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China Telcos Weigh Sharing 5G Network to Cut Costs, Potentially Hurting Huawei

HONG KONG—China Telecom said on Aug. 22 it is ready to build a 5G mobile network with its rivals in order to reduce costs, a proposal that is likely to cut multi-billion dollar equipment orders for vendors such as Huawei Technologies.

China’s big three state telcos are racing to roll out 5G services in more than 50 cities this year, following countries like South Korea and the United States which have already started the service that promises to support new technologies such as autonomous driving.

While the gradual rollout of 5G services globally is a boon to telecoms gear makers, tie-ups by mobile operators in China, the world’s biggest smartphone market, to build the network together threaten to cut the size of the overall 5G infrastructure spending.

The proposal also comes as Huawei is fighting a trade ban from Washington that has hurt its business since May and could cut off its access to essential U.S. suppliers.

China Telecom Chairman Ke Ruiwen said on Thursday the company had reached a tentative agreement with rival China Unicom to jointly build a 5G network where they would share part of the infrastructure, after China Unicom expressed interest in that last week.

“Co-building and co-sharing would bring great savings in capital expenditure, operating expenditure, as well as improve resource utilization,” Ke said, without giving numbers.

China Unicom Chairman Wang Xiaochu said last week 5G network sharing could save it between 200 billion yuan to 270 billion yuan ($28.2 billion to $38.1 billion). But both companies kept their 2019 capex guidance unchanged.

Mobile operators are seeking to build networks together to share the heavy capital expenditure burden, as their earnings growth eases due to slowing subscriber growth and government pressure to cut tariffs.

Unlike South Korea and the United States, China aims to build the kind of 5G network known as stand-alone network, which is more powerful than an upgrade based on the existing 4G network but is costlier.

Both Ke and Wang said they are open to working with other players including China’s largest…

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Changing economic trends in Taiwan

Nan Shan Plaza and Taiwan

Author: Min-Hua Chiang, NUS

Taiwan’s economic growth has long been based on exporting intermediate goods to mainland China for final assembly, but this is now showing signs of change. Taiwan’s monthly exports to China and Hong Kong have registered negative growth since November 2018 according to Taiwan’s official statistics.

In January–June 2019, Taiwan’s exports to China and Hong Kong shrank by 8.8 per cent compared to the same period in 2018. In comparison, Taiwan’s exports to the United States grew by 17.4 per cent. Overall exports declined by 3.4 per cent during the same period. As a result, China’s share in Taiwan’s total exports declined from 41 per cent in 2017 to less than 39 per cent in the first half of 2019. China’s falling significance was balanced by the growth of exports to the United States from 12 per cent to 14 per cent during the same period.

Taiwan’s decreasing investment in China explains the shrinking exports to the country. Although China remains Taiwan’s largest outward investment destination, its importance has dropped to 37 per cent in the first half of 2019 from its peak of 84 per cent in 2010.

Taiwan’s decreasing investment in and export to China has been caused by China’s transformation towards a more consumption-based economy. The growing trade dispute between the United States and China has accelerated the shift in Taiwanese investment away from China. In 2016, 8 out of the top 10 US-bound exporting companies in China were Taiwanese firms.

Taiwan’s declining investment in China did not boost its investment in developing countries in Southeast Asia as China and Southeast Asia are within the same supply chain networks — Southeast Asian countries supplied raw material and intermediate goods for final assembly in China. Trade interdependencies mean that Taiwanese firms’ withdrawal of their factories from China might negatively impact their investment in Southeast Asia.

Some Taiwanese firms choose to invest at home in the face of US trade retaliation against Chinese products. From January–June 2019, the total return on investment from China amounted to over NT$440 billion (about US$14 billion). This considerable return sustained Taiwan’s economic growth despite falling exports.

The Taiwanese government tried to reduce Taiwan’s investment in China before in the 1990s but the result was not fruitful. The opening of US markets to Chinese goods following US–China reconciliation underpinned export-oriented investment in China. As most Taiwanese exports produced by Taiwanese firms in China are destined for the US market, Taiwan has transmitted its economic reliance on the United States to intermediary China.

Unlike president Lee Teng-hui (1988–2000), president Chen Shui-bian (2000–2008) realised the prohibition only resulted in extensive hidden investment that the government could not control. He then adopted a relatively open economic policy towards China. When Ma Ying-jeou took office in 2008, he opened Taiwan’s economy a step further to China as he believed greater cross-strait economic integration would rescue Taiwan’s ailing economy.

Ironically, Taiwan’s investment in China started to decrease and its exports to China also became stagnant during Ma’s administration (2008–2016). China’s rising wages and stricter rules for environmental protection explained diminishing investment from Taiwan. China’s industrial upgrading further reduced its demand for intermediate goods from Taiwan. Beyond weak global demand, Taiwan’s wearying investment-driven exports to China also explained its bleak economic performance.

Unlike Ma, current President Tsai Ing-wen vowed to revitalise the economy through diversifying economic relations after she took office in 2016. This comes in the wake of China’s economy facing downward pressure exacerbated by the worsening investment environment and prolonged US–China trade tensions. Tsai’s policy of economic diversification may succeed because it complements the current US economic policy towards China as well as China’s economic structural changes.

The future of Taiwanese investment remains largely contingent upon US–China relations. A complete shift of its supply chain network from China to other countries seem unlikely in the short term. Given China’s huge population, the China market-oriented firms may continue to stay.

US President Donald Trump’s plan to bring manufacturing back to the United States may also delink the traditional US–Asia economic connections where Asia produces and…

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Miami – A Great Place to Buy Real Estate

Miami has evolved into a cosmopolitan wonder city under the sun. Famous for its great beaches, this city has also earned a reputation of being a sexy, marvelous and trendy place to live. From amazing golf courses like the one at Crandon Park in Key Biscayne to the Miami Metro Zoo, this beautiful city has something to offer to everyone. Owning a piece of paradise is a dream within reach of locals and foreigners as well. People from all parts of the world have already taken advantage of the great opportunities available today in the marketplace.

Miami has some of the most amazing real estate developments like the astonishing Santa Maria located in Brickell, or the unbelievable towers of Icon Brickell. Some other exclusive and impressive Miami condos include, the Jade at Brickell, the 900 Biscayne in downtown Miami, the fabulous Trump Palace in Sunny Isles Beach and the astonishing Icon South Beach just to name a few. These modern Miami luxury condos have all the comforts and amenities only found in five star hotels.

The city of Miami has it all, great golf, amazing beaches, a turquoise beautiful ocean, a warm weather, excellent shopping, an electrifying night life, lots concerts, entertainment and sports events at the famous America Airlines Arena in downtown Miami.

Miami real estate buyers are as diverse as the city culture and population itself. Buyers come from all over the globe, Europeans, Latin Americans, and Asians and of course buyers from all around the United States. Some have chosen this beautiful city to have a second home and some have fallen in love so much that they now call Miami their home making it an exciting melting pot to live in.

Source by Mauricio Chaparro Bosch

Taiwan M&A activity hits 15-year low as US-China trade wa…

Merger and acquisition activity in Taiwan has hit a 15-year low as the US-China trade war and global recession fears have spooked investors who fear the business climate is deteriorating.According to data by Dealogic, the number of M&A deals so far this year dropped 42 per cent from the same period in 2018 to 71 while the transaction value of US$2.5 billion was the lowest since 2004.Ongoing trade tension between the world’s two largest economies and a global economic slowdown have worsened…

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Trump Warns China on Hong Kong

Trump Warns China on Hong Kong Tasnim19 Aug 2019, 22:36 GMT+10 TEHRAN (Tasnim) – US President Donald Trump on Sunday warned China that carrying out a Tiananmen Square-style crackdown on Hong Kong pro-democracy protesters would harm trade talks between the two countries. – Other Media news – ‘I think it’;d be very hard to deal if they do violence, I mean, if it’;s another Tiananmen Square,’ Trump told reporters in New Jersey. ‘I think it’;s a very hard thing to do if there’;s violence.’The months-long trade dispute between the US and China has been blamed for setting world financial markets on edge amid signs of a possible global economic slowdown.Trump’;s comments came as Washington and Beijing look to revive pivotal high-level talks aimed at ending their trade war.Phone calls between both countries’; deputies are planned for the next 10 days, and if those are successful, negotiations between more senior officials could resume, Trump’;s chief economic advisor Larry Kudlow said on Sunday.Hong Kong has meanwhile been rocked by more than two months of protests and on Sunday saw a crowd that organizers said numbered some 1.7 million people march peacefully in the city despite rising unrest and stark warnings from Beijing, AFP reported.Last week, protesters paralyzed the city’;s airport, tarnishing a campaign that took pride in its peaceful intent and unpredictability — which demonstrators have tagged with the slogan ‘Be Water.’Communist Party-ruled mainland China has in turn sharpened its tone towards the dissidents, decrying the ‘terrorist-like’ actions of a violent minority, while state media has broadcast images of military personnel and armored personnel carriers in Shenzhen, across the border from the semi-autonomous city.China deployed tanks to end student-led protests in the bloody 1989 crackdown in Beijing’;s Tiananmen Square, resulting in an estimated death toll between several hundred to over a thousand.If such a situation was repeated in Hong Kong, ‘I think there’;d be… tremendous political sentiment not to do something,’ Trump said, referring to the trade negotiations with China.Under a deal signed with Britain, China agreed to allow Hong Kong to keep its unique freedoms when the former crown colony was handed back in 1997.But many Hong Kongers feel those freedoms are being chipped away, especially since China’;s hardline president Xi Jinping came to power.Trump stopped short of endorsing the protesters, saying, ‘I’;d love to see it worked out in a humane fashion,’ and calling on Xi to negotiate with the dissidents.Last week, China’;s state-run daily The Global Times said there ‘won’;t be a repeat’ of Tiananmen Square in a rare reference to the crackdown.’China is much stronger and more mature, and its ability to manage complex situations has been greatly enhanced,’ the newspaper wrote in an editorial.Analysts say any intervention in Hong Kong by Chinese security forces would be a disaster for China’;s reputation and economy.The weeks of demonstrations have plunged the financial hub into crisis, with images of masked, black-clad protesters engulfed by tear gas during street battles against riot police stunning a city once renowned for its stability.The unrest was sparked by widespread opposition to a plan for allowing extraditions to the Chinese mainland, but has since morphed into a broader movement for democratic rights in the semi-autonomous city.Sunday’;s march, billed as a return to the…

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Upgrading the ASEAN–China Free Trade Agreement

China

Authors: Jayant Menon and Anna Cassandra Melendez, ADB

In 2015, ASEAN and China signed an upgraded protocol to improve the original Framework Agreement for the ASEAN–China Free Trade Area (ACFTA). The upgraded protocol entered into force in July 2016 and implementation will start from August 2019.

Since ACFTA was launched, China’s share of ASEAN total merchandise trade increased from 8 per cent in 2004 to 21 per cent in 2018, making it ASEAN’s biggest trading partner with trade amounting to US$591.1 billion. China also rose to become ASEAN’s third largest source of FDI in 2017, with flows amounting to US$11.3 billion.

But how will the upgrading of the agreement likely affect these flows? The key changes relate to: simplifying Rules of Origin (ROOs) and Certificate of Origin procedures; improving services commitments from China covering the engineering, construction, sporting, securities and tourism sectors; strengthening provisions for investment promotion and facilitation; and building e-commerce capabilities — especially for micro, small and medium-sized enterprises.

The upgraded protocol does not do much to address non-tariff barriers despite evidence that they continue to grow and suppress trade. Even for tariffs, studies point to low utilisation rates for ACFTA tariff concessions. If low utilisation rates are mainly due to difficulties in complying with ROOs then the proposed simplification could see a significant increase in trade flows. But if it is mainly because margins of preference (or the difference between Most-Favoured-Nation and ACFTA preferential tariffs) are low, then the likely impacts are more complex.

Margins of preference are likely to be low — or even zero — for trade in parts and components and other intermediate goods because of various tariff exemption schemes. For instance, for trade in electronic parts and components that dominate supply chains in Southeast and East Asia, the WTO’s Information Technology Agreement provides duty exemption even for countries that are not signatories.

For trade in other types of parts and components, various duty-drawback schemes like bonded warehouses or the location of multinational corporations in duty-exempt export processing zones also make these tariff preferences redundant. Even if this was not the case, it is very difficult to design ROOs for supply chain-driven trade — by its nature it involves limited value-addition or transformation.

This means simplification of ROOs and other related reforms in the upgraded ACFTA are likely to affect trade in final rather than intermediate goods that constitute only about a third of ASEAN’s exports to China, but more than two-thirds in the opposite direction. This would aggravate the trade imbalance.

But improvements to the agreement on trade in services have the potential to significantly strengthen trade relations, since barriers have been high. This is also a rapidly growing area of trade. The trade dispute between China and the United States has already affected supply chains, with investment being diverted away from China and towards some countries of Southeast Asia. Strengthening provisions that promote or facilitate investment between China and ASEAN could increase flows from the former to the latter in an attempt to avoid punitive tariffs, even if the dispute is resolved anytime soon.

The restructuring may continue in an attempt by Chinese firms to diversify risk, recognising that the tensions may live on beyond this dispute and find new forms of expression. This restructuring and shift in regional supply chains could be the true legacy of this dispute, and it has already started to happen.

All of this assumes that the agreements are implemented faithfully. This is no easy task considering that domestic laws may have to be amended to accommodate these new accords. Ever since the ACFTA was first mooted, there has been concern over the potential negative impact on production and employment in sensitive sectors in ASEAN member states. Indonesian producers, for instance, requested a delay in the implementation of the original ACFTA tariff reduction scheme for some 228 items, without success.

Although some of these fears may have since subsided, they have not been eliminated. For example, there have been delays in the enactment of national laws and regulations to implement the upgraded protocol. Domestic industry lobbies continue to push for protection, and some wield significant influence over governments. In this environment, the flexibility that characterises ASEAN cooperation…

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US institutions will keep Trump’s currency war at bay, but for how long?

US Dollar and China Yuan notes are seen in this picture illustration 2 June 2017. (Photo: Reuters/Thomas White)

Author: Adam Triggs, ANU

‘China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices’ tweeted the President of the United States. ‘Not anymore!’ Mr Trump’s assertions on currencies range from overblown to completely baseless. But this has not stopped his actions likely to endanger the US and global economies.

US authorities labelled China a currency manipulator on 5 August 2019 for the first time in 25 years after the RMB fell below the 7 RMB-per-dollar level. This was despite China’s actions failing to satisfy the US Treasury’s own definition of a currency manipulator. While US institutions may keep President Trump in check in the near term, this represents a dangerous escalation in tensions and a serious challenge to financial markets, US institutions and the rules-based system.

An undervalued exchange rate makes a country’s exports cheaper than they otherwise would be compared to those of other countries. Economists measure whether an exchange rate is undervalued by calculating what an exchange rate ought to be based on the characteristics of that economy, how much it trades with the world, how much it invests overseas and how much other countries invest in it. If an exchange rate is below what these fundamentals imply it ought to be, it is possible (though not conclusive) that the country is depreciating its exchange rate to achieve a competitive advantage.

This has not been the case for China. The IMF judges that China’s exchange rate in 2018 was broadly in-line with its fundamentals. This is not new. The IMF reached the same conclusion in its analyses of China’s currency for at least the last five years and, before that, found that China’s exchange rate was only marginally undervalued. US Treasury analysis comes to the same conclusions, supported by the fact that China’s current account surplus is almost non-existent: down from 10 per cent of GDP in 2007 to almost zero today.

Economists also assess whether a country is manipulating its exchange rate to achieve a competitive advantage by monitoring whether they persistently engage in one-sided interventions in foreign exchange markets. The US Treasury has never been able to demonstrate this for any major US trading partner, including China.

It is therefore perplexing why China has suddenly been labelled as a currency manipulator, a label which opens the door to sanctions and further trade restrictions. The trigger was that, for the first time in 10 years, China’s central bank has allowed the RMB to fall below the 7 RMB-per-dollar level. But the key word in this sentence is ‘allow’. A slowing Chinese economy, weakening exports due to US trade restrictions and an almost balanced current account means a weaker Chinese currency is to be expected. ‘They are not driving the currency down’ notes Marc Chandler, Chief Market Strategist at Bannockburn Global Forex ‘but just accepting market forces’.

Cornell University’s Eswar Prasad notes that China doesn’t even meet the US Treasury’s own definition of a currency manipulator. Mark Sobel, a 40-year US Treasury veteran, made a similar point. ‘It [China] has not been intervening’, he says. ‘By Treasury’s own foreign exchange-report criteria, China doesn’t even come close to meeting the terms for manipulation’. Labelling China as a currency manipulator, contrary to its own criteria, undermines the credibility of the US Treasury.

China is not alone. President Trump has regularly accused Europe and Japan of pushing down the value of their currencies to unfairly compete with the United States. It is true that the exchange rates of Germany, Japan, South Korea, Mexico and the euro area have been persistently undervalued in recent years. But even for these economies, the reality is more complex than what Trump suggests.

Germany’s exchange rate, for example, is undervalued by between 8 and 18 per cent. But this is primarily because it shares an exchange rate with the rest of the euro area. And although the common currency gives Germany an undervalued exchange rate, it gives France, Italy and a host of other euro area economies an overvalued exchange rate, netting-out most of the euro-wide impact.

US punishment of these economies for currency manipulation would rightly leave them feeling aggrieved and make the prospect of a currency war more likely. The costs would be substantial. Most economic models suggest that a currency war will distort trade and investment…

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China-Owned Oil Tanker Changes Name in Apparent Effort to Evade US Sanctions

SINGAPORE/KUALA LUMPUR—While in the Indian Ocean heading toward the Strait of Malacca, the very large crude carrier (VLCC) Pacific Bravo went dark on June 5, shutting off the transponder that signals its position and direction to other ships, ship-tracking data showed.

A U.S. government official had warned ports in Asia not to allow the ship to dock, saying it was carrying Iranian crude in violation of U.S. economic sanctions. A VLCC typically transports about 2 million barrels of oil, worth about $120 million at current prices.

On July 18, the transponder of the VLCC Latin Venture was activated offshore Port Dickson, Malaysia, in the Strait of Malacca, about 940 miles (1,500 km) from where the Pacific Bravo had last been signaling its position.

But both the Latin Venture and the Pacific Bravo transmitted the same unique identification number, IMO9206035, issued by the International Maritime Organization (IMO), according to data from information provider Refinitiv and VesselsValue, a company that tracks ships and vessel transactions. Thomson Reuters has a minority stake in Refinitiv.

Since IMO numbers remain with a ship for life, this indicated the Latin Venture and the Pacific Bravo were the same vessel and suggested the owner was trying to evade Iranian oil sanctions.

“Without speculating on any particular shipowners’ actions, generally speaking for a ship to change its name abruptly after receiving accusations from the U.S., it can only be that the owner is hopeful that the market will be deceived by something as rudimentary as a name change,” said Matt Stanley, an oil broker at StarFuels in Dubai.

The vessel is owned by Kunlun Holdings, which, according to data from Equasis.org, a shipping transparency website set up by the European Commission and the French Maritime Administration, is based in Shanghai. The company also has an office in Singapore.

Calls to the company’s offices were unanswered.

While operating as the Pacific Bravo, the ship’s transmission data showed that its cargo tanks were full before it turned off the transponder. When it reappeared…

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