Beijing appeals to US for fairness under investment law

The law signed Monday by President Donald Trump expands the authority of a government security panel to scrutinize foreign investments. (AP)
Updated 14 August 2018
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Beijing appeals to US for fairness under investment law

  • The law signed Monday by Donald Trump expands the authority of a government security panel to scrutinize foreign investments
  • Other governments including Germany and Britain also are uneasy about rising Chinese investment

BEIJING: China appealed to Washington on Tuesday not to misuse security concerns to hamper business activity after President Donald Trump signed a law that expands the jurisdiction of an investment review panel.
The law signed Monday by Trump expands the authority of a government security panel to scrutinize foreign investments. It was prompted by complaints Chinese companies were taking advantage of gaps in US law and improperly obtaining technology and possibly sensitive information.
“The United States should treat Chinese investors objectively and fairly and avoid making a national security review an obstacle to Chinese-US enterprises’ investment cooperation,” said a Commerce Ministry statement.
Other governments including Germany and Britain also are uneasy about rising Chinese investment, the communist Beijing government’s behind-the-scenes role and acquisitions of technology that might have military uses or is seen as an important economic asset.
The US security panel, known as CFIUS, reviews foreign acquisitions of American assets for possible security threats. Critics say legislation governing its powers, last updated a decade ago, was antiquated and failed to take into account tactics used by some Chinese companies.
The legislation signed by Trump expands CFIUS jurisdiction to cover entities that might own a minority stake in a company that makes a purchase. It also gives CFIUS authority to prevent loss of sensitive personal information.
The legislation also gives CFIUS authority to initiate its own investigations instead of waiting for a buyer to seek approval.
Lawmakers who proposed the legislation last year expressed concern that Chinese companies were using joint ventures with foreign companies or minority stakes in ventures to gain access to sensitive technology.
Last month, a proposed Chinese purchase of a German power company was blocked when a state-owned utility bought the company instead. German news reports said Berlin also planned to block a Chinese acquisition of an engineering company but authorities said later that bid was withdrawn.
Also last month, Britain’s government announced a proposal to expand its powers to block foreign acquisitions that pose security concerns. It would apply to deals in which a foreign buyer acquires as little as 25 percent of a company.
Germany and other governments also complain their companies are barred from buying most Chinese assets at a time when China’s companies are in the midst of a multibillion-dollar global acquisition spree.


Saudi energy minister recommends driving down oil inventories, says supply plentiful

Updated 3 min 55 sec ago
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Saudi energy minister recommends driving down oil inventories, says supply plentiful

  • Oil supplies were sufficient and stockpiles were still rising despite massive output drops from Iran and Venezuela
  • Producer nations discussed how to stabilise a volatile oil market amid rising US-Iran tensions in the Gulf, which threaten to disrupt global supply

JEDDAH: Saudi Arabia’s Energy Minister Khalid Al-Falih said on Sunday he recommended “gently” driving oil inventories down at a time of plentiful global supplies and that OPEC would not make hasty decisions about output ahead of a June meeting.
“Overall, the market is in a delicate situation,” Falih told reporters before a ministerial panel meeting of top OPEC and non-OPEC oil producers, including Saudi Arabia and Russia.
While there is concern about supply disruptions, inventories are rising and the market should see a “comfortable supply situation in the weeks and months to come,” he said.
The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is de facto leader, would have more data at its next meeting in late June to help it reach the best decision on output, Falih said.
“It is critical that we don’t make hasty decisions – given the conflicting data, the complexity involved, and the evolving situation,” he said, describing the outlook as “quite foggy” due in part to a trade dispute between the United States and China.
“But I want to assure you that our group has always done the right thing in the interests of both consumers and producers; and we will continue to do so,” he added.
OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.
Russian Energy Minister Alexander Novak told reporters that different options were available for the output deal, including a rise in production in the second half of the year.
The energy minister of the United Arab Emirates, Suhail Al-Mazrouei, said oil producers were capable of filling any gap in the oil market and that relaxing supply cuts was not “the right decision.”
Mazrouei said the UAE did not want to see a rise in inventories that could lead to a price collapse and that OPEC would act wisely to maintain sustainable market balance.
“As UAE we see that the job is not done yet, there is still a period of time to look at the supply and demand and we don’t see any need to alter the agreement in the meantime,” he said.
US crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, data from the government’s Energy Information Administration showed on Wednesday.
DELICATE BALANCE
Saudi Arabia sees no need to boost production quickly now, with oil at around $70 a barrel, as it fears a price crash and a build-up in inventories, OPEC sources said, adding that Russia wants to increase supply after June.
The United States, not a member of OPEC+ but a close ally of Riyadh, wants the group to boost output to bring oil prices down.
Falih has to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh’s budget needs, while pleasing Moscow to ensure Russia remains in the OPEC+ pact, and being responsive to the concerns of the United States and the rest of OPEC+, the sources said earlier.
Sunday’s meeting of the ministerial panel, known as the JMMC, comes amid concerns of a tight market. Iran’s oil exports are likely to drop further in May and shipments from Venezuela could fall again in coming weeks due to US sanctions.
Oil contamination also forced Russia to halt flows along the Druzhba pipeline — a key conduit for crude into Eastern Europe and Germany — in April. The suspension, as yet of unclear duration, left refiners scrambling to find supplies.
Russia’s Novak told reporters that oil supplies to Poland via the pipeline would start on Monday.
OPEC’s agreed share of the cuts is 800,000 bpd, but its actual reduction is far larger due to the production losses in Iran and Venezuela. Both are under US sanctions and exempt from the voluntary reductions under the OPEC-led deal.
REGIONAL TENSIONS
Oil prices edged lower on Friday due to demand fears amid a standoff in Sino-US trade talks, but both benchmarks ended the week higher on rising concerns over disruptions in Middle East shipments due to US-Iran political tensions.
Tensions between Saudi Arabia and Iran are running high after last week’s attacks on two Saudi oil tankers off the UAE coast and another on Saudi oil facilities inside the Kingdom.
Riyadh accused Tehran of ordering the drone strikes on oil pumping stations, for which Yemen’s Iran-aligned Houthi militia claimed responsibility. 
Saudi Arabia’s minister of state for foreign affairs said on Sunday that the Kingdom wants to avert war in the region but stands ready to respond with “all strength” following the attacks.
“Although it has not affected our supplies, such acts of terrorism are deplorable,” Falih said. “They threaten uninterrupted supplies of energy to the world and put a global economy that is already facing headwinds at further risk.”
The attacks come as the United States and Iran spar over Washington’s tightening of sanctions aimed at cutting Iranian oil exports to zero, and an increased US military presence in the Gulf over perceived Iranian threats to US interests.