Asia Business

Chinese President Xi Jinping on Friday touted close security and energy ties with Gulf nations during summits in Saudi Arabia that have highlighted tensions with Washington.

On the third and final day of his visit, Xi attended a gathering of the six-member Gulf Cooperation Council and a broader China-Arab leaders’ meeting.

It was only Xi’s third journey outside China since the coronavirus pandemic began.

Friday’s talks followed bilateral sit-downs on Thursday with Saudi royals that yielded a joint statement stressing “the importance of stability” in oil markets — a point of friction with the United States, which has urged the Saudis to raise production.

“China will continue to firmly support the GCC countries in maintaining their own security… and build a collective security framework for the Gulf,” Xi said on Friday at the start of the China-GCC summit.

“China will continue to import large quantities of crude oil from GCC countries on an ongoing basis,” he said, also vowing to expand other areas of energy cooperation including liquefied natural gas imports.

Additionally, Xi said China would make full use of a Shanghai-based platform “to carry out RMB [yuan] settlement of oil and gas trade” — a move that, if Gulf countries participate, could weaken the global dominance of the US dollar.

Asked at a press conference, as the summits came to close Friday evening, if Riyadh would agree to such a scheme, Saudi Foreign Minister Prince Faisal bin Farhan said he had “nothing to add”.

Oil from Saudi Arabia alone accounted for 17 percent of China’s imports last year, and last month Qatar announced a 27-year natural gas deal with China.

– Rejecting ‘polarity’ – 

Xi’s visit comes amid persistent rancour between Saudi Arabia and the US, its long-time partner and security guarantor, over oil production, human rights issues and regional security. 

It follows US President Joe Biden’s trip to Jeddah in July, before midterm elections, when he failed to persuade the Saudis to pump more oil to reduce prices.

Xi’s arrival in the kingdom on Wednesday earned a rebuke from the White House, which warned of “the influence that China is trying to grow around the world”. 

Washington called Beijing’s objectives “not conducive to preserving the international rules-based order”.

Saudi officials have repeatedly stressed that they value deep ties with Washington but will not hesitate to explore relationships elsewhere.

“We are very much focused on cooperation with all parties and I think competition is a good thing,” Prince Faisal said on Friday, adding that Riyadh will also continue to have strong relations with the US “across the board”. 

“We will continue to work with all of our partners and we don’t see it as a zero-sum game by any means,” he added.

“We don’t believe in polarity.”

– Trade talks –

Crown Prince Mohammed bin Salman, Saudi Arabia’s 37-year-old de facto ruler, addressed both summits on Friday, promising “continuing Arab-Chinese cooperation to serve our common goals and aspirations of our peoples”.

The Gulf countries, strategic partners of Washington, are bolstering ties with China as part of an eastward turn that involves diversifying their fossil fuel-reliant economies. 

At the same time China, hit hard by its Covid lockdowns, is trying to revive its economy and widen its sphere of influence, notably through its Belt and Road Initiative which provides funding for infrastructure projects around the world. 

One area of focus for the China-GCC summit was a free trade agreement under discussion for nearly two decades. 

Drawing those negotiations to a close would be “a matter of prestige for Beijing”, said Robert Mogielnicki of the Arab Gulf States Institute in Washington.

“It’s not as simple for the GCC states, which seem to be more invested in advancing bilateral ties and are engaged in varying degrees of regional economic competition with their neighbouring member states.”  

No breakthrough was announced on Friday.

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Global economic leaders on Friday hailed China’s move away from its hardline zero-Covid policy, with the IMF chief saying the “decisive actions” would help revive growth both in the country and globally.

The relaxation would help to shore up a world economy struggling with the impact of the pandemic and Russia’s invasion of Ukraine, the head of the World Trade Organization said after a conference in the eastern Chinese city of Huangshan hosted by outgoing Premier Li Keqiang. 

Beijing on Wednesday announced a loosening of its zero-tolerance approach to coronavirus outbreaks, ending large-scale lockdowns and allowing some positive cases to isolate at home following widespread protests against the restrictions.

The decision indicated that the world’s second-largest economy is finally shifting towards living with Covid after years of grinding curbs stifled growth.

“We welcome very much the decisive actions taken by the Chinese authorities… to recalibrate the Covid policies so as to create a better impetus for the revival of growth in China,” International Monetary Fund managing director Kristalina Georgieva said at a press briefing with the heads of other major economic institutions.

The effort to boost vaccination rates and anti-viral treatments “is very good for the Chinese people, but also important for Asia and the rest of the world”, Georgieva added.

“China’s performance matters (not just) to China — it matters to the world economy as well.”

The global economy has been rocked this year, with Russia’s invasion of Ukraine adding to a stuttering post-pandemic recovery and a cost of living crisis in many countries.

The retreat from zero-Covid “will help remove one set of uncertainties” in a world reeling from the impacts of the pandemic, the war in Ukraine and climate change, said WTO Director-General Ngozi Okonjo-Iweala at the same briefing.

Secretary-general of the Organisation for Economic Co-operation and Development, Mathias Cormann, said the “adjustments will support the strength of the recovery both in China and globally”.

Beijing’s step back from zero-Covid has helped to prop up global stock markets fearful of a looming recession in the United States, but analysts have warned that China’s route to a full reopening remains bumpy.

– Further relaxations –

Long criticised for disrupting business operations and global supply chains, the zero-Covid policy has acted as a constraint on China’s economy, with analysts expecting Beijing to miss its stated annual growth target of 5.5 percent.

Public frustration with snap lockdowns and mass testing boiled over last month as protesters took to the streets in cities around the country, with some calling for greater political freedoms in China’s most widespread demonstrations since 1989.

On Friday, China rolled back more restrictions, with the culture and tourism ministry announcing that visitors will no longer be required to show “health codes” when entering a range of venues.

A spokesperson for the National Health Commission (NHC) said at a press briefing that hospitals must not refuse care to coronavirus-positive patients, state broadcaster CCTV reported.

The move marks a further pivot away from China’s longstanding strategy of isolating all those who test positive and treating them in state-run quarantine facilities.

Some of those facilities will now be transformed into “sub-designated hospitals… equipped with certain treatment faculties” including 10 percent of berths reserved for “observation and care”, CCTV quoted the NHC’s Jiao Yahui as saying.

Demand for home treatments and personal protective gear has surged along with concerns over possible large-scale outbreaks, even though official statistics have reported a decline in new cases in recent days.

China’s market regulator said Friday that it would crack down on price gouging after the retail price of a traditional flu treatment as much as quadrupled in the first few days of December.

Meanwhile, an iPhone megafactory in central China announced it was ending months of a virus-secure “closed loop” system that had hit production of the Apple gadgets.

The Foxconn facility in Zhengzhou was in effective lockdown for 56 days, with workers only allowed to travel between their dormitories and the factory floor on shuttle buses after infections were discovered in October.

Foxconn said in a social media post that employees could now return to work with a negative Covid test taken in the last 48 hours, in line with the “further lifting of China’s epidemic control measures”.

China on Friday announced the first delivery of its new domestically produced passenger jet, with the aircraft expected to make its commercial debut early next year.

Beijing hopes the C919 commercial jetliner will challenge foreign models like the Boeing 737 MAX and the Airbus A320, though most of its parts are sourced from abroad.

The first model of the narrow-body jet, which seats 164 passengers, was formally handed over to China Eastern Airlines during a ceremony at an airport in Shanghai, state media reported.

The move marked “an important milestone” in the journey of China’s aircraft industry, state broadcaster CCTV said.

Footage broadcast Friday by CCTV showed the jet bearing the China Eastern insignia standing on a rainswept airfield and gave a glimpse inside the aircraft’s cabin.

The state-owned Commercial Aircraft Corp of China (COMAC) passed the airline a “commemorative key to the world’s first C919,” CCTV reported.

COMAC said at an airshow last month that it had secured orders for 300 C919s, but did not clarify whether the orders were fully confirmed and gave no details about the value of the deals or delivery dates.

But if the orders go through, they would take the number of known deals for the C919 to over 1,100, based on figures from previous COMAC statements.

Domestic media previously reported that four aircraft were expected to be delivered to China Eastern –- the country’s second-largest carrier by passenger numbers –- by the end of the year before going into operation in the first quarter of 2023.

China sealed a deal for Airbus jets worth $17 billion earlier this year, and the company began producing its A321 model in the northeastern city of Tianjin last month.

The Boeing 737 MAX has been grounded in China since 2019 after two fatal crashes, though the aerospace giant said in July that it may be approved for delivery by Chinese regulators this year.

But lingering US-China trade tensions and China’s worst commercial air disaster earlier this year involving a Boeing 737-800 have slowed progress.

Beer bottles and broken plastic chairs litter the fairways of a derelict golf course on the Indonesian holiday island of Bali, where laid-off workers lament the unfulfilled promises of a Donald Trump “dream project”.

Nearly a decade ago, the real estate mogul and future US president signed a deal to license his name to a six-star holiday destination intended to displace the Nirwana Golf Resort, one of the world’s best.

But today, the once-thriving golf course is filled with weeds — another failed project for Trump, whose six casino and hotel bankruptcies spanning two decades have run up billions of dollars in debt and impacted thousands of lives.

“There was no clarity about our future. We heard that we would be re-recruited but it has never happened,” said Ditta Dwi, a 26-year-old former caddy who was forced to take a waitressing job while awaiting a reopening that never came.

The Trump Organization and Indonesian developer MNC Group shut the resort in 2017 and laid off hundreds of workers after partnering to rebrand the Nirwana, which boasts idyllic views of the Indian Ocean.

The planned redevelopment — Trump’s first venture into Southeast Asia’s biggest economy — was dubbed a “dream project” by his son Donald Trump Jr on a 2019 visit to Jakarta.

But Trump’s deal to license his name to the new resort and help operate it — first struck in 2015 — has turned out to be a pipe dream for Indonesian workers.

Five years after sending staff home, the hotel sits demolished and its course defunct, its forlorn fairways the domain of a solitary security guard who wheels around on a cart, warding off tourists.

The derelict, overgrown and empty site is a far cry from the luxury image Trump long maintained for his real estate interests before setting his sights on the White House.

But the property magnate, who recently announced he will seek the presidency again in 2024, is no stranger to colossal flops.

Six times between 1991 and 2009, his casino and hotel projects fell into bankruptcy. 

The first to fail, the Trump Taj Mahal in the beachside gambling mecca of Atlantic City, New Jersey, threatened Trump’s personal fortune. To cover some of the casino’s debts, he had to sell off his yacht, private jet and half his shares.

– ‘Postponed’ –

MNC chief and Trump ally Hary Tanoesoedibjo — who bought the Nirwana in 2013 — has previously cited lower consumer spending during the Covid-19 pandemic in explaining delays, but the project’s troubles predate the outbreak.

Edwin Darmasetiawan, director of MNC’s property arm, refused to confirm how many Indonesians were sacked when the development was abruptly sidelined.

He said “financial matters” had caused the years-long delays and said he hoped it would still be developed within two years, even though no work has begun.

“I don’t see this project as a failure, but as postponed,” he told AFP.

“We have another project in Lido, now we are focusing on that,” he said, referring to a planned mega resort city of the same name south of Jakarta.

The project in West Java, which will include a Trump golf course and resort, has courted controversy over builders allegedly exhuming Islamic ancestral graves without locals’ permission.

The Trump Organization did not respond to a request for comment about the Bali resort. 

Many Balinese workers have lost opportunities due to the billionaires’ decision to let the plot stagnate.

While hotel workers were compensated after losing their jobs, about 150 caddies on temporary contracts received no money when they were suddenly released.

“It was hard. The time I lost my job as a caddy was difficult. Many people were angry,” said Dwi.

She earned a 1.3 million rupiah ($86) monthly salary, but tips from wealthy golfers meant she could earn as much as 15 million rupiah in a good month. Now she makes the same salary, but no tips.

– ‘Moving on’ –

Yet the hotel and golf workers whose livelihoods were sliced into the rough are trying to forgive and forget.

Dwi, the former caddy, told AFP that getting her old job back now seemed “impossible”.

“I have just let it go. I’m moving on,” she said.

Pita Dewi, who worked at the hotel’s spa for 18 years and now runs her parents’ cafe, said Trump’s shutdown of the resort had left her fearing for her future.

“I got stressed thinking about how I would earn money, because I have children,” she said. 

“I was 48 years old, how could I get another job?”

But in typical Balinese fashion, optimistic locals who believe staunchly in forgiveness are quick to throw away any negative feelings towards the larger-than-life tycoon.

“We have to continue our life,” Dewi said.

“If we hated him, would that make him give us money?”

Wall Street stocks staged a relief rally and Hong Kong soared on Thursday, but recession fears held back equity trading elsewhere.

Oil prices, meanwhile, added to recent sharp losses.

Equity markets had been rising ahead of US jobs figures last week, boosted by a surprise drop in inflation and comments from Federal Reserve boss Jerome Powell that the central bank was likely to raise rates at a slower pace soon.

But robust employment data and a jump in wages, plus figures on Monday showing a forecast-busting pickup in the US services sector last month, raised the prospect that the Fed will not back down from sharp rate increases when it meets next week.

That sent stocks slumping, with even China’s relaxing of Covid testing and quarantine restrictions — setting up the prospect of a rebound in activity in the world’s second-largest economy — unable to turn sentiment.

But following five straight declines, the S&P 500 climbed 0.8 percent.

“What we have today, then, is a little rebound spirit — an assumption that the stock market is due for a bounce after behaving so poorly in more recent action,” said market analyst Patrick O’Hare at Briefing.com.

European stocks spent the afternoon wobbling between gains and losses. Frankfurt ended the day flat, while London and Paris shed 0.2 percent.

“The risk-off sentiment… remains hard to kick into touch as concerns about recession stay front and center,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The evil twins of recession and persistently higher inflation are lurking, keeping investors on edge.”

Analysts pointed out that two-year US Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming downturn.

This week also saw the heads of some of Wall Street’s biggest banks warn of a slowdown.

– China Covid shift –

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of snap lockdowns and mass testing.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many rules and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index closed up more than three percent Thursday.

“Developments in China have a big role to play, although as we’re seeing once again, Covid-related moves are almost exclusively impacting stocks in domestic markets,” said Craig Erlam, senior analyst at OANDA trading group. 

Joshua Mahony, senior market analyst at online trading platform IG, added that “to a large extent this week highlights how traders have to somehow weigh up the benefits of a gradual Chinese reopening with the fears of an impending economic contraction in the year ahead.”

– Key figures around 2130 GMT –

New York – Dow: UP 0.6 percent at 33,781.48 (close)

New York – S&P 500: UP 0.8 percent at 3,963.51 (close)

New York – Nasdaq: UP 1.1 percent at 11,082.00 (close)

London – FTSE 100: DOWN 0.2 percent at 7,472.17 (close)

Frankfurt – DAX: FLAT at 14,264.56 (close)

Paris – CAC 40: DOWN 0.2 percent at 6,647.31 (close)

EURO STOXX 50: FLAT at 3,921.27 (close)

Tokyo – Nikkei 225: DOWN 0.4 percent at 27,574.43 (close)

Hong Kong – Hang Seng Index: UP 3.4 percent at 19,450.23 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,197.35 (close)

Euro/dollar: UP at $1.0560 from $1.0506 on Wednesday

Dollar/yen: DOWN at 136.61 yen from 136.62 yen

Pound/dollar: UP at $1.2239 from $1.2203

Euro/pound: UP at 86.24 pence from 86.09 pence

Brent North Sea crude: DOWN 1.3 percent at $76.15 per barrel

West Texas Intermediate: DOWN 0.8 percent at $71.46 per barrel

India’s largest winemaker Sula Vineyards is heading to the stock market, betting on the diversifying tastebuds of a booming urban middle class in a country that has long favoured strong liquor.

Wine makes up less than one percent of India’s massive alcohol market, with spirits the overwhelming drink of choice in the nation of 1.4 billion people.

On average, Indians each drink only a few spoonfuls of wine a year, but producers hope the country will replicate the wine boom in China when its economy took off in the 1980s.

Still, experts warn their rosé ambitions are tempered by uncertainties including the impact of climate change on viniculture, and an Australian trade deal lowering import tariffs.

“Wine’s time has come,” insists Sula’s founder and CEO Rajeev Samant.

When the Stanford University graduate returned from California, he initially tried growing roses and mangoes on family-owned land near Nashik, an ancient holy city about 160 kilometres (100 miles) from financial hub Mumbai.

“Where Sula is today, it was just grassland. There were leopards and snakes. There was no electricity, there was no telephone line,” as if it was a century earlier, Samant told AFP.

“I saw some beauty here, there was something about the place that really struck me.”

India is one of the world’s biggest grape producers and Nashik is one of its key regions, but back then the vines were all table grapes for eating and raisins, rather than wine grapes.

Samant was inspired by his visits to California’s Napa Valley wine country.

“Why not try to make a decent, drinkable wine right here in India, proudly made in India?” he thought. “And that’s what I decided to do.”

Named after Samant’s mother Sulabha, Sula planted its first vines in 1996, later building a sprawling resort and helping to cultivate a new reputation for Nashik as India’s wine capital.

Applications for shares in its IPO open next week, it said Wednesday, with its owners selling around a third of the company for up to 9.6 billion rupees ($116 million), valuing it at about $350 million.

– Sweet tooth –

Higher-priced Indian wines are becoming comparable to their international peers in terms of quality, according to Ajit Balgi, founder of Mumbai-based wine and spirit consultancy The Happy High, although they remained “Indian style” in flavour.

“They won’t be tasting the same as an Australian or a French wine,” he said. “India is too close to the equator, so our grapes that we choose are the riper ones.”

New drinkers tended to have a sweet tooth and were attracted to “jammier” wines, he added. “Most start their association with wine with sangria.”

Wine consumption in India has risen from negligible levels in 1995, while women drinking in public has become more acceptable as more joined the workforce, but volumes still stood at just 20 million litres last year, according to the International Organisation of Vine and Wine. 

Mumbai businessman Parimal Nayak is a fan, and visited the Sula vineyard with his family to celebrate his 44th birthday.

“Sula wines has improved a lot… and the atmosphere here is good,” he told AFP. “I’m proud of it.”

But the biggest obstacle to expansion was cost, said Balgi.

Wine is often taxed at similar levels to spirits in many Indian states, despite having much lower alcohol content.

“The price of a basic Indian wine is comparable to that of a full bottle of rum or basic whisky,” he said. “There is not much wine consumption in India because the masses cannot afford it.”

– Last glass –

Sula reported revenues of 4.5 billion rupees and a net profit of 521 million rupees in the last financial year, and saw average annual revenue growth of more than 13 percent in the decade to March 2022.

Samant, 55, plans to sell around five percent of his 27 percent stake in the firm.

But several recent Indian tech IPOs have flopped. Payments firm Paytm has lost three-quarters of its value since listing a year ago, and analysts say many firms are overvalued.

Previous wine pioneer Indage Vintners delisted in 2011 after debt and cash problems. 

Sula could face increasing competition from foreign wine, which currently makes up 17 percent of the Indian market.

A recent trade pact with its biggest supplier Australia will cut import duties for some wines from a punishing 150 percent.

Sula, meanwhile, warned in its IPO prospectus about the risk of “adverse climatic conditions” affecting grape quality.

Farmers in Nashik were already reporting floods and droughts nearly a decade ago, said the Mumbai-based World Resources Institute India’s climate programme manager Prutha Vaze.

Higher average temperatures also hasten grape ripening, lowering acidity and increasing sugars, which raises alcohol levels in wine. These changes impact a wine’s delicate balance of flavours, experts say.

If growers do not adapt to the changing climate, Vaze said, “there could be a day where we are… biting on the last piece of chocolate or having the last glass of wine”.

The EU on Wednesday escalated disputes with China to the WTO, requesting panels be assembled to hear two cases, one over trade restrictions on Lithuania and the other on legal recourses for EU patent holders.

“In both cases, the Chinese measures are highly damaging to European businesses” and, in the Lithuania case, “impact the functioning of the EU internal market,” the European Commission said in a statement.

China is the European Union’s biggest trading partner, and the litigation burdens the World Trade Organization with a thorny challenge at a time its dispute settlement system is badly weakened. 

The Lithuania case is over trade restrictions China has been applying to that EU member country because of Lithuania’s strengthening ties with Taiwan, which China views as part of its territory.

Beijing has denied taking coercive measures against Lithuania.

But Lithuanian exports to China have dropped 80 percent over the past year, ever since Chinese authorities started rejecting many Lithuanian imports.

The commission said that Chinese claims made in February that bans on Lithuanian alcohol, beef, dairy products, logs, peat and wheat were on health grounds were not justified.

Consultations with China early this year failed to address that issue, the commission said.

On the patents matter, the European Union is challenging decisions made by Chinese courts in August 2020 that barred EU owners of high-tech patents from turning to EU courts to protect their intellectual property.

The commission said that “Chinese manufacturers requested these anti-suit injunctions to pressure patent right holders to grant them cheaper access to European technology”.

– ‘Litigation stage’ –

An EU official briefing details to journalists on condition of anonymity said: “By requesting a panel, we’re essentially taking these two cases to the litigation stage.”

He added that “one of the reasons that we’re taking this course of action is because we see that they (Chinese authorities) take their WTO obligations seriously and we see that they have a good record of compliance”.

The WTO’s dispute settlement body will discuss the EU’s request for the panels on December 20. China can oppose it, but the EU can then renew its request, and the panels would then be established on January 30 next year.

A panel is the first WTO port of call for countries wanting to have a dispute adjudicated. They are typically composed of three experts but can have five in some cases. 

The commission said the panels’ deliberations could last up to a year and a half.

The WTO’s dispute settlement system, however, is in a fragile state after the United States, under then president Donald Trump, in 2019 blocked the appointment of new judges to the body’s appeals tribunal.

Current US President Joe Biden has not lifted the block, insisting that the WTO must reform to be more efficient.

To ensure disputes can still be appealed, 16 WTO member countries in 2020 set up a separate and temporary appeal system called the Multiparty Interim Appeal Arbitration Arrangement (MPIA), to which China is a party.

The United States is seeking to get the European Union onside with its harsher stance against China, over trade, human rights and Beijing’s increasingly assertive military posture.

Washington has pledged to give Taiwan the military means to defend itself in the event of a Chinese invasion. 

It has also barred Chinese telecom and tech companies from US networks.

The EU official briefing journalists said the United States, as well as Australia, Britain, Canada, Japan and Taiwan had sought to join the consultation phase of its disputes with China, but Beijing refused.

Those countries can ask to join the panels phase of the dispute as third parties, however, and China does not have the power to stop them.

“We would expect a reasonable number of WTO members to come in as third parties,” the official said.

Vietnam’s homegrown carmaker VinFast, which plans to sell the first ever Vietnamese car in the United States, said Wednesday it has filed for an initial public offering (IPO) in the country.

Vinfast, which is part of conglomerate Vingroup, owned by Vietnam’s richest man Pham Nhat Vuong, will deliver its first electric SUVs to Americans later this month.

On Wednesday, the company said it “intends to list its ordinary shares on the Nasdaq Global Select Market under the symbol ‘VFS'”.

No decision has been made on the number of shares to be offered and the price range for the proposed offering, it added. 

The pivot to the United States is a bold move by chairman Vuong, who started out selling dried noodles in the former Soviet Union before amassing his $5 billion fortune in a range of sectors including real estate, tourism and education.

VinFast already has electric vehicles (EVs) on the streets of Hanoi, but is using an unusual battery leasing model to hook customers in the crowded and difficult US market, which is dominated by Elon Musk’s Tesla.

The upfront payment for the VF8 and VF9 — the two models sold in the US — will be $42,000 and $57,500 respectively. Tesla’s SUVs start at around $65,000.

In July, VinFast opened six showrooms in California, including a flagship store at one of the trendiest malls in upmarket Santa Monica.

It said it planned for 30 in total by the end of the year, while it has also broken ground on a $2 billion electric vehicle and battery plant in North Carolina that it says will produce 150,000 cars a year when fully up and running.

Vinfast has also opened showrooms in Europe — one in Cologne, Germany, and another in Paris — and is targeting several other European cities.