Smartphone giant Xiaomi reels as US ramps up China blacklist

People walk past a Xiaomi store in Beijing on Friday as shares in the company collapsed after the US blacklisted the smartphone giant and a host of other Chinese firms. (AFP)
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Updated 16 January 2021

Smartphone giant Xiaomi reels as US ramps up China blacklist

  • US Department of Defense ‘determined to counter China’s military-civil fusion development strategy’

HONG KONG: Shares in Xiaomi collapsed on Friday after the US blacklisted the smartphone giant and a host of other Chinese firms as the Trump administration aims to cement its trade war legacy against Beijing.
Beijing hit back at the latest sanctions, accusing the US of “abusing state power” to crack down on Chinese companies “for no reason.”
The flurry of last-minute blacklistings is the coda to four years of aggressive diplomatic and trade policies toward rival China under Donald Trump.
With just six days to go before the president leaves office, US officials made a series of announcements targeting Chinese firms including state oil giant CNOOC, Xiaomi and embattled social media favorite TikTok.
Xiaomi — which overtook Apple last year to become the world’s third-largest smartphone manufacturer — was one of nine firms classified by the Pentagon as “Communist Chinese military companies.”
The Pentagon’s action means US investors will be unable to purchase Xiaomi securities and will ultimately have to divest down the line unless the order is overturned by the incoming administration of Joe Biden.
Xiaomi is one of the biggest companies to be blacklisted so far and its shares plunged more than 10 percent in Hong Kong by the close of trading Friday after the announcement. US chip giant Qualcomm is a major investor.
The smartphone maker denied having links to China’s military and said in a statement it was “reviewing the potential consequences” of the new order.
But the US Department of Defense said it was “determined to highlight and counter the People’s Republic of China’s military-civil fusion development strategy” that allowed it to access key technology and security data.
Similar actions have been made by the US against other tech firms including Huawei and chip giant SMIC, hobbling their ability to import key technology and compete internationally.
“The Trump administration has broadened the concept of national security, abused state power and repeatedly cracked down on Chinese companies for no reason,” said Chinese Foreign Ministry spokesman Zhao Lijian Friday.
“China is firmly opposed to that.”

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Xiaomi denied having links to China’s military and said in a statement it was ‘reviewing the potential consequences’ of the new order.

Trump issued an executive order in November banning Americans from investing in Chinese companies deemed to be supplying or supporting the country’s military and security apparatus, earning a sharp rebuke from Beijing.
Earlier this month the New York Stock Exchange said it was delisting three state-owned Chinese telecoms giants to comply with the order.
The Commerce Department also released a separate banned entity list on Thursday targeting companies such as CNOOC and deep-water explorer Skyrison, which develops military equipment.
That makes it extremely difficult for US firms to export products or technology to those companies without a hard-to-obtain license.
Commerce Secretary Wilbur Ross said CNOOC had been listed because of “reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarization efforts.”
“CNOOC acts a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Ross said.
Territorial disputes in the South China Sea have festered for years, with Beijing building a series of artificial islands to expand its military and commercial reach in the contested region.
“CNOOC has repeatedly harassed and threatened offshore oil and gas exploration and extraction in the South China Sea, with the goal of driving up the political risk for interested foreign partners, including Vietnam,” the Commerce Department said.
CNOOC’s share price was less affected, falling a little more than 1 percent in Hong Kong on Friday.
Meanwhile, the Commerce Department also announced new rules for trading in technology and communications equipment with “foreign adversaries” including China, Russia, Iran, North Korea, Cuba and Venezuela.
The rule will take effect in 60 days. The aim is to protect against data and national security vulnerabilities in software and hardware, and it would outline a six-month review process before any ban is implemented.
A senior administration official confirmed the new rule would apply to TikTok, the video app that Trump banned from operating in the US.


IMF chief warns pandemic leaving some countries behind

Updated 24 February 2021

IMF chief warns pandemic leaving some countries behind

WASHINGTON: The crisis caused by the pandemic is leaving many economies lagging behind, increasing the plight of the poor, a problem made worse by “uneven” access to vaccines, IMF chief Kristalina Georgieva said Wednesday.
In a message to the Group of 20 meeting on Friday Georgieva urged governments to increase vaccine distribution, ensuring Covid-19 is brought under control.
“The economic arguments for coordinated action are overwhelming,” she said in a blog post.
“Faster progress in ending the health crisis could raise global income cumulatively by $9 trillion over 2020-25. That would benefit all countries.”
She said that should include financing for vaccinations, reallocation of excess supply to countries with a shortage, and scaling up of production.
The global pandemic death toll is approaching 2.5 million, according to Johns Hopkins University, and the shutdowns forced to control infections have devastated economies.
And while vaccine rollouts are raising hopes for a recovery this year, the IMF forecasts job losses in the G20 alone to total more than 25 million this year.
By the end of 2022, emerging market and developing nations — excluding China — will see per capital incomes 22 percent below pre-crisis levels, compared to just 13 percent lower for advanced economies, which will throw millions more into extreme poverty, Georgieva warned.
“That is why we need much stronger international collaboration to accelerate the vaccine rollout in poorer countries,” she said.
G20 finance ministers and central bank chiefs led by Rome will meet by videoconference to discuss the state of the recovery and how best to attack the problem.
The Washington-based crisis lender estimated more than half of the world’s 110 emerging and developing countries will see their incomes fall further behind advanced economies through the end of next year.
And the virus-driven economic crisis also will widen income gaps within developing nations, especially as millions of children are still facing disruptions to education.
“Allowing them to become a lost generation would be an unforgiveable mistake. It would also deepen the long-term economic scars of the crisis,” she warned.


Moody’s revises up US and emerging markets forecasts, cuts Europe

Updated 24 February 2021

Moody’s revises up US and emerging markets forecasts, cuts Europe

  • Emerging market growth moved up to 7 percent from 6.1 percent, led by upward revisions to China, India and Mexico

LONDON:Credit ratings firm Moody’s revised upwards on Wednesday its economic forecasts for the year for the United States and emerging markets, but cut Europe’s following the region’s tough COVID-19 lockdowns.
Moody’s pushed up its US growth forecast to 4.7 percent, from the 4.2 percent it had expected in November.
Emerging market growth moved up to 7 percent from 6.1 percent, led by upward revisions to China, India and Mexico, while the euro zone and Britain saw their respective projections cut to 3.7 percent and 4.7 percent, from 4.7 percent and 5.2 percent previously.
“The effects on individual businesses, sectors and regions continue to be uneven, and the COVID-19 crisis will endure as a challenge to the world’s economies well beyond our two-year forecast horizon,” Moody’s said in a report on its new forecasts.

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SoftBank-backed Berkshire Grey to go public via $2.7bn SPAC deal

Updated 24 February 2021

SoftBank-backed Berkshire Grey to go public via $2.7bn SPAC deal

SoftBank-backed robotics firm Berkshire Grey said on Wednesday it has agreed to go public through a merger with blank-check firm Revolution Acceleration Acquisition Corp. in a deal valuing the equity of the combined company at $2.7 billion.

Food and drinks group Agthia eyes acquisitions to become big regional player

Updated 24 February 2021

Food and drinks group Agthia eyes acquisitions to become big regional player

  • Agthia’s products include bottled water, dairy products and baked goods

DUBAI: Abu Dhabi-listed food and drinks group Agthia Group is looking into making more acquisitions to turn the company into one of the region’s top players in the food and beverage industry, its chief executive said on Tuesday.
After doing a number of deals already Agthia has a “pipeline of ideas” for additional targets to strengthen its position at home and abroad.
“Certainly we want to be a big regional player in the F&B business and more in the consumer space, so we want to move into that branded space where we can start building master brands across the region,” CEO Alan Smith said.
Agthia’s products include bottled water, dairy products and baked goods.
Smith did not rule out entering new markets, though he said a number of factors would come into play, including whether the company could enter at a large enough scale.
He said Agthia has had conversations with Israeli parties on potential cooperation, but no agreements have been finalized.
Smith also said Agthia had some sub-scale assets that the company was currently reviewing.
Abu Dhabi state-owned holding company ADQ, the corporate structure where Agthia sits, in November signed an agreement to acquire an indirect 45% stake in Louis Dreyfus Co., the first outside investment in the family-owned commodity merchant’s 169-year-old history.
“To be honest the Dreyfus transaction is fairly recent and I think we have had some initial conversations just in terms of the commodities space. But at the moment there’s no plans to have a conversation with them about (consumer packaged goods) products.”
Smith said Agithia, which reported a fall in net profit for 2020, had a strong balance sheet and was comfortable with its debt levels. It has no current plans to tap international debt markets, but may need to in the future, he said.


Britain’s Heathrow sinks to $2.8bn loss during pandemic

Updated 24 February 2021

Britain’s Heathrow sinks to $2.8bn loss during pandemic

  • Heathrow called on the government to agree a common international travel standard to allow passengers to start flying again in the summer

LONDON: Britain’s Heathrow Airport plunged to a 2 billion pound ($2.8 billion) annual loss after passenger numbers collapsed to levels last seen in the 1970s during the pandemic.
Heathrow called on the government to agree a common international travel standard to allow passengers to start flying again in the summer and to provide business tax breaks for airports to help them ride out the crisis.
The airport, west of London, is hopeful that travel markets will reopen from mid-May after a government announcement on easing lockdown on Monday.
Still Britain’s biggest airport, Heathrow last year lost its title as the busiest in Europe to Paris as its flight schedules contracted more than its rival’s.
The airport said on Wednesday that during 2020 passenger numbers shrunk 73% to 22 million people, with half of those people having traveled during January and February before COVID-19 shut down global travel.
The airport sunk to a 2 billion loss before tax on revenues which were down 62% to 1.18 billion pounds, but Heathrow said it had 3.9 billion pounds of liquidity and that could keep it going until 2023.
The airport is owned by Spain’s Ferrovial, the Qatar Investment Authority and China Investment Corp, among others.