http://www.zerohedge.com/contributed/2013-06-05/%E2%80%9Cchinese-dream%E2%80%9D-come-true-gobbling-assets-overseas
Submitted by testosteronepit on 06/05/2013 12:53 -0400
http://www.zerohedge.com/news/2013-06-05/small-african-country-seize-chinese-oil-exploration-assets
Submitted by Tyler Durden on 06/05/2013 18:27 -0400
The “Chinese Dream” Come True: Gobbling Up Assets Overseas
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
The “Chinese dream” is the dream of the whole nation and also of every individual Chinese,explained Fu Ying, chairwoman of the Foreign Affairs Committee of the National People’s Congress. The slogan had been coined by President Xi Jinping after he’d ascended to the throne of the Communist Party. It would benefit the world, she said. But for the richest Chinese, it has already come true.
So Chinese real estate mogul Zhang Xin boughta big stake in the iconic 50-story white-marble General Motors Building in Manhattan. A few days ago, Shuanghui International Holdings, China’s largest meat processor, offered to acquire Smithfield Foods, the largest pork producer in the US, a couple of months after 16,000 dead pigs floated down the Huangpu River into Shanghai. Maybe, Shuanghui wants to obtain Smithfield’s expertise in food safety; or maybe it just wants to find a place outside China to park a few billions.
Other industries have seen similar purchases, particularly the automotive component sector. Or what’s left of it in the US, as many component makers have already moved their production and in some cases even their design centers to China in search of cheap labor. It shows: for the first four months of 2013, imports of Chinese auto components have swollen to over $5 billion and will soon be in second place, behind Mexico but ahead of Japan and Canada. Delphi, GM’s former component division, and Visteon, Ford’s former component division, have but skeleton crews left in the US [for these dark aspects of deindustrialization, read my article.... The Currency Wars: Now US Automakers Are Squealing].
The Chinese have also gone on a shopping spree in Germany, where they’re interested in the Mittelstand – family-owned companies with innovative technologies and high-quality manufacturing in worldwide niche markets. The most prominent was the acquisition of Putzmeister, long the world leader in concrete pumps (here is my take). The Chinese have been buying in each country according to their perception of what that country is famous for, and what is available to Chinese buyers without too many political hassles.
So in France, the Chinese have a different shopping list – in late May, for example, Fosun International, one of the biggest privately owned Chinese conglomerates, partnered with Axa Private Equity to make a tender offer for vacation-resort operator Club Med, of which both are already the largest stockholders. There were other deals for what France is known for in China: châteaux and their vineyards.
It just emerged that Goldin Financial, based in Hong Kong, bought three châteaux and their prestigious vineyards in Bordelais, a brand-name wine region in southwestern France: Château Le Bon Pasteur in Pomerol, Château Rolland Maillet in Saint-Émilion, and Château Bertineau Saint-Vincent in Lalande de Pomerol. A few weeks earlier, a Chinese architect had bought the Château La Fleur Jonquet in the Graves region.
In 2008, the Chinese made their first acquisitions in Bordelais, each less than €5 million. Over the years, the pace quickened. By 2011, they’d picked up 21 vineyards, some of which had been on the market for a long time. In 2012, they added another nine – including a Grand Cru Saint-Émilion. And so far in 2013, they’ve snapped up six more.
The Chinese are now in second position of foreign owners in the region, behind the Belgians with 45 vineyards. China is already the number one importer of Bordeaux, with 538,000 hectoliters, or 10% of production, more than double of runners-up Germany, Belgium, and the UK. They’ve also gone shopping in other wine regions, including Burgundy where a Chinese investor bought the Château de Gevrey-Chambertin last summer.
It’s the same story around the world. The “Chinese dream” come true. For some. That concept “came just in time,” said Fu Ying while addressing the Asia-Pacific Roundtable in Kuala Lumpur, Malaysia. “It reflects the reality in China and people’s expectations, and serves the need to unite the people to achieve a higher objective,” she said.
A higher objective? Corporate chieftains from the US, Europe, Japan, and elsewhere have invested untold billions in China over the years to offshore production from their home countries. As a consequence, the US, most other Western countries, and more recently even Japan, have run up huge trade deficits with China. And hot money washed ashore, even while the Chinese government created an enormous credit bubble that could effortlessly fund just about anything, from the largest high-speed and money-losing rail network in the world to entire ghost cities, no matter how impossible it would later be to service this debt.
That bubble is there for all to see, more flamboyant than ever, scaring even the government – and the rich. Those who can, while they still can, try to take at least some of their money overseas where it would be safe even during periods of financial or political instability at home.
But bubbles are everywhere. An economic slowdown is looming over the global economy, but no one seems to care, as stock markets continue to reach new record-highs – giving investors false hopes of economic growth. But how long can this mirage actually last? Read....A Mirage Called The Stock Market
http://www.zerohedge.com/news/2013-06-05/small-african-country-seize-chinese-oil-exploration-assets
Small African Country To "Seize" Chinese Oil Exploration Assets
It's one thing for broke Argentina to nationalize assets of just as broke Spain. However when tiny west-African country Gabon decides to "seize" assets from three international oil companies including China's petrochemical giant Sinopec, things not only get interesting, but puts a brand new pawn on the global geopolitical chessboard. But why is Gabon seeking to antagonize some of the primary participants in its crude extraction supply chain? Simple: leverage, or its own perception thereof. As the FT reports, this surprising move comes as Gabon prepares to "launch a licensing round for the deep waters off its coast. Experts say reserves in the Gabon Basin could rival deep offshore discoveries in Brazil."
So what happens next? The same as when every banana republic reverts to its banana republic stats - corporate partners are alienated, a rogue oligarchic regime proceeds to spend whatever money it has managed to steal in recent years, the government is destabilized, a military coup follows, currency devaluation, hyperinflation, economic collapse, until one oligarch is replaced with another (future) who attempts to restore relations with the same corporations that are being nationalized today.
Tensions between the industry and Gabon’s oil ministry come as a number of African countries attempt to wrest better terms from foreign multinationals and clamp down on transfer pricing and tax evasion.Etienne Ngoubou, oil minister, told the Financial Times the government plans to reclaim the main onshore site of China’s Addax Petroleum, the Tsiengui field, when the contract comes up for renewal in 2015, due to alleged breaches of contract.Mr Ngoubou said the state had informed two other oil companies they faced similar action. “There will be a partial reclamation of assets,” he said. “The companies have realised we have proof of irregularities. [They] have recognised their fault.” The minister refused to identify the oil companies. It is understood that neither Total Gabon nor Shell Gabon are being targeted.
The expropriated companies are understandably unhappy:
Relations between the oil industry and ministry have deteriorated sharply. Companies complain they have been forced to negotiate on licences without a new hydrocarbon code which will set investment terms. They also complain that new conditions are imposed as contracts are renewed.There are also suspicions that the ministry’s tougher approach is motivated by a desire to reallocate producing assets to GOC, which wants to take stakes in existing and new fields. Mr Ngoubou denies this.Many investors have also been angered by government demands for repayment of historical shortfalls in customs or tax payments, some of which date back several years. “The demands are unreasonable and unfounded,” said one executive.
In the meantime the local (transitory) government is adamant:
Gabonese ministers reject suggestions that they are putting foreign investment in the country at risk. Luc Oyoubi, Gabon’s economy minister said there was a fine line to tread between ensuring revenues to the state were maximized and encouraging fresh investment.“The fact is there is a dilemma between the necessity of doing objective and thorough controls and the need to provide incentives for new investors. We try to have both things in mind. So the tax authorities are doing their work, we are watching what they do.”
All of this is to be expected: the offshore megacorps were well aware of the risks they took on when investing in the resources of a country such as Gabon (just ask the gold and silver miners). What is unknown, however, is how China which currently views Africa as its territorial fiefdom will respond. Since the US considers west Africa its own military protectorate (see recent drone base plans in Niger) any escalation of energy-related tensions from Beijing will hardly be smiled upon by John Kerry.
Which may be long-overdue. By now everyone is sick and tired with the great proxy wars taking place the middle east - it is about time the tape started carrying some more exciting developments out of Africa. Preferably weaponized: after all, with convential credit-creation channels clogged up beyond repair, global GDP desperately needs a source of Keynesian "growth"...
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