April News Round Up
Billionaire capital of the world
China has by far the most billionaires of any country in the world. An additional 210 new billionaires last year brought China’s total to 819 billionaires, with 131 of them living in Beijing – making China’s capital the billionaire capital of the world. The list produced by the Hurun report said that not only does China have the most billionaires but it was also gaining them the fastest. The USA has the second-highest number at 571 but only added 19 new billionaires last year. The report said there were a total of 2,694 billionaires in the world, across 68 countries.
Dozens of trade associations across the United States asked President Trump not to impose tariffs on China, saying that it would be particularly harmful to the US economy and consumers. Trump has threatened to impose tariffs on a range of products including metals and consumer goods, including electronics, telecoms andother tech from China. China has said it is prepared to take any necessary response and that the only outcome would be harmful to America. China could impose tariffs on products such as soybeans and other US exports in a tit-for-tat trade war. American companies such as Apple and Amazon who manufacture a large number of products in China could find themselves victims of Trump’s tariffs.
Companies with large China sales exposure
Company – % of sales in China
Skyworks Solutions (SWKS) – 85%
Qorvo (QRVO) – 75%
Qualcomm (QCOM) – 69%
Wynn Resorts (WYNN) – 64%
Nvidia (NVDA) – 56%
Micron (MU) – 55%
Broadcom (AVGO) – 54%
Applied Materials (AMAT) – 47%
Texas Instruments (TXN) – 45%
KLA-Tencor (KLAC) – 44%
Lam Research (LRCX) – 43%
Microchip (MCHP) – 41%
Intel (INTC) – 40%
Corning (GLW) – 31%
Amphenol (APH) – 30%
Advanced Micro Devices (AMD) – 26%
Delphi (DLPH) – 26%
Xilinx (XLNX) – 25%
Apple (AAPL) – 22%
Agilient (A) – 20%
Source: Goldman Sachs – July 2017
New top economist
Liu He has been named as China’s top economist. The Harvard graduate is officially one of China’s four vice-premiers in charge of economic policies and financial issues. A long-time favourite of President Xi Jinping, the economist sometimes known as Uncle He has been credited with China’s shift in economic policy that has seen a pivot to a more sustainable consumption based growth model, and away from a debt-fuelled investment and export model. The announcement was made towards the end of the National People’s Congress. The three other vice-premiers he will work with are Han Zheng, Sun Chunlan and Hu Chunhua.
Following the National People’s Congress, which ended last month, the number of members of the State Council – China’s cabinet – was reduced from 35 to 27 with some notable new appointments made.
The CEO of Tencent, the internet giant behind WeChat, has said that they will be hosting their servers in caves they are digging out of the mountains of Guizhou. Apple also announced last year that they would be moving all Chinese iCloud data over to Guizhou-Cloud Big Data (GCBD) – a state-run company in the province. Guizhou is investing heavily in the information technology sector.
No housing tax
Before last month’s congress, it was thought China might implement a property tax, however, no taxes will be introduced in the housing market. Currently, there is zero tax on property, making it a very stable store of value but also adding to the housing market bubble. It also leads to a significant number of properties being left vacant and the emergence of ghost cities.
The war on pollution
Cities in China have cut fine particles of air pollution by an average of 32 percent over the last four years according to new data. After declaring war on pollution four years ago, Beijing pledged US $120 billion to tackle pollution in the capital. New coal fire stations were banned in polluted areas, existing plants were told to reduce their emissions and some were shut down. Coal was replaced by natural gas in other power stations. There was also a reduction in iron and steel manufacturing and the number of cars on the roads of China’s big cities was also restricted.
China spends big on R&D
An estimated US $279 billion was spent on R&D in China last year, a year-on-year increase of 14 percent and a rise of over 70 percent from 2012. China is investing heavily in robotics, big data and artificial intelligence and has established dozens of industrial parks and incubators in a bid to move up the value chain and become an innovation centre.
The run on international footballers moving to China for big bucks might be coming to an end. China’s football association introduced a 100 percent tax on transfers of over £5 million last summer and has introduced further regulations to curb the arrival of foreign footballers in a bid to develop local players.