the trip since “there have been no direct meetings for almost three years” due to the coronavirus pandemic.

    “In view of the completely changed geopolitical and global economic situation, the trip to Beijing offers the opportunity for a personal exchange of views,” the automaker said.

    Despite Beijing’s Covid curbs and geopolitical tensions, Germany has every economic incentive to stay close to China.

    Its dependency on China can be seen across industries. While about 12% of total imports came from China last year, the country was responsible for 80% of imported laptops and 70% of mobile phones, Sandkamp said.

    The automobile, chemical and electrical industries are also reliant on Chinese trade.

    “If we were to stop trading with China, we would run into trouble,” Sandkamp added.

    China made up 40% of Volkswagen’s worldwide deliveries in the first three quarters of this year, and it’s also the top market for other automakers such as Mercedes.

    Wariness among some German officials over the country’s closeness with China could filter into a more restrictive trade policy, though economic cooperation is still in both parties’ interests.

    Last week, Germany’s economy minister Robert Habeck told Reuters that the government was efforting a new trade policy with China to reduce dependence on Chinese raw materials, batteries and semiconductors.

    Unidentified sources also told the news agency that the ministry was weighing new rules that would make business with China less attractive. The ministry did not respond to a request for comment from CNN Business.

    But “despite all odds and challenges, China remains unrivaled in terms of market size and market growth opportunities for many German companies,” said Butek, of the German Chamber.

    He predicted that “the large majority will stay committed to the Chinese market and is expecting to expand their business.”

    Companies appear to be toeing that line. Last week, BASF CEO Martin Brudermüller was quoted in Chinese state media as saying that Germans should “step away from China-bashing and look at ourselves a bit self-critically.”

    “We benefit from China’s policies of widening market access,” he said at a company event, according to state-run news agency Xinhua, pointing to the construction of a BASF chemical engineering site in southern China.

    — CNN’s Simone McCarthy, Chris Stern, Lauren Kent, Claudia Otto and Arnaud Siad contributed to this report.

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  • US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

    US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

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    Hong Kong
    CNN Business
     — 

    Chinese leader Xi Jinping’s push to “win the battle” in core technologies and bolster China’s position as a tech superpower could be severely undermined by Washington’s unprecedented steps to limit the sale of advanced chips and chip-making equipment to the country, analysts say.

    On October 7, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The rule also restricts the ability of “US persons” — including American citizens or green card holders — to provide support for the “development or production” of chips at certain manufacturing facilities in China.

    “The US moves are a major threat to China’s technological ambitions,” said Mark Williams and Zichun Huang, analysts at Capital Economics, in a recent research report. The analysts pointed out that the global semiconductor industry is “almost entirely” dependent on the United States and countries aligned with it for chip design, the tools that make them, and fabrication.

    “Without these,” the analysts said, “Chinese firms will lose access not only to advanced chips, but to technology and inputs that might over time have allowed domestic chipmakers to climb the ladder and compete at the cutting edge.” They added: “The US has chopped the rungs away.”

    Chips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. US officials have talked about the move as a measure to protect national security interests. It also comes as the United States is looking to bolster its domestic chip manufacturing abilities with heavy investments, after chip shortages earlier in the pandemic highlighted the country’s dependance on imports from abroad.

    Arthur Dong, a teaching professor at Georgetown University’s McDonough School of Business, described the recent US sanctions as “unprecedented in modern times.”

    Previously, the US government has banned sales of certain tech products to specific Chinese companies, such as Huawei. It has also required some major US chip-making firms to halt their shipments to China. But the latest move is much more expansive and significant. It not only bars the export to China of advanced chips made anywhere in the world using US technology, but also blocks the export of the tools used to make them.

    With its Made in China 2025 road map, Beijing has set a target for China to become a global leader in a wide range of industries, including artificial intelligence (AI), 5G wireless, and quantum computing. At the Communist Party Congress earlier this month, where he secured a historic third term, Xi highlighted that the nation will prioritize tech and innovation and grow its talent pool to develop homegrown technologies.

    “China will look to join the ranks of the world’s most innovative countries by 2035, with great self-reliance and strength in science and technology,” Xi said in the party congress report, released on October 16.

    Dong said the latest US sanctions will make it harder for China to advance in AI as well as 5G, given the role advanced chips play in both industries.

    “In any circumstances,” Williams from Capital Economics said, “China would find achieving global tech leadership hard to achieve.”

    One dramatic, and potentially disruptive aspect of the rules is the ban on American citizens and legal residents working with Chinese chip firms.

    Dane Chamorro, a partner at Control Risks, a global risk consultancy based in London, said such measures are usually “only enacted against ‘rogue regimes’” such as Iran and North Korea. The decision to use this against China is “unprecedented,” Chamorro said.

    Many executives working for Chinese firms may now have to choose between keeping their jobs or acting as lawful US residents. “You can’t do both,” Chamorro said.

    The ban could lead to a mass resignation of top executives and core research staff working at Chinese chip firms, which will hit the industry hard, Dong from Georgetown University said.

    So far it’s not clear exactly how many American workers there are in China’s domestic chip industry. But an examination of company filings indicates that more than a dozen chip firms have senior executives holding US citizenship or green cards. At Advanced Micro-Fabrication Equipment China (AMEC), one of the country’s largest semiconductor equipment manufacturers, at least seven executives, including founder and chairman Gerald Yin, hold US citizenship, the latest company documents show.

    A woman inspects the quality of a chip at a manufacturer of IC encapsulation in Nantong in east China's Jiangsu province Friday, Sept. 16, 2022.

    Other examples include Shu Qingming and Cheng Taiyi, who currently serve as vice chairman and deputy general manager, respectively, at GigaDevice Semiconductor, an advanced memory chip firm. The Financial Times report said in a recent report that Yangtze Memory Technologies has already asked American employees in core tech positions to leave, citing anonymous sources. But it’s unclear how many.

    AMEC, GigaDevice Semiconductor, and Yangtze Memory Technologies didn’t respond to requests for comments.

    If these senior executives depart, “this will create a leadership and technological void within China’s chipmaking industry,” Dong said, as the country loses executives with years of chipmaking experience in an industry with “one of the most complex manufacturing processes known to mankind.”

    While much of the world’s chip manufacturing is centered in East Asia, China is reliant on foreign chips, especially for advanced processor and memory chips and related equipment.

    It is the world’s largest importer of semiconductors, and has spent more money buying them than oil. In 2021, China bought a record $414 billion worth of chips, or more than 16% of the value of its total imports, according to government statistics.

    But some Western suppliers have already started preparing to halt sales to China in response to the US export curbs.

    ASM International

    (ASMIY)    , the Dutch semiconductor equipment supplier, said Wednesday that it expected the export restrictions will affect more than 40% of its sales in China. The country accounted for 16% of ASML’s equipment sales in the first nine months of this year.

    Lam Researc

    (LRCX)    h, which supplies semiconductor equipment and services, also flagged last week that it could lose between $2 billion and $2.5 billion in annual revenue in 2023 as a result of the US export curbs.

    The party congress, which recently wrapped up, has slowed China’s response to latest US export controls, analysts said. But as Beijing starts assessing the significance of the measures, it might retaliate. Xi is “concerned” about US plans to bolster domestic chip production as his administration moves to restrict China’s ability to make them, said US President Joe Biden in a speech on Thursday.

    “This conflict is just beginning,” said Chamorro.

    Chamorro said the most valuable “card” in China’s hand might be the supply of processed rare earth minerals, which Beijing could embargo. Rare earth minerals are important materials in electric vehicle production, battery making and renewable energy systems.

    “These are not easily or quickly replaced and China dominates the processing and supply chain,” Chamorro said.

    The Biden administration, meanwhile, is also weighing further restrictions on other technology exports to China, a senior US Commerce Department official said Thursday, according to the New York Times.

    If either country takes these steps, it could shift the tech arms race between the United States and China to a whole new level.

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  • Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

    Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

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    Hong Kong
    CNN Business
     — 

    Hong Kong stocks had their worst day since the 2008 global financial crisis, just a day after Chinese leader Xi Jinping secured his iron grip on power at a major political gathering.

    Foreign investors spooked by the outcome of the Communist Party’s leadership reshuffle dumped Chinese equities and the yuan despite the release of stronger-than-expected GDP data. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy.

    Hong Kong’s benchmark Hang Seng

    (HSI)     Index plunged 6.4% on Monday, marking its biggest daily drop since November 2008. The index closed at its lowest level since April 2009.

    The Chinese yuan weakened sharply, hitting a fresh 14-year low against the US dollar on the onshore market. On the offshore market, where it can trade more freely, the currency tumbled 0.8%, hovering near its weakest level on record, even as the Chinese economy grew 3.9% in the third quarter from a year ago, according to the National Bureau of Statistics. Economists polled by Reuters had expected growth of 3.4%.

    The sharp sell-off came one day after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.

    A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States. Those pushed aside included Premier Li Keqiang, Vice Premier Liu He, and central bank governor Yi Gang.

    “It appears that the leadership reshuffle spooked foreign investors to offload their Chinese investment, sparking heavy sell-offs in Hong Kong-listed Chinese equities,” said Ken Cheung, chief Asian forex strategist at Mizuho bank.

    The GDP data marked a pick-up from the 0.4% increase in the second quarter, when China’s economy was battered by widespread Covid lockdowns. Shanghai, the nation’s financial center and a key global trade hub, was shut down for two months in April and May. But the growth rate was still below the annual official target that the government set earlier this year.

    “The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.

    “There is no prospect of China lifting its zero-Covid policy in the near future, and we don’t expect any meaningful relaxation before 2024,” he added.

    Coupled with a further weakening in the global economy and a persistent slump in China’s real estate, all the headwinds will continue to pressure the Chinese economy, he said.

    Evans-Pritchard expected China’s official GDP to grow by only 2.5% this year and by 3.5% in 2023.

    Monday’s GDP data were initially scheduled for release on October 18 during the Chinese Communist Party’s congress, but were postponed without explanation.

    The possibility that policies such as zero-Covid, which has resulted in sweeping lockdowns to contain the virus, and “Common Prosperity” — Xi’s bid to redistribute wealth — could be escalated was causing concern, Cheung said.

    “With the Politburo Standing Committee composed of President Xi’s close allies, market participants read the implications as President Xi’s power consolidation and the policy continuation,” he added.

    Mitul Kotecha, head of emerging markets strategy at TD Securities, also pointed out that the disappearance of pro-reform officials from the new leadership bodes ill for the future of China’s private sector.

    “The departure of perceived pro-stimulus officials and reformers from the Politburo Standing Committee and replacement with allies of Xi, suggests that ‘Common Prosperity’ will be the overriding push of officials,” Kotecha said.

    Under the banner of the “Common Prosperity” campaign, Beijing launched a sweeping crackdown on the country’s private enterprise, which shook almost every industry to its core.

    “The [market] reaction in our view is consistent with the reduced prospects of significant stimulus or changes to zero-Covid policy. Overall, prospects of a re-acceleration of growth are limited,” Kotecha said.

    On the tightly controlled domestic market in China, the benchmark Shanghai Composite Index dropped 2%. The tech-heavy Shenzhen Component Index lost 2.1%.

    The Hang Seng Tech Index, which tracks the 30 largest technology firms listed in Hong Kong, plunged 9.7%.

    Shares of Alibaba

    (BABA)     and Tencent

    (TCEHY)     — the crown jewels of China’s technology sector — both plummeted more than 11%, wiping a combined $54 billion off their stock market value.

    The sell-off spilled over into the United States as well. Shares of Alibaba and several other leading Chinese stocks trading in New York, such as EV companies Nio

    (NIO)     and Xpeng, Alibaba rivals JD.com

    (JD)     and Pinduoduo

    (PDD)     and search engine Baidu

    (BIDU)    , were all down sharply Thursday afternoon.

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  • An antitrust battle over GIFs could be a wake-up call for Silicon Valley | CNN Business

    An antitrust battle over GIFs could be a wake-up call for Silicon Valley | CNN Business

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    Washington
    CNN Business
     — 

    GIFs — those short, animated images that were a staple of internet memes and culture in the 1990s and 2000s — may be going out of fashion now as social media users have largely moved on to emojis and video.

    But a long-running legal battle over who can control access to them, culminating this week in a rare defeat for Meta (META), the parent of Facebook, could have major ramifications for Big Tech regulation. While the stakes of the case itself were relatively small, policy experts say the outcome is certain to embolden antitrust regulators around the globe and could chip away at the image of Big Tech as an invincible juggernaut.

    On Tuesday, UK regulators forced Meta to unwind its 2020 purchase of Giphy, one of the largest searchable internet libraries of GIFs.

    Meta had fought the breakup effort. But after an appeals tribunal this past summer largely upheld the government’s decision, Meta said this week it would sell Giphy in response to the final order from the UK requiring a spin-off.

    The concession marks a key moment in the global tug-of-war between governments and tech giants. It’s the first time any government — and one outside the United States at that — has successfully forced Meta to accept a breakup, albeit a partial one, since regulators worldwide began scrutinizing its economic dominance.

    “The Citadel may have been breached,” said Joel Mitnick, an antitrust attorney at the law firm Cadwalader, Wickersham & Taft.

    Meta, more than any other tech company, has drawn the attention of regulators for its acquisitions, which to critics have often looked like attempts to kill off potential competitive threats before they can flourish. In particular, they’ve pointed to its deal for Instagram in 2012 and WhatsApp in 2014, both of which were far pricier than the $400 million it reportedly paid for Giphy.

    Meta is currently defending against a US government antitrust suit seeking to force the company to spin off Instagram and WhatsApp, and another that would block a more recent proposed acquisition of a virtual reality startup known as Within Unlimited.

    The company said this week that it will continue to explore acquisitions despite the UK ruling. In issuing its decision, the UK’s competition regulator said Meta’s Giphy acquisition risked eliminating a competitor in digital advertising and cutting off third-party access to Giphy’s GIFs.

    GIFs aren’t a core part of Meta’s business; the company has sought to reposition itself instead as a leader in virtual reality technology. Even when Meta’s deal was first announced, it was widely regarded as a headscratcher and not an obvious threat to competition, according to Adam Kovacevich, CEO of the Chamber of Progress, an industry advocacy group funded partly by Meta.

    “Almost no one thought Meta was securing some kind of major coup with this deal,” Kovacevich tweeted, arguing that the case primarily served as a political exercise for UK regulators to demonstrate their post-Brexit relevance.

    Paul Gallant, an industry analyst at Cowen Inc., said that that only emphasizes how closely regulators are watching tech mergers now, and underscores how much of a wake-up call the UK ruling is.

    “Successfully blocking this deal will catch the eyes of the biggest tech companies in the world,” Gallant said. “The biggest tech companies have grown significantly through mergers and acquisitions, so this decision has the potential to complicate that strategy.”

    In many ways, the UK’s success in rolling back the Giphy merger reflects the cooperation and consensus that has emerged among antitrust agencies around the world, said William Kovacic, former chairman of the Federal Trade Commission and a law professor at George Washington University.

    The ruling will give non-UK regulators greater confidence that their own attempts to block tech industry consolidation may be achievable or, at the very least, not be viewed as radical, he added.

    “It gives you the ability to resist the argument that you are a rogue agency or a rogue jurisdiction,” Kovacic said. “It is more comforting to travel in a group than alone.”

    Emboldened regulators could seek to block more deals, or perhaps bring more cases alleging anticompetitive behavior. But just because the Giphy case could inspire more enforcement, that doesn’t necessarily mean they’ll be successful. That’s because, in major markets such as the United States, antitrust cases first must be proven in court before any penalties can be imposed. And US courts don’t typically take foreign antitrust rulings into account; their job is to interpret US law.

    In that respect, said Mitnick, US antitrust officials face a tougher challenge than their counterparts in Europe and in other places where regulators face lower procedural hurdles.

    A successful US breakup prosecution, Mitnick said, “remains a very high wall to scale.”

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  • Undaunted by DeSantis, immigrant workers are heading to Florida to help with hurricane cleanup | CNN

    Undaunted by DeSantis, immigrant workers are heading to Florida to help with hurricane cleanup | CNN

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    CNN
     — 

    Just weeks after Ron DeSantis made a very public display of his efforts to keep migrants from coming to Florida, Hurricane Ian’s destruction is drawing a growing number of immigrants to the Republican governor’s state.

    “They’re arriving from New York, from Louisiana, from Houston and Dallas,” says Saket Soni, executive director of the nonprofit Resilience Force, which advocates for thousands of disaster response workers. The group is made up largely of immigrants, many of whom are undocumented, Soni says. Much like migrant workers who follow harvest seasons and travel from farm to farm, Soni says these workers crisscross the US to help clean up and rebuild when disaster strikes.

    To describe their work, he likes to use a metaphor he says a Mexican roofer once shared with him.

    “What you have now is basically immigrants who are sort of traveling white blood cells of America, who congregate after hurricanes to heal a place, and then move on to heal the next place,” Soni says.

    Already, Soni says his team has been in the Fort Myers area with hundreds of immigrant workers – about half of whom came from out of state. And he says more will arrive in the coming weeks.

    He calls it a “moment of interdependence.” And he says it’s something he hopes DeSantis and others in Florida will recognize.

    “Many who were traveling in the opposite direction weeks ago are now traveling to Florida to help rebuild,” he says.

    And each morning when they wake up, he says, many migrants have told him they are praying for DeSantis.

    “They’re praying for him to lead a good recovery, they’re praying for him to be the best governor he can be. Because they need him and he needs them. And they know that,” Soni says.

    Does DeSantis?

    “There’s no way that he doesn’t,” Soni says.

    But so far, the Florida governor’s words and actions tell a different story.

    Back in 2018, DeSantis campaigned for governor with a TV ad showing him teaching his kids to build a wall. And since then, he’s positioned himself as one of the most vocal critics of the Biden administration’s immigration policies and announced high-profile immigration steps of his own, including – most recently – using state funds for two flights taking migrants from Texas to Florida to Martha’s Vineyard, Massachusetts.

    Word that immigrants are now coming to help clean up some of his state’s most storm-ravaged communities hasn’t softened the governor’s stance.

    Several minutes into a news conference Tuesday billed as an update on the state’s hurricane response – before he detailed ongoing rescue efforts – DeSantis made a point of trumpeting that three “illegal aliens” were among four people recently arrested on looting allegations.

    “These are people that are foreigners, they’re illegally in our country, and not only that, they try to loot and ransack in the aftermath of a natural disaster. I mean, they should be prosecuted, but they need to be sent back to their home countries. They should not be here at all,” he told reporters.

    Later in the news conference, CNN’s Boris Sanchez asked DeSantis whether he had any response to reports that Venezuelans in New York were being recruited to work on recovery efforts, and whether the governor would also be trying to send those migrants back north.

    DeSantis doubled down on his earlier message.

    Florida Gov. Ron DeSantis speaks during a news conference Tuesday in Cape Coral, Florida.

    “First of all, our program that we did is a voluntary relocation program. I don’t have the authority to forcibly relocate people. If I could, I’d take those three looters, I’d drag them out by their collars, and I’d send them back to where they came from,” the governor said, drawing applause from officials surrounding him.

    He went on to describe a funeral he attended this week of a Pinellas County sheriff’s deputy who was killed in a hit and run by a front-end loader that authorities allege was driven by an undocumented Honduran immigrant.

    Then he ended the news conference, making no mention of immigrant workers who were putting tarps on roofs or clearing debris.

    Hurricane Ian is the first major hurricane to hit Florida since DeSantis took office in January 2019.

    Many migrants coming now to help rebuild, Soni says, have responded in the past to numerous major disasters in Florida and across the country.

    “Many are from Venezuela. Many are from Honduras and Mexico. They represent all of the different waves of migrants that have been arriving into the US and into this industry. Many of them who I’ve known since Hurricane Katrina and who have a dozen hurricanes under their belt,” he said. “But there are also newer migrants. I just met a group of Venezuelan asylum-seekers who were arriving to do the work.”

    The Smithsonian’s National Museum of American History notes in its description of an artifact in its collection that after Hurricane Katrina hit New Orleans in 2005, “Many homeowners undertook their own clean-up, but much was performed by immigrant laborers attracted to the region by the promise of hard work and good wages.”

    This file photo from April 2006 shows immigrant workers performing

    Sergio Chávez, an associate professor of sociology at Rice University who studies Mexican roofers, describes Katrina as a “key moment” that shaped the identities and careers of many of the hundreds of men he’s interviewed.

    A little more than half of the roofers in the group he’s studied are undocumented immigrants, Chávez says. And when he’s spoken with roofers across the United States – based in places like Wisconsin, Minnesota, Illinois, Iowa, Ohio and Kentucky – Chávez says a common detail quickly emerges when he asks how they ended up in those locations.

    “They always name a storm,” he says.

    After Hurricane Ian, he says, many of those roofers are poised to head to Florida. Deciding exactly when to go to a disaster zone is a strategic decision, Chávez says, noting that arriving too early can be problematic.

    “There’s no telephone service, gasoline, food, housing,” he says. “They also have to be really careful not to just work for anybody, because otherwise they may not get compensated for the work that they do.”

    But there’s no doubt they’re going to Florida, he says, and that they’ll play a key role in the state’s recovery.

    “DeSantis is not scaring them away,” Chávez says.

    That doesn’t mean they won’t face some hostility once they get there, just like they have in other communities.

    “My guys for the most part do experience ‘the look.’ They do get pulled over, maybe. But for the most part, any time they go to a lot of these different locations, they are there to do work which the local population sees as essential. So they get their work done,” Chávez says.

    On the ground in communities, Chávez says he’s seen contradictions between people’s political beliefs and their actions. Some may support anti-immigrant rhetoric, he says, but then look the other way when they need certain services that immigrant workers provide.

    A bigger problem, Chávez says, is that when these workers face abuses – like wage theft or unsafe housing conditions – there aren’t enough laws to protect them, or local authorities may be hesitant to enforce them.

    On top of that, the work is physically demanding and risky.

    “These guys are helping us to adapt to a new world that we live in and we need their labor,” Chávez says. “But it turns out they actually risk their bodies. (Roofing is) one of the most dangerous occupations in the United States.”

    Damage from Hurricane Ian is seen on Tuesday in San Carlos Island, Fort Myers Beach.

    Chávez says he’s spoken with many roofers about on-the-job injuries.

    “A lot of these guys have fallen and they don’t have access to health insurance. Their bodies are no longer the same. They have bad knees, bad backs,” he says.

    So why do roofers and other disaster recovery workers keep setting out for these destinations, storm after storm?

    Even though wage theft is a major problem some face, there’s the potential to earn good wages, send their earnings to families in their home country and possibly advance to higher-paying jobs over time, Chávez says. So it’s a choice that makes economic sense to many, despite the risks.

    Desperation is also a factor, Soni says.

    “Part of what’s happened is because this is such dirty, dangerous work, and the conditions are so harsh, the most desperate people – those with no other economic avenues, those who are willing to be transient for a year or more – are the ones who join,” he says.

    When it comes to the physical and economic risks, Soni says Resilience Force does what it can to protect workers by helping them negotiate fair wages and payment with contractors, and making sure they have the right safety equipment as they set out to rebuild homes and schools.

    But those aren’t the only construction projects they’ll be working on in Florida, Soni says.

    “We also try to rebuild a society that’s better than it was before the storm,” he says. “And it’s better when there are more relationships and there are more bonds between different people. … Politics can change when the people in a place change their minds.”

    After previous hurricanes, he says, the organization has led workers on service projects rebuilding uninsured homes, then hosted meals where homeowners and workers can talk with the help of interpreters.

    “Those bonds have lasted. People have become friends and people have changed their minds,” he says. “What that often looks like in Florida or Louisiana is for someone who thought immigration was their most important issue, well, after a hurricane, immigration becomes the 35th most important issue. And what’s more important is, how are we going to stay in this place to survive and thrive again? Who will it take? What family will it take to bring this place back? And that family usually includes the immigrants who helped rebuild the place.”

    DeSantis may not take note of this. But as Florida rebuilds, Soni is betting that community leaders and homeowners who need help will.

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  • Namibia can become a green energy exporter, says first lady | CNN Business

    Namibia can become a green energy exporter, says first lady | CNN Business

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    London
    CNN
     — 

    With Europe looking for alternatives to Russian energy, the European Union has set a target to produce 11 million tons of green hydrogen, and import another 11 million tons, by 2030.

    Green hydrogen (hydrogen produced using renewable energy) is being touted as a clean alternative to fossil fuels that could power heavy industry and transport. EU officials said this summer that they hoped to strike a deal to help Namibia develop its green hydrogen sector. The southern African nation is set to open the continent’s first green hydrogen production plant in 2024, operated by French power company HDF Energy.

    Namibia’s first lady, Monica Geingos, has served on policy advisory boards in her country and championed gender equality. CNN’s Melissa Mahtani spoke with Geingos at the UN General Assembly in New York last week, and sent her additional questions by email, about Namibia’s advances in green energy and the role of women in the country’s economic future.

    This interview has been edited for length and clarity.

    Namibia’s first hydrogen power plant is expected to be up and running in 2024, and there’s also a potential plan in place to partner with the EU on green hydrogen. Where do you see sustainable energy in the future of the country’s business landscape?

    Geingos: It is clear that Namibia’s green hydrogen plans extend beyond domestic energy self-sufficiency. It is also about intra-African trade as Namibia has an opportunity to export clean energy into regional power markets. Additionally, there is an opportunity to export clean (energy) to a neighboring country (South Africa) that is also Africa’s largest carbon contributor.

    Namibia has also been identified as a strategic enabler of the European Union’s decarbonization agenda, which facilitates our ability to export energy to Europe. What this means is that Namibia can go beyond the traditional relationship of being an aid recipient to become a strategic trading partner.

    Amongst many other benefits, I am excited about the vibrant economic mobilization that the business sector will benefit from as (Namibia) will be able to deploy its own resources to private-sector investment, which also enables increased risk appetite for sectors that foreign investors traditionally stay away from.

    You were an entrepreneur before becoming first lady. How did that experience prepare you for this role?

    Geingos: My career was in capital markets, corporate finance and private equity so it prepared me well to work under pressure, stand my ground and manage difficult conversations. It also helped me to develop a strong ethics compass which is helpful in navigating gray areas and understanding no-go areas.

    What barriers remain in place when it comes to elevating women to positions of power, especially in business settings?

    Geingos: Namibia’s legislative and policy framework pertaining to gender equality is very progressive. The barriers are unseen and pertain to how women are perceived, spoken about, treated and made to feel when in positions of influence, or when trying to climb the ladder.

    In essence, our mindsets are not as progressive as our laws. While public sector leadership has not reached gender parity, it leads the private sector which still lags far behind in ensuring gender equality. This is an indicator of the gains made in certain sectors but also confirmation of how much work still needs to be done.

    The African Continental Free Trade Area came into effect last year — of which Namibia is a part. How important is it that women take a lead in that, and have a seat at the table when major decisions are being negotiated?

    Geingos: It is of critical importance that women take a seat at any table where consequential decisions are made, as targeting such large opportunities without diverse thinking would be to society’s detriment.

    Women bring differentiated thinking, and capacity to the table. It makes no sense to sit around the table and make major decisions while excluding a portion of your intellectual capital. The easier movement of goods and people to facilitate intra-African trade has risks for women that need to be managed — (for example) human trafficking — but also has significant opportunities. There are bespoke pockets of capital that target women entrepreneurs which can be applied in pursuing expanded market opportunities, which make for exciting times for women entrepreneurs.

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