Saudi Arabia may seek funding in Chinese yuan

A handout picture by the Saudi Royal Palace on August 24, 2017 shows Saudi Crown Prince Mohammed bin Salman (R) meeting with the China's First Vice- Premier Zhang Gaoli in Jeddah. Saudi Arabia is considering funding itself partly in Chinese yuan, a senior Saudi official said on Thursday. (Saudi Royal Palace / Bandar Al-Jaloud via AFP)
Updated 25 August 2017
0

Saudi Arabia may seek funding in Chinese yuan

JEDDAH: Saudi Arabia is willing to consider funding itself partly in Chinese yuan a senior Saudi official said on Thursday, raising the possibility of closer financial ties between the two countries.
The Saudi government has started borrowing tens of billions of dollars abroad in the past year to cover a big budget deficit caused by low oil prices, but its foreign bond issues and loans have been denominated entirely in US currency.
Obtaining some funds offers more financial flexibility and would mark a success for China, the biggest market for Saudi oil, in its drive to make the yuan a top international currency.
“One of our main objectives is to diversify the funding basis of Saudi Arabia,” Vice Minister of Economy and Planning Mohammed Al-Tuwaijri told a Saudi-Chinese conference in Jeddah.
“We will do that through access to investors or bodies of liquidity in the markets. China is by far one of the top markets. We will also access other technical markets in terms of unique funding opportunities, private placements, panda bonds and others.”
Tuwaijri added: “We will be very willing to consider funding in renminbi and other Chinese products, and Industrial and Commercial Bank of China and other divisions have shown interest for us to do that.”
Panda bonds are yuan-denominated bonds from non-Chinese issuers which are sold within China. An Liyan, chief executive of ICBC International, an arm of ICBC, the biggest Chinese bank, told the conference that her bank was willing to sponsor Saudi issues of panda bonds.
Tuwaijri said Riyadh was interested in raising money abroad not just to cover its budget deficit but also, more importantly, to finance major investment projects that would expand its economy and create jobs.
“Ideally, we would be funding through project finance and bond markets and other means,” he said.
Saudi Energy Minister Khalid Al-Falih told Reuters on the sidelines of the conference that Saudi Arabia and China planned to establish a $20 billion investment fund on a 50:50 basis.
“It is preliminary at this stage but the commitment from the top is there,” Falih said. He said the fund would invest in sectors such as infrastructure, energy, mining and materials, but did not give further details of its strategy.
China has announced plans to establish such joint investment funds around the world in recent years as a way to cement bilateral economic ties. In December 2015 Beijing said it would establish a $10 billion fund with the United Arab Emirates, and last October a plan for a fund with France was revealed.
The Jeddah conference followed a visit to China by King Salman in March during which as much as $65 billion of business deals were signed in sectors including oil refining, petrochemicals, light manufacturing and electronics.
Falih said on Thursday that he expected 11 business deals worth about $20 billion to be signed with China this week. He did not give details; some of the deals may be more detailed versions of agreements reached on the Asian tour, and some may be memorandums of understanding rather than concrete projects.
Saudi Arabia is keen to attract Chinese investment to new industries, such as manufacturing and tourism, that it hopes to develop as part of efforts to diversify its economy beyond oil exports.
But Riyadh is also eager to boost the profits of its main sovereign wealth fund, the Public Investment Fund, which is believed to have around $180 billion of assets. The PIF is looking at investment opportunities in China’s shipping and transport systems and other infrastructure, Tuwaijri said.


Huawei in public test as it unveils sanction-hit phone

Updated 19 September 2019

Huawei in public test as it unveils sanction-hit phone

  • Hit by US sanctions, Huawei's Mate 30 will not be allowed to use Google’s Play Store
  • Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
BERLIN: Chinese tech giant Huawei launches its latest high-end smartphone in Munich on Thursday, the first that could be void of popular Google apps because of US sanctions.
Observers are asking whether a phone without the Silicon Valley software that users have come to depend on can succeed, or whether Huawei will have found a way for buyers to install popular apps despite the constraints.
The company has maintained a veil of secrecy over its plans, set to be dropped at a 1200 GMT press conference revealing the Mate 30 and Mate 30 Pro models.
Huawei, targeted directly by the United States as part of a broader trade conflict with Beijing, was added to a “blacklist” in Washington in May.
Since then, it has been illegal for American firms to do business with the Chinese firm, suspected of espionage by President Donald Trump and his administration.
As a result, the new Mate will run on a freely available version of Android, the world’s most-used phone operating system that is owned by the search engine heavyweight.
While Mate 30 owners will experience little difference in the use of the system, the lack of Google’s Play Store — which provides access to hundreds of thousands of third-party apps and games as well as films, books and music — could hobble them.
Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
The tech press reports that this yawning gap in functionality has left some sellers reluctant to stock the new phones, fearing a wave of rapid-fire returns from dissatisfied customers.
Huawei president Richard Yu said at Berlin’s IFA electronics fair this month that his engineers found a “very simple” way to install the hottest apps without going via the Play Store.
Huawei could offer its own app store in a preliminary version, setting itself up as a competitor to the dominant Apple and Google offerings, observers speculate.
Over the longer term, the company could build out a similar “ecosystem” of devices, apps and services as the Silicon Valley companies that would bind users more closely to it.
The world’s second-largest smartphone maker after Samsung, Huawei earlier this month presented its proprietary operating system HarmonyOS, a potential replacement for Android.
The Mate 30 will not yet have HarmonyOS installed.
But it could make for a new round in the decades-old “OS wars” between Microsoft’s Windows and Apple’s Mac OS, then Android versus Apple’s iOS.
Meanwhile, Eric Xu, current holder of Huawei’s rotating chief executive chair, has urged Europe to foster an alternative to Google and Apple.
That could provide an opening for Huawei to build up Europe’s market of 500 million well-off consumers as a stronghold against American rivals.
“If Europe had its own ecosystem for smart devices, Huawei would use it... that would resolve the problem of European digital dependency” on the United States, Xu told German business daily Handelsblatt.
He added that his company would be prepared to invest in developing such joint European-Chinese projects.