China’s premier urges US to ‘act rationally’ over trade

Premier Li Keqiang, above, made no mention of a possible Chinese response in the event US President Donald Trump raises import barriers over trade complaints against Beijing, but other officials say the government is ready to act. (AP)
Updated 20 March 2018
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China’s premier urges US to ‘act rationally’ over trade

BEIJING: Chinese Premier Li Keqiang appealed to Washington on Tuesday to “act rationally” and avoid disrupting trade over steel, technology and other disputes, promising that Beijing will “open even wider” to imports and investment.
“No one will emerge a winner from a trade war,” said Li, the No. 2 Chinese leader, at a news conference held during the meeting of China’s ceremonial legislature.
Li made no mention of a possible Chinese response in the event US President Donald Trump raises import barriers over trade complaints against Beijing, but other officials say President Xi Jinping’s government is ready to act.
Trump’s government has raised import duties on Chinese-made washing machines and other goods and is investigating whether Beijing pressures foreign companies to hand over technology, which might lead to trade penalties. That could invite Chinese retaliation.
“What we hope is for us to act rationally rather than being led by emotions,” the premier said. “We don’t want to see a trade war.”
Commerce Minister Zhong Shan said March 11 that China will “resolutely defend” its interests but gave no details. Business groups have suggested Beijing might target US exports of jetliners, soybeans and other goods for which China is a major market.
Asked whether Beijing might use its large holdings of US government debt as leverage, the premier said its investments are based on market principles and “China will remain a responsible long-term investor.”
Li promised more market-opening and other reforms as Xi’s government tries to make its cooling, state-dominated economy more productive. He said Beijing will make it easier to start a business and will open more industries to foreign and private competition.
The ruling Communist Party promised in 2013 to give a bigger role to market forces and entrepreneurs who generate most of China’s new jobs and wealth. Reform advocates complain they are moving too slowly.
Private sector analysts say Xi, who took power in 2012, might accelerate reform after focusing for his first five-year term as party leader on cementing his status as China’s most dominant figure since at least the 1980s.
“If there is one thing that will be different from the past, that will be that China will open even wider,” said Li.
Beijing plans to “further bring down overall tariffs,” with “zero tariffs for drugs, especially much-needed anti-cancer drugs,” the premier said.
Li repeated a promise he made at the March 5 opening of the legislature to “fully open the manufacturing sector” to foreign competitors.
“There will be no mandatory requirement for technology transfers and intellectual property rights will be better protected,” he said.
The government has yet to say how that might change conditions for automakers and other manufacturers that are required to work through Chinese partners, which requires them to share technology with potential competitors.
In a sign of Li’s reduced status as President Xi Jinping amasses power, the premier was flanked by eight newly promoted economic officials, in contrast to previous years when he appeared alone at the annual news conference.
They included Liu He, a Harvard-trained Xi adviser who was named a vice premier Monday and has told foreign businesspeople he will oversee economic reform. Neither Liu nor any of the other officials spoke at the event.
The premier traditionally is China’s top economic official but Xi has stripped Li of his most prominent duties by appointing himself to lead ruling party bodies that oversee economic reform and finance policy.


Abu Dhabi’s Mubadala halts Abraaj investment deal talks

Updated 1 min 27 sec ago
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Abu Dhabi’s Mubadala halts Abraaj investment deal talks

ABU DHABI: Abu Dhabi state investor Mubadala has halted talks to buy Abraaj’s investment business, two sources said, in a blow to the private equity firm which is facing an investigation by investors into how it used some of their money.
Dubai-based Abraaj, which denies any wrongdoing, is considering selling some or all of the unit following a row with four investors, including the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corporation, over how it used their money in a $1 billion health care fund.
Mubadala, which has more than $200 billion in assets, and Abraaj held initial talks a month ago, but these did not progress, one of the sources said.
Abraaj said it does not comment on market speculation, while Mubadala declined to comment on Monday.
“We remain focused on working collaboratively with our investors and continuing to execute on the re-organization of our firm to pave the way for continued long-term growth and value creation,” Abraaj said in an email to Reuters.
Investment banks have also approached international private equity firms to look at Abraaj’s investment arm, but some are holding off until after an investigation by forensic accounting experts Ankura Consulting, which has been commissioned by the investors, two other sources said.
Other potential buyers include Abu Dhabi Financial Group (ADFG), sources said last month.
ADFG, which manages $6.5 billion in assets, declined to comment about its interest in Abraaj’s investment business. The Gates Foundation and the IFC, the World Bank’s private finance arm, have both declined to comment on the row.
SHAKE-UP
The fund dispute, which erupted this year has jolted Abraaj, a top investor in the developing world founded in 2002 by Arif Naqvi, who in late February handed the running of the fund to two co-chief executives.
Abraaj has also shaken up its management, suspended new investments, freed up large investors from millions of dollars in capital commitments and is reviewing its corporate structure.
It was managing $13.6 billion before deciding to return $3 billion to investors and putting a new $6 billion fund on hold.
Naqvi remains CEO of Abraaj Holdings, a significant shareholder of Abraaj Investment Management Ltd, the fund management business. Sources say he has spoken to senior bankers about various options for the firm, although Abraaj has not formally hired an adviser to sell the business.