International officials and supporters continue to desperately press for proof that China’s popular tennis superstar Peng Shuai is safe after she dropped from sight early this month when she accused a former member of the Chinese government of sexual assault.
The fear is that a high-profile sports star is being held against her will by the government for speaking out about an assault by a powerful man.
A brief video of a woman who appeared to be Peng released Saturday by China was insufficient to alleviate fears about her safety, said the head of the Women’s Tennis Association. Chinese state media has since released a new series of short videos showing Peng at a tennis event, but with similarly little clarity on Peng’s wellbeing.
“It remains unclear if she is free and able to make decisions and take actions on her own without coercion or external interference,” WTA CEO Steve Simon said in a statement.
The United Nations on Friday called for proof of Peng’s whereabouts, and the WTA is threatening to cut ties with the nation.
White House Press Secretary Jen Psaki said Friday that the Biden administration is “deeply concerned” about Peng.
“I hope she is safe,” Williams wrote on Twitter. “This must be investigated and we must not stay silent.”
Peng accused former Vice Premier Zhang Gaoli of forcing her into sex at his home, according to screenshots of a since-deleted social media post from Nov. 2. The post was deleted by Chinese censors within 30 minutes of its posting. Peng dropped from sight the same day.
The Chinese government has yet to even acknowledge publicly that the accusations were made.
Earlier this week, the Chinese state broadcaster released a highly suspect email, purportedly sent to Simon from Peng, which walked back her allegations.
UN Human Rights spokesperson Liz Throssell told reporters Friday that it’s “important to have proof of [Peng’s] whereabouts and wellbeing — and we would urge that there be an investigation with full transparency into her allegations of sexual assault.”
WTA’s Simon told CNN Thursday that he is prepared to forego hundreds of millions of dollars in business in China if Peng is not fully accounted for and her allegations are not investigated.
“Women need to be respected, not censored,” he said.
The Chinese Tennis Association has insisted to WTA officials that Peng is unharmed, according to Simon. But it has been impossible to reach her, he noted.
Simon believes the email revealed on state TV was fake. He called it a “staged statement of some type,” and told CNN that he hadn’t received any reply from Peng after immediately writing back to the email address.
The email “only raises my concerns as to her safety and whereabouts,” Simon said in a statement. “I have a hard time believing that Peng Shuai actually wrote the email we received or believes what is being attributed to her … we won’t be comfortable until we have a chance to speak with her.”
A journalist for the state broadcaster on Friday also shared photos of Peng that she had ostensibly posted on a social media, but that could not immediately be confirmed.
China signals that crackdown on privacy, data, anti-trust to go on
China will draft new laws on national security, technology innovation, monopolies and education, as well as in areas involving foreigners, the national leadership said in a document published late on Wednesday (Aug 11).
The announcement signals that a crackdown on industry with regard to privacy, data management, anti-trust, and other issues will persist on through the year.
The Chinese Communist Party and the government said in a blueprint for the five years to 2025, published by the state-run Xinhua news agency, that they would also improve legislation around public health by amending the infectious disease law and the “frontier health and quarantine law”.
China is working for a return to normal after the coronavirus pandemic, which emerged in its Wuhan city in late 2019.
Regulations dealing with food and medicine, natural resources, industrial safety production, urban governance, transport, would also be strictly enforced, they said.
Authorities will aim to develop laws consistent with new sectors such as the digital economy, internet finance, artificial intelligence, big data, cloud computing, they said, adding that they would also improve the response to emergencies.
They additionally laid out directives for the prevention and resolution of social conflicts and reiterated an order for officials to “nip conflicts in the bud”.
Better legislation for areas including education, race and religion and biosecurity was also on the cards, they said.
The government has in recent months reined in tech giants with anti-monopoly or data security rules and clamped down on tutoring companies, as the state increases its control of the economy and society.
On Thursday, state-media outlet, the Securities Times reported that banking regulators would step up scrutiny of online insurance companies in an effort to “purify the market environment” and “protect the legal interests of consumers”.
Authorities used a law aimed at responding to foreign sanctions for the first time last month to sanction former US Commerce Secretary Wilbur Ross and imposed a national security law on the special region of Hong Kong last year, employing legal means to protect interests beyond the mainland border.
The party and the government also asserted that a “rule of law government” must follow the leadership of the party.
President Xi Jinping has made “rule of law governance” a signature of his rule, which will be extended if, as expected, he seeks a third term next year. Reuters/ng
Xi Jinping visits Tibet for first time since becoming president
Xi Jinping has made his first visit to Tibet since becoming China’s president in 2013, amid criticism from human rights groups of his hardline ethnic assimilation policies in the region.
Chinese state media said on Friday that Xi arrived in Nyingchi, a town near the contested border with India’s Arunachal Pradesh state, on Wednesday, before travelling by train to Lhasa, Tibet’s capital.
The ruling Chinese Communist party has come under renewed scrutiny over what human rights groups say is a nationwide effort to force ethnic minorities to be loyal to Beijing and adopt Chinese culture and language.
The party says its policies in border regions such as Xinjiang and Tibet promote “ethnic unity” and are necessary to fight “separatism, extremism and terrorism”. But humans rights activists argue that they trample on religious and cultural freedoms.
Chinese authorities shut down Lhasa’s Sengdruk Taktse middle school, a privately run Tibetan-language institution, this month, advising students to enrol in government institutions, according to a report by Free Tibet, a London-based advocacy group.
John Jones, a Free Tibet campaigner, said the closure demonstrated how “every facet of Tibetans’ identity — the right of Tibetans to control their language, land and religion — is under attack”.
It is not unusual for state media to avoid advertising Xi’s movements ahead of time but the level of secrecy surrounding his Tibet trip suggested that “Chinese authorities do not have confidence in their legitimacy among the Tibetan people”, according to the International Campaign for Tibet, a Washington-based advocacy group.
Xi arrived in the region shortly after the 70th anniversary of a controversial agreement in May 1951 between the Communist party and the Dalai Lama, the spiritual and then political leader of Tibet. The party considers the date as the region’s “peaceful liberation”.
The Dalai Lama fled China in 1959 after a failed uprising against party rule. Beijing has viewed the 86-year-old spiritual leader as a dangerous separatist and has largely refused to engage in talks with the India-based Tibetan government-in-exile.
Tenzin Lekshay, director at the policy institute of the Tibetan government-in-exile, said on Twitter it was “high time for [Xi] to understand the true aspiration of Tibetan people and resume the dialogue to resolve the Sino-Tibetan conflict”.
Xi’s visit comes as India and China have been locked in a stand-off near their border in Ladakh, following a clash that killed 21 Indian soldiers and at least four Chinese fighters last summer.
Both countries have tens of thousands of troops and heavy military equipment stationed in the mountainous region that was previously a lightly manned area guarded by occasional patrols.
The countries have held 11 rounds of talks but have failed to agree on military disengagement.
China’s Xi makes first official visit to Tibet as tensions rise on Indian border
Xi Jinping has made his first visit to Tibet as Chinese president, affirming Beijing’s control over a region where its military buildup and policies on ethnic assimilation have drawn international criticism.
Xi arrived in the regional capital of Lhasa on Thursday, the official Xinhua News Agency wrote on social media. He inspected the operations of the Sichuan-Tibet railway during his visit, China Central Television said.
State media showed Xi being greeted by enthusiastic Tibetans and riding a train with Liu He, China’s economic czar, and Zhang Youxia, vice chairman of the Central Military Commission.
Robert Barnett, a British academic who has written about Tibet, posted videos showing the Chinese leader speaking to locals.
“All regions and people of all ethnicities in Tibet will march toward a happy life in future,” Xi says in one video. “I am full of confidence as you all are. Lastly, I will not delay your dancing. Let me say this: I wish everyone a happy life and good health.”
“Tashi Delek,” he adds, using a phrase wishing good fortune.
Earlier this year, the People’s Republic of China marked the 70th anniversary of its assertion of sovereignty over Tibet. That was part of a broader effort by Mao Zedong’s communists to consolidate control over territory historically claimed by China before decades of colonialism, war and internal strife.
The region is at the center of border tensions with India. Both sides have reorganized forces to the area after the deadliest fighting in decades last year.
Earlier this month, Indian Foreign Minister Subrahmanyam Jaishankar and Chinese counterpart Wang Yi agreed to continue discussions over the border standoff. Those talks came after India redirected at least 50,000 extra troops to the border in a historic shift toward an offensive military posture against the world’s second-biggest economy. India had roughly 200,000 troops focused on the border at the time, according to two people familiar with the matter.
China has faced criticism for its policies in Tibet, which has been subject to intense social, security and religious controls, much like its northern neighbor Xinjiang. In May, Wu Yingjie, the Communist Party chief of mostly Buddhist Tibet, lauded the progress Beijing has made developing the region, saying that “religion has been increasingly compatible with a socialist society.”
Xi told officials at a meeting on Tibet issues in August last year to “actively guide Tibetan Buddhism to adapt to socialist society, and promote the Sinofication of Tibetan Buddhism.”
“To govern a country, it’s necessary to govern the border,” Xi said at the symposium, where the party discussed policies for developing the region. “To govern the border, it’s required to stabilize Tibet first.”
Xi’s visit comes about two weeks after Tenzin Gyatso, the 14th Dalai Lama, turned 86. The choice of successor to the spiritual leader of Tibetans, who now lives in exile in India, is shaping up to be a struggle between India and the U.S. on one hand and China on the other.
Senior security officials in India, including in the prime minister’s office, have been involved in discussions about how New Delhi can influence the choice of the next Dalai Lama, Bloomberg News reported in April. China’s Foreign Ministry has said the reincarnation of the Dalai Lama is an internal affair that “allows no interference.”
In September last year, prominent Xinjiang researcher Adrian Zenz released a report alleging that Beijing was instituting a mass labor system in Tibet similar to the one it has rolled out in Xinjiang. Tibet Governor Qi Zhala said at the time that forced labor transfer “does not exist,” maintaining that the local government was focused on providing job training.
Radio Free Asia reported Thursday that security measures limiting people’s movements in public were in place in Lhasa, and that work at factories and construction sites has been halted. A ban on flying drones and kites was also in place, it said.
Tenzin Lekshay, a spokesman for the Tibet government in exile in northern India, wrote in a tweet that Xi should “understand the true aspiration of Tibetan people and resume the dialogue to resolve the Sino-Tibetan conflict.”
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Thermal coal prices soar as demand for electricity rebounds
Supply disruptions, a drought in China and rebounding electricity demand have fired up the market for thermal coal, making the world’s least liked commodity one of this year’s best-performing assets.
Since the start of the year, the price of high energy Australia coal — the benchmark for the vast Asian market — has climbed 80 per cent to almost $146 a tonne, its highest level in more than a decade.
Its South African equivalent is also trading at its highest level in more than 10 years, after rising 44 per cent in 2021 according to the latest weekly assessment by commodity price provider Argus.
That puts the coal benchmarks ahead of two of this year’s best performing asset classes: real estate, which is up 28 per cent, and financial stocks, up 25 per cent. Only Brent crude, up 44 per cent, boasts comparable gains.
The resurgence of thermal coal, which is burnt in power stations to generate electricity, highlights the difficulties governments face as they try to make the switch to cleaner forms of energy.
Even though renewables such as wind and solar are growing rapidly they are struggling to keep pace with rising demand for electricity and power, leaving fossil fuels to fill the gap.
Several factors linked have combined to drive up prices, according to traders and analysts.
“Price increases have been primarily driven by robust demand from China, with Chinese buyers willing to secure material at highest prices,” said Dmitry Popov, senior thermal coal analyst at CRU, a consultancy.
A drought earlier this year in southern China, which knocked out hydroelectric dams and boosted demand for coal, has played a major role in the commodity’s turbocharged run.
China has also struggled to boost domestic supply to meet the increased demand due tough safety rules that have crimped production volumes.
At the same time output from Indonesia, China’s biggest overseas supplier of coal, has been hampered by persistent rainfall, while rail and port constraints have affected shipments from Russia and South Africa, two other key coal producers.
China has also been unable to buy Australia coal because of a ban, while surging natural gas prices have prompted some utility companies in Japan and Europe to switch to coal, further tightening the market.
“I have never seen China under this sort of pressure before,” said Tom Price, head of commodities strategy at Liberum. “Hydro down, local production struggling and key import options just not there.”
All this has come as electricity demand has picked up as Covid-related lockdowns have eased.
After falling by around 1 per cent in 2020, global electricity demand is set to grow by close to 5 per cent in 2021, according to the International Energy Agency, and by 4 per cent in 2022.
“While renewable energy sources are expected to continue to grow rapidly, they will only be able to serve around half of the net demand increase in 2021 and 2022,” the IEA said in its latest Electricity Market Report.
As a result, the Paris-based agency reckons coal-fired electricity will increase by almost 5 per cent this year to exceed pre-pandemic levels and grow by a further 3 per cent in 2022 when it could reach a record high.
Still, not everyone believes high prices will hold. Fitch Solutions predicts prices will peak later this year as Beijing releases coal from its strategic stockpiles and orders miners to increase production. In additional fossil power generation in China typically peaks in July and August before falling sharply.
“Consequently, we continue to expect a slowdown in domestic thermal coal demand by the start of September,” said Popov.
Looking further ahead, the big question for thermal coal is whether environmental polices will result in demand weakening more quickly than supply, as bank and insurers refuse to fund new projects.
“I expect supply to fall faster than demand,” said Price at Liberum, who thinks China and India will continue to buy coal in the export market for the next decade. “It is a super tight market. It’s not going to crash in a heap.”
Bets on electric vehicles light up lithium miners and battery makers
Investors are betting that the rise of electric cars will drive a period of rapid growth for lithium miners and battery producers.
Sales of electric cars have surged in Europe and China this year, boosting the outlook for the battery industry. The world’s largest carmakers have pledged to spend billions developing new models. Meanwhile the EU said last week it might ban petrol and diesel cars by 2035.
Volkswagen, the world’s largest carmaker, said its sales of electric cars rose 165 per cent in the first half of the year; China’s BYD reported a 154 per cent increase.
Prices for lithium carbonate, a key material for electric car batteries, have almost doubled over the past year, according to Benchmark Mineral Intelligence.
“We believe that a transformational bull market is under way for speciality metals, as the green revolution gains pace and the ‘green recovery’ from the Covid-19 crisis offers the sector a boost from stimulus and regulation,” said fund managers at Baker Steel Capital Managers.
Shares in Ganfeng Lithium, China’s largest producer of the battery material, have risen 98 per cent this year, giving the company a value of $42bn, which makes it the world’s largest listed lithium miner. The Xinyu-based company has been highly acquisitive, investing in lithium assets in Mali, Mexico, China and Argentina this year.
Shares in CATL, the world’s largest battery maker, have gained almost 38 per cent this year, lifting its market value to $200bn — $50bn more than VW.
“If you look at all the expansion plans for the battery makers and OEMs [carmakers] you have to be prepared,” said Wang Xiaoshen, Ganfeng’s chief executive, in an interview with the Financial Times. “The world needs all kinds of lithium resources.”
Wang said the lithium market faced the risks of supply lagging behind demand over the next couple of years because new mining projects could face delays. That could limit carmakers’ ability to meet their ambitious targets for EVs, he said.
“It looks like it [the market] might be balanced — but if it’s balanced, it will be a very tight balance,” he said.
Investor enthusiasm for batteries has prompted a number of battery technology start-ups to list on the stock exchange via reverse mergers with special acquisition vehicles, known as SPACs.
This month Singapore-based SES, which is developing a more powerful lithium-metal battery, said it would list on the New York Stock exchange via a combination with Ivanhoe Capital Acquisition Corp.
Still, rising raw material prices will translate into higher production costs for lithium-ion batteries, making electric cars and energy storage more expensive.
Steven Meersman, co-founder of UK battery start-up Zenobe Energy, said higher battery prices were causing some people to delay energy storage projects, which use large lithium-ion batteries to store energy for electricity grids.
“Battery prices are going up a lot,” he said. “We have a perfect storm happening at the moment, with what’s going on in the shipping sector, getting more expensive, and commodities . . . the supply chain is waking up from its slumber post Covid.”
The higher prices have created an incentive to re-use old lithium-ion batteries which have lost some capacity but can still be used in energy storage applications, he said.
Security concerns are weakening China’s place in the world
This article is an on-site version of our Trade Secrets newsletter. Sign up here to get the newsletter sent straight to your inbox every Monday to Thursday
Hello from Italy, where I am in quarantine for five days before visiting family. Rome is trying to keep in check the Delta variant of coronavirus that is threatening the economic recovery of many countries around Europe.
We’re not the only ones suffering from a lack of freedom as a result of the pandemic. Today’s main story looks at how Chinese outward investment has rapidly weakened, limited by increased scrutiny both at home and investment destinations. The trend is in stark contrast with expectations of a spending spree, with Chinese groups feasting on distressed companies in advanced economies. It bucks the strong rebound in global mergers and acquisitions too.
The foreign, and homegrown, fears behind FDI’s fall
China’s role in global investment has diminished dramatically.
Its greenfield foreign projects in the 12 months to May almost halved compared with the previous 12 months.
This is much worse than the almost 30 per cent drop across the globe over the same time, with falls of about 25 per cent for the UK, the US and Europe’s leading economies.
The scale of the decline means Chinese companies dropped from being the sixth-biggest investors in greenfield projects to ninth place in the most recent 12 months, overtaken by Switzerland, the Netherlands and Spain.
Outbound Chinese mergers and acquisitions fell too. In the year to date, the number plunged 37 per cent compared with the same period in 2019, while the value of the deals stagnated.
This is against a backdrop in which M&A activity has surprised many by picking up, pushing the value of deals to a multiyear high.
China was the only major global economy to expand last year. So what exactly is going on?
One part of the story is foreign governments’ security concerns.
The UK government, for instance, recently intervened on the acquisition of the country’s UK’s largest silicon wafer manufacturer. Canada and Australia blocked the takeover of two construction companies. And Italy and Germany vetoed a Chinese acquisition of a national semiconductor company and a satellite group respectively.
Tougher investment screening frameworks are already having an impact — including the UK National Security and Investment Act, which is set to officially become law later this year. “The UK Government is reserving the ability to call in for review, once the rules are operational, any deals that have completed since November 2020, when the bill was published by the UK government,” said Sunny Mann, partner at Baker McKenzie. “This has prompted a number of acquirers to already start filing their proposed investments voluntarily with the newly formed investment screening unit.”
The UK’s step follows similar laws in the EU and Australia. Earlier in the year, US president Joe Biden signed an executive order to prohibit investments in 59 Chinese companies on security grounds, including Huawei, the telecoms equipment manufacturer, and Semiconductor Manufacturing International Corporation, China’s largest chipmaker.
The trend is well recorded by the recent annual report by Unctad, which tracks global investment and counted 50 restrictive measures in 2020, against 21 in the previous year, largely “driven by national security concerns over FDI in sensitive industries”. Many were introduced by developed economies.
But this is far from the only cause. There are factors closer to home too.
Thilo Hanemann, partner at Rhodium Group, a think-tank, said that while greater regulatory and political scrutiny abroad was a factor, “the fall of Chinese outbound investment since 2017 is largely a Chinese story”.
“Beijing reimposed capital controls as outflows grew too large for its comfort,” he said. The crackdown on large private conglomerates, such as Alibaba, tighter liquidity in the market, and concerns about access to sensitive personal data have become additional drivers in the past two years.
The US-China Investment Project, a think-tank, noted in a recent report that “throughout the pandemic, Beijing prioritized stability, refusing to loosen restrictions on outbound investment by private companies despite a massive trade surplus and upward pressure on its currency”.
“In China, the balance that leaders strike between domestic financial stability and openness to the outside world will shape the investment landscape,” the report said.
Deals so far this year are down more than four-fifths on the level seen in 2016. Hanemann said that a return to those high levels was “unlikely in the near future”.
Max J Zenglein, chief economist at Mercator Institute for China Studies, a think-tank, agreed that a pick-up was unlikely in the coming months. While the general interest in gaining access to foreign technology and securing market access had not changed, “the changing political circumstances require some adjustments”. As a result, he expected the structure of Chinese FDI would change, for example with more venture capital investments.
China could also see “more onshoring of critical technology and R&D” as “absorbing global value chains into China can be seen as a direct response to increased economic defence measures complicating Chinese investments abroad”, said Zenglein.
The trend towards shifting investment back home has been catalysed by the pandemic. In China, at least, we’re increasingly sure it will outlive it.
Brussels has, somewhat unsurprisingly, said it will not renegotiate the Brexit deal. That refusal came after the UK’s Brexit minister Lord David Frost issued a paper calling for the so-called Northern Ireland protocol agreed with the EU in 2019 to be renegotiated. Philip Stephens thinks the Johnson government has acted in bad faith, taking a stance it knows the EU cannot accept.
Tesla has agreed to buy nickel for its batteries from BHP, the world’s largest miner, as it looks to lock up supplies of the metal not controlled by China.
Reuters reports that the meat industry is warning that UK supply chains are now at risk of failing due to pandemic-related labour shortages.
As Beijing and Moscow bolster diplomatic ties, the city of Blagoveshchensk on the Chinese-Russian border is pursuing a trade and tourism boost (Nikkei, $, subscription required). Taiwan Semiconductor Manufacturing Company, the world’s biggest made-to-order chipmaker, may put its first chip plant in Japan into operation as early as 2023 (Nikkei, $). The aim is for it to supply electronics group Sony.
The Peterson Institute for International Economics has an interesting critique of the International Trade Commission’s assessment of some of the agreements negotiated under the now expired Trade Promotion Authority. The assessment claims the US economy is 0.5 per cent bigger as a result of the deals. Claire Jones
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