Import extravaganza highlights China’s promise and challenges

Visitors crowd into the China International Import Expo. (Getty Images)
Updated 08 November 2018
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Import extravaganza highlights China’s promise and challenges

  • Beijing plans China-centered world trading networks
  • Critics say foreign firms squeezed out of technology

SHANGHAI: Visitors to a vast trade fair meant to rebrand China as a welcoming import market could sip Moroccan wine, ogle Italian yachts and watch a Japanese industrial robot play ping-pong.
The communist government’s marketing extravaganza involving 3,600 companies from 152 countries showcases the promise and challenges of China’s growing, state-dominated and intensely competitive markets.
At a stand for German robot maker Jungheinrich, spectators watched a bright yellow automated forklift shift bulky cartons. A manager, Christian Wurzinger, said China accounts for one-third of its global sales but the Hamburg company wants to expand beyond factories and logistics into health and other industries.
The expo gives “very good access to Chinese companies, especially outside big cities,” said Wurzinger. “We are lucky to be here.”
Still, he said Jungheinrich already faces Chinese competition: “There are plenty of local Chinese manufacturers with pretty good technology, to be honest.”
The China International Import Expo is part of efforts to develop China-centered world trading networks while resisting pressure to roll back industry plans that Washington, Europe, Japan and other governments say violate its market-opening obligations.
China already is the No. 1 market for most of its Asian neighbors. But a big share of those imports is iron ore, computer chips and other materials that are turned into smartphones, toys and other goods for export.
That is changing as communist leaders promote consumer spending as part of efforts to develop self-sustaining economic growth and reduce reliance on trade and investment. That holds out the promise of a market of 1.4 billion consumers, even if incomes are a fraction of those in developed countries.
On the expo’s opening day, President Xi Jinping promised Monday to boost imports, cut costs for importers, protect patents and improve consumer spending power. But he did not address US and European complaints about technology policy that prompted President Donald Trump to impose penalty tariffs of up to 25 percent on $250 billion of Chinese goods.
Importers into China must contend with a thicket of restrictions and, in autos and other industries, pressure to help develop potential Chinese competitors as the price of market access.
Tarvand Saffron, an Iranian exporter of saffron, was invited to the expo by a Chinese state-owned company. But export manager Amir Reza Jalalian said food regulations bar sales of its product in China.
“Maybe in the future we can import saffron,” Jalalian said, as visitors crowded around the company’s stand to smell the crimson spice.
Business groups complain that while Beijing increases imports to serve its factories and consumers, foreign companies are being squeezed out of technology and other promising industries.
Exhibitors at the expo ranged from General Motors and Lego toys to Brazilian shoemakers, a Korean dumpling brand and Uganda’s National Enterprise Corp., an exporter of coffee and honey.
Visitors crowded around a stand for Japan’s Omron Corp. to watch an industrial robot hit a ping-pong ball back and forth with a human opponent.
Global auto, aerospace and technology brands already are well known in China, suggesting many were at the expo not to sell but to nurture relations with the Communist Party by showing support for Xi’s trade initiative.
“For the bulk of China’s imports, these expos don’t make much difference,” said Gareth Leather of Capital Economics. “For companies from smaller, developing countries, probably at the margins they do make a bit of a difference.”
At a stand promoting Polish poultry, visitors lined up for bowls of chicken in cream sauce made by cooks led by celebrity chef Artur Moroz.
Nearby, visitors sipped red and white wines from La Ferme Rouge, a winery in Morocco in North Africa. It produces exclusive batches under the labels of luxury hotels in Morocco and wants to market that service to high-end Chinese hotels and restaurants.
“It’s a big opportunity for us to enter this part of the market,” said Rita Sourelah, a manager.
The expo also highlighted the blurring of lines as Chinese companies acquire US and European brands and technology to sell at home.
Weichai Group, a Chinese shipbuilder, displayed a luxury cabin cruiser made by Italy’s Ferretti, in which Weichai bought a 75 percent stake in 2012.
Other hybrid importers included Sweden’s Volvo Cars, a unit of Chinese automaker Geely Holding; General Electric Appliances, acquired by China’s Haier Group in 2016, and California-based solar supplier MiaSole, part of Beijing-based Hanergy Group.


Undersea gas fires Egypt’s regional energy dreams

Updated 18 November 2018
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Undersea gas fires Egypt’s regional energy dreams

  • In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast
  • Gas production has now hit 184 million cubic meters a day

CAIRO: Egypt is looking to use its vast, newly tapped undersea gas reserves to establish itself as a key energy exporter and revive its flagging economy.
Encouraged by the discovery of huge natural gas fields in the Mediterranean, Cairo has in recent months signed gas deals with neighboring Israel as well as Cyprus and Greece.
Former oil minister Osama Kamal said Egypt has a “plan to become a regional energy hub.”
In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast, including the vast Zohr field, inaugurated with great ceremony by President Abdel Fattah El-Sisi.
Discovered in 2015 by Italian energy giant Eni, Zohr is the biggest gas field so far found in Egyptian waters.
The immediate upshot has been that since September, the Arab world’s most populous country has been able to halt imports of liquified natural gas, which last year cost it some $220 million (190 million euros) per month.
Coming after a financial crisis that pushed Cairo in 2016 to take a $12 billion loan from the International Monetary Fund, the gas has been a lifeline.
Egypt’s budget deficit, which hit 10.9 percent of GDP in the financial year 2016-17, has since fallen to 9.8 percent.
Gas production has now hit 184 million cubic meters a day.
Having met its own needs, Cairo is looking to kickstart exports and extend its regional influence.
It has signed deals to import gas from neighboring countries for liquefaction at installations on its Mediterranean coast, ready for re-export to Europe.
In September, Egypt signed a deal with Cyprus to build a pipeline to pump Cypriot gas hundreds of kilometers to Egypt for processing before being exported to Europe.
That came amid tensions between Egypt and Turkey — which has supported the Muslim Brotherhood, seen by Cairo as a terrorist organization, and has troops in breakaway northern Cyprus.
In February, Egypt, the only Arab state apart from Jordan to have a peace deal with Israel, inked an agreement to import gas from the Jewish state’s Tamar and Leviathan reservoirs.
A US-Israeli consortium leading the development of Israel’s offshore gas reserves in September announced it would buy part of a disused pipeline connecting the Israeli coastal city of Ashkelon with the northern Sinai peninsula.
That would bypass a land pipeline across the Sinai that was repeatedly targeted by jihadists in 2011 and 2012.
The $15-billion deal will see some 64 billion cubic meters of gas pumped in from the Israeli fields over 10 years.
Independent news website Mada Masr reported that Egypt’s General Intelligence Service is the majority shareholder in East Gas, which will earn the largest part of the profits from the import of Israeli gas and its resale to the Egyptian state.
Kamal said he sees “no problem” in that, adding that the agency has held a majority stake in the firm since 2003.
“That guarantees the protection of Egyptian interests,” he said.
Ezzat Abdel Aziz, former president of the Egyptian Atomic Energy Agency, said the projects were “of vital importance for Egypt” and would have direct returns for the Egyptian economy.
They “confirm the strategic importance of Egypt and allow it to take advantage of its location between producing countries in the east and consuming countries of the West,” he said.
The Egyptian state is also hoping to rake in billions of dollars in revenues from petro-chemicals.
Its regional energy ambitions are “not limited to the natural gas sector, but also involve major projects in the petroleum and petrochemical sectors,” said former oil minister Kamal.
Minister of Petroleum and Mineral Resources Tarek El Molla recently announced a deal to expand the Midor refinery in the Egyptian capital to boost its output by some 60 percent.
On top of that, the new Mostorod refinery in northern Cairo is set to produce 4.4 million tons of petroleum products a year after it comes online by next May, according to Ahmed Heikal, president of Egyptian investment firm Citadel Capital.
That alone will save the state $2 billion a year on petrochemical imports, which last year cost it some $5.2 billion.
Egypt is also investing in a processing plant on the Red Sea that could produce some four million tons of petro-products a year — as well as creating 3,000 jobs in a country where unemployment is rife.