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SINGAPORE: More than US$2.8 million (S$3.8 million) in cryptocurrencies from a suspect’s account was withdrawn while he was remanded in relation to a S$2.4 billion money-laundering probe, the lead investigating officer (IO) has revealed.
This information came in an affidavit by the IO tendered to the court in support of the prosecution’s objection to bail for Vang Shuiming on Friday (Sep 29).
Vang currently faces five charges – one of using a forged document and four of possessing criminal benefits worth S$2.4 million from unlicensed moneylending in China.
The 42-year-old Turk with multiple passports was arrested on Aug 15 this year, said Mr Teh Yee Liang of the Singapore Police Force’s Commercial Affairs Department (CAD) in his affidavit.
Two days after this, while Vang was remanded, more than US$2.8 million worth of cryptocurrencies was withdrawn from his Binance account.
“Information gathered suggests that the movement of assets was by a person of interest after the accused had been arrested,” said Mr Teh.
Vang is linked to three other wanted suspects who are on the run, including his brother.
Mr Teh said CAD had not known of these assets initially, and was alerted to them only after receiving information from “foreign authorities”.
Mr Teh said the overall quantum of cryptocurrency assets is believed to amount to more than US$30 million and investigations on this front are ongoing.
“This further strengthens my belief that the accused has connections and assets to allow him to relocate outside of Singapore, despite the seizure of his local assets, should he be released on bail,” said Mr Teh.
More than S$200 million in assets linked to Vang have been seized in Singapore.
According to Mr Teh, this comprises S$962,000 in cash, S$128.8 million in his bank accounts, S$5.5 million in his wife’s bank accounts, 15 properties worth S$104.8 million in his wife’s name but funded by him and three vehicles worth S$3.4 million in his wife’s name but funded by him.
Vang relocated to Singapore with his wife, son and daughter in 2019, and his children are attending international schools, the court heard.
He has substantial wealth and assets overseas, said the IO. This includes an estimated 32 million yuan (US$4.4 million) worth of investments in Chinese private companies, US$18 million worth of land plots in Cambodia, US$500,000 of investments in Turkey, two condominium units in Xiamen, China, worth 20 million yuan, HK$2 million in a bank account in Hong Kong and US$110,000 worth of USDT or Tether tokens.
In response to Vang’s arguing that his parents were “not physically mobile” in his bid for bail, Mr Teh pointed to travel records.
These showed that Vang’s parents recently travelled out of Singapore, returning from Hong Kong via a private jet in March this year.
Vang was ultimately denied bail, and his lawyers said he intended to contest his charges.
He will return to court for a pre-trial conference next month.
Official government estimates put tax collection from gaming activities at over 4.5 billion ringgit ($1.3 billion) annually, with a bulk of it coming from one casino operation controlled by the Genting Group, that also runs an integrated resort operation in Singapore.
A large chunk also comes from the six official lottery operations, including the likes of Magnum and Sports Toto, which are owned by publicly listed entities.
Slot machine operations occupy a secretive slice of this thriving gambling scene.
Industry executives estimate that there are close to roughly 300 legal slot machine establishments nationwide with each premise operating at least 15 machines. All these operations are controlled by privately held companies.
The main industry players are GPL Sdn Bhd, which is controlled by businessman David Cheng, who enjoyed close ties with now jailed former premier Najib Razak, and the Waz Lian Group, which is majority-owned by low-key businessman Ta Kin Yan.
Palmgold Corporation, which is controlled by businessman Danny Tan Chee Sing, who is the younger brother of tycoon Vincent Tan Chee Yioun of the Berjaya conglomerate, is ranked as the third-largest operator.
Government officials noted executives from the top three slot machine operators were called in for questioning by the MACC, which also summoned company executives from gaming equipment distributor RGB International Bhd.
The ongoing probe is tied to claims by Mr Anwar that several of the slot machine operators had made financial contributions to political parties in the previous Perikatan Nasional coalition government headed by former premier Muhyiddin Yassin.
Muhyiddin has denied the allegations, but industry sources noted that the investigators from the MACC are pursuing leads related to links between the award of new slot machine licences and political contributions.
The ongoing MACC investigation is not the only set of problems facing slot machine operators. Officials from the MACC did not respond to queries.
Financial bookmarks can be very illuminating in assessing a market’s readiness for global primetime. Such is the case with JPMorgan Chase & Co adding Indian debt to its emerging market indices.
The Wall Street icon plans to do just that in June 2024, perhaps drawing US$40 billion into South Asia’s biggest economy – and at a moment when investors are buzzing that India is a ready alternative to a slowing China.
Perhaps most interesting, though, is that India will enter JPMorgan’s benchmark just days after Prime Minister Narendra Modi reaches his 10-year mark in power. On May 26, 2014, Modi’s Bharatiya Janata Party returned to power with a bold economic reform agenda.
The question, nearly a decade on, is whether the Modi era has whipped India into shape as a more innovative, productive and prosperous investment destination. And it’s here where investors rushing India’s way may be more disappointed than fulfilled.
In the Modi era, India is really a tale of two economies. The macroeconomy is going gangbusters with its China-beating growth rate and stampede of tech “unicorn” startups juicing the stock market. At the micro level, though, India is more cautionary tale than emerging-market exemplar.
At the BRICS summit in New Delhi earlier this month, Modi declared that “soon, India will become a US$5 trillion economy.” That would make India’s economy bigger than Japan’s.
And clearly, India is winning friends in high places. As JPMorgan Chase CEO Jamie Dimon views it, the surge in optimism on India is warranted.
Speaking at a forum in London this week, Dimon said: “Look at this conference. I remember eight years ago or nine years ago we started with 50 or 75 clients. Now it’s 700 investors around the world, 100 companies presenting. I think the optimism of India is actually completely justified.”
Morgan Stanley strategist Min Dai notes that its inclusion in indices like JPMorgan’s “could be a push factor to prompt foreign inflows into India and foreign investors are likely to be more active in the Indian fixed-income market.” This is, he says, a “milestone event.”
Economist Robert Carnell at ING Bank says “It remains to be seen whether the JPMorgan decision will spur others, such as the FTSE Russell to follow suit. Either way, as well as supporting the Indian rupee, the decision should also help to reduce government bond spreads over US Treasuries, and also pass through into lower corporate bond rates.”
Not surprisingly, Modi is working overtime to capitalize on this India-rising optimism by seeking to lure multinational companies disillusioned with China. The recent move by Beijing to order employees at some state-linked firms to cease using Apple’s iPhones has been a gift to Modi’s commerce ministry.
India, meanwhile, grew a China-topping 6.1% in the three months ended March year on year. Asia’s third-biggest economy grew an even more impressive 7.2% for the fiscal year through March as its post-pandemic recovery drove consumption.
As China becomes more isolated amid “de-risking” and “decoupling” calls, and Washington and its allies in Asia seek a new emerging-market growth champion, Modi’s $3.4 trillion economy is keen to step up.
This year, the International Monetary Fund sees India contributing more than 15% of global growth. While still less than half of China’s 35%, India’s global clout is clearly growing.
As Modi was happy to highlight at the BRICS — Brazil, Russia, India, China, South Africa — summit, India finds itself in something of a geopolitical sweet spot just as Global South nations come into their own. This gives Modi a unique degree of leverage to play China’s interests against America’s.
This, just as India surpasses China to become the most populous nation, a reminder that Modi’s demographics are healthier than Xi’s. China’s Communist Party is grappling with record youth unemployment, reported as high as 21% until authorities banned future readouts on the figure.
But India’s outlook also depends on Team Modi making the most of India’s so-called “demographic dividend.” If New Delhi doesn’t create enough good-paying jobs, it will face a demographic nightmare rather than daydream.
It’s here where India’s micro policies lag the heady exuberance at the macro level. Look no further than the lack of confidence among currency traders selling the rupee. India’s inflation troubles and the government’s shaky fiscal position have rupee trends defying economists’ optimism.
“Foreign investors have poured $16 billion into equities this year, viewing India as a haven amid rising US rates and economic stresses in China,” notes analyst Udith Sikand at Gavekal Research.
“They have been well rewarded, with stock markets hitting record highs. But the prospect of a weaker rupee, in addition to the outlook for elevated global interest rates, makes the risk-reward proposition on Indian equities less favorable in coming months,” Sikand says.
True, Sikand adds, the inclusion of Indian government debt in JPMorgan’s benchmark index “should prove a watershed event, turbocharged by investors’ need to find alternatives to China.” He adds that India’s “bond market is both deep enough to absorb much larger flows and remains largely untapped.”
Yet “the flip side of greater foreign participation in domestic bond markets is that policymakers will have less room to maneuver, particularly as the twin deficits widen,” Sikand says.
“Still, as long as the Modi government does not give in to its populist instincts in the run-up to elections next year, bond yields are likely to fall as investors look to front-run the expected flood of passive inflows.”
It’s a big “if,” though. Another worry: India’s infrastructure and competitiveness in manufacturing lag China’s by magnitudes that are impossible to dismiss.
Modi’s ambitious “Make in India” push has only increased the flow of Chinese imports, leading to a marked deterioration in New Delhi’s trade balance. Along with rubbing currency traders the wrong way, this dynamic complicates hopes that multinationals might shift supply chains India’s way.
Other warning signs include rising inequality, partly thanks to Covid-19 fallout and inflation running at 15-year highs. Kunal Kundu at Societe Generale speaks for many economists in cautioning that “consumer fatigue” could soon cause giant headwinds.
Modi’s decade in power hasn’t sufficiently addressed many of the challenges he pledged to tackle in 2014. They include poor infrastructure, inequality, chronic youth unemployment, high levels of private debt, a deterioration in balance of payments dynamics and underwhelming household demand.
This has opposition parties ready to pounce. At least two dozen minority parties are joining forces to sideline Modinomics in favor of a more inclusive model. Along with inflation, opposition forces are drawing attention to worsening religious violence and assaults on press freedom.
Here, it’s worth considering another worrisome bookend: the number 85. This is India’s current ranking in Transparency International’s corruption perceptions index.
It’s the exact same ranking India achieved in 2014 — and fully 20 rungs behind 65th-ranked China. So, while Modi’s tenure hasn’t unleashed a bull market in graft, it hasn’t been a golden era for good governance either.
That helps explain why nearly a decade after Modi took national power S&P Global still rates India just one notch above junk at BBB.
Modi’s appeal, of course, derived from the folk-hero reputation he cultivated during his 13-year stint running the western state of Gujarat. From 2001 to 2014, Modi’s local government routinely generated faster gross domestic product (GDP) rates than the national average.
Gujarat often also boasted greater productivity and innovation, less bureaucracy, better infrastructure and lower levels of corruption. A major reason why voters returned the BJP to power in 2014 was in the hope that Modi would replicate the “Gujarat model” nationwide.
Modi’s team did put some early wins on the scoreboard. It opened some key sectors to increased overseas investment, including aviation and defense. It implemented a national goods-and-services tax. It projected a sense of confidence as a startup boom put India in headlines for all the right reasons.
Yet Modi has often read more from the playbook of Shinzo Abe than Margaret Thatcher or Ronald Reagan.
In 2012, Japanese Prime Minister Abe took power pledging epochal reforms, channeling the supply-side revolutions that Thatcher unleashed on the UK and Reagan on the US.
Abe did manage to improve corporate governance. That, over time, drove the Nikkei Stock Average to 30-year highs. Mostly, though, Abe relied on hyper-aggressive Bank of Japan easing to revive growth. This trickle-down economics scheme failed to boost wages or rekindle innovation.
The parallels between Abenomics and Modinomics are clear enough. In certain ways, though, the Modi era in India has been far more damaging than Abe’s 1980s-influenced economic exploits.
Take India’s press freedom score, which has plunged precipitously. In 2014, its 140th ranking out of 180 nations on Reporters Without Borders’ tables was poor enough. Today India ranks 161st, trailing Cambodia by 14 rungs and 11 behind Pakistan.
If Team Modi were serious about reducing opacity and leveling playing fields, it would embrace a free-wheeling press as an ally in raising India’s competitive game. The Modi era has dragged India in the other direction.
Making this dynamic all the more awkward: this year’s scandal involving the Adani Group, led by billionaire Gautam Adani, whose alleged close ties to Modi date back to their Gujarat days.
Short seller Hindenburg Research accused the conglomerate of “brazen stock manipulation and accounting fraud,” spotlighting cracks in India’s financial sector.
In February, billionaire George Soros exacerbated the storm by saying that the Adani crisis “will significantly weaken” Modi’s “stranglehold” on New Delhi politics. In Soros’ telling, Modi and Adani are “close allies” with “intertwined” fates.
BJP officials pushed back, arguing that Soros has “now declared his ill intentions to intervene in the democratic processes” in India.
Weak corporate governance is raising concerns about the health of India’s business environment. It also collides with Modi-era efforts to spotlight India’s giant industrial conglomerates, many of which might not be ready for global primetime.
Another bookmark worth noting: In the latest financial year, foreign direct investment inflows fell for the first time in a decade. The 16% drop to $71 billion would seem at odds with a booming economy winning new converts around the globe as the new China.
It speaks to the need for Modi’s team to accelerate efforts to increase domestic and international competition, build trust in New Delhi’s regulatory institutions, scrap policies that support national champions and curb protectionist impulses.
If his “Make in India” strategy is to gain traction, Modi must rethink tariffs on foreign components. Though intended to advantage domestic supply chains, the protectionist policy dents India’s argument that it’s open for business.
Modi’s government must also invest more in human capital. One in five of India’s 1.4 billion people is under 25. Increased funding must go toward improving financial literacy, education and training. Modi’s team must delve into the economic effects of societal norms.
In a March report, the Organization for Economic Cooperation and Development argued that “in South Asia hundreds of millions of people – not just in India – are affected by caste-discrimination. Caste systems divide people into unequal and hierarchical social groups. Those at the bottom of hierarchy are considered lesser human beings. In the business and work-sphere caste-discrimination affects workers.”
To be sure, Modi has racked up some notable victories, notes analyst Alexis Serfaty at the Eurasia Group consultancy. He says that “India’s policy ecosystem seems to have finally found the right mix to enable rapid manufacturing growth.” Powered by broader geopolitical trends” and Modi government policies, “electronics manufacturing has grown 275% over the past eight years.”
But “while the overarching policy environment at both the central and state levels is realigning toward enabling export-led manufacturing growth, industry executives are still concerned about long-term policy stability, given India’s checkered history,” Serfaty says.
“The Modi government has assured investors that it has the political capital, and the policy will stay the course. Still, realigning bureaucratic behavior and state-level political views to support long-term growth will pose a big challenge in the medium term,” he adds.
And for global investors about to pour $40 billion into Indian debt, a reminder that Modinomics hasn’t transformed the economy as much as hoped and as much as needed to be the new China.
Follow William Pesek on X, formerly known as Twitter, at @William Pesek
Getty Images“When I think about it, I cry,” says Mrs Guo about the home she had bought. “It’s hard, and I feel sorry for my son and myself.”
In 2021, just months before the Chinese property giant Evergrande showed the first signs of crisis, Guo Tianran (whose name has been changed on request) and her husband bought an apartment off-plan for their only child from the top-selling developer.
The couple, nearing their 60s, had scrimped to afford the $30,000 (£24,500) down payment on the yet-to-be-built flat. They bit the bullet in pledging to use 75% of their income to pay for the mortgage.
“We wanted to help our son, to give him a place to start out on once he graduates from college,” Mrs Guo told the BBC earlier this month. But just months after their purchase, Evergrande’s facade began to crack.
In Henan, the central Chinese province where they had bought the home, building work ground to a halt.
“We saw the main frame being built, and suddenly we heard that Evergrande was falling. Then construction stopped last year,” she says.
In September 2021, Evergrande failed to repay more than $100 million to offshore lenders. At that time it was estimated that the firm had more than 1.5 million unfinished homes. The default brought to light a real estate crisis in China which is still spiralling two years later. The bankrupt firm has spent the past 18 months trying for a recovery deal, but news this week that its founder Hui Ka Yan and other senior leaders have been detained by police has renewed alarm over its future.
“I used some of my retirement money for the down payment. We will be paying [off the] mortgage for the next 30 years,” says Mrs Guo who was initially told that she would get the keys by December this year.
But as China’s housing crisis grows, so have her fears: “We don’t want to end up with nothing,” she said.
It’s a worry shared by so many others who have sunk their life savings into a new home – that their dreams have been bulldozed.
What is adding to the worry is that Evergrande is not the only real estate developer in deep trouble. Another property giant, Country Garden, reported a record $6.7bn half-year loss. Analysts estimate it has sold one million homes that are yet to be completed.
“I almost bought an apartment from Country Garden,” said 31-year-old Zhang Min who also lives in Henan.
She told the BBC that she and her fiancée had planned to buy the place as their marital home. Her parents’ house had been built by Country Garden, and the young couple had been told they could buy a discounted property in August. But they changed their mind when they heard the firm was on the brink of a default.
“We’re certainly not postponing our wedding because we didn’t buy a new home. I will just have to give up pursuing the idea of ‘newlyweds living in a new house’,” says Ms Zhang.
“My parents’ generation have seen two decades of China’s housing market only going up. These days people around me are all worried about house price depreciation.”
China’s property market accounts for a third of its economy, fuelling concerns about the impact on allied industries, from construction materials such as steel and cement, to household appliances. And yet this is one more crisis for Beijing, which is also battling slowing growth, falling exports and a youth unemployment rate that has risen above 20%.
Beijing has sought to temper public concern. State media has said little about Mr Hui being put under police surveillance, and the foreign ministry appeared to stonewall questions on the subject from reporters at its daily briefing on Thursday. But the news has been a top trend on Chinese social media platforms such as Weibo, with more than 600 million views around the topic of Mr Hui’s surveillance alone.
Many on Weibo were critical of how Evergrande and other property giants had been allowed to get to this point. Why weren’t there enough protections for buyers, users have asked.
“Because of inadequate mechanisms and regulation, it’s almost become a norm that companies could ‘blow up'”, one user wrote. There appears to be concern that the property crisis could spread to more developers because Evergrande’s situation has revealed systemic flaws – the effects of excessive borrowing and deep discounts to lure buyers had drained the firm’s coffers.
Another user asked: “How will they ever deliver [those] apartments? Many of these units have been paid for by the savings and hard-earned money of several generations across families?”
People were also sharing their experiences as disillusioned and anxious home buyers. In one video on Douyin, China’s version of TikTok, a man said he had to work three jobs to afford both his mortgage and his current rent – because he can’t move into his unfinished Evergrande flat.
When Evergrande’s failings first emerged two years ago, there were protests outside the firm’s offices in Shenzhen in southern China. Those demonstrations have started up again in recent months. At one recent protest, buyers chanted: “Construction stops, mortgage stops. Deliver homes and get repaid!”
Mrs Guo says she and other Evergrande buyers aren’t sitting idly by either. They have formed three groups on WeChat, with nearly 500 members each.
“We have organised ourselves to go to the government. With so many of us they can’t possibly ignore it,” she said.
She also told the BBC that she had been warned by local officials not to speak to the media, and fed promises that construction work at the Evergrande property where she bought a flat would resume soon.
But a few members of her group check on the construction site every day. They’ve seen only a few workers and minimal progress.
“Some of us have stopped paying the mortgage,” Mrs Guo says. “If the bank pushes too hard, they will sleep in the lobby of the bank.”
With additional reporting by Ian Tang and Kelly Ng in Singapore
Yan Chen is a reporter with BBC Chinese
This video can not be played
What is often not recognised is that Mr Anwar’s options may be limited.
First, he will have to decide if he wants a mini reshuffle, replacing new ministers in key portfolios and keeping the rest intact, or a major reshuffle where changes are not only made to the Cabinet, but also to the top layer of the civil service, government-linked companies and key statutory bodies.
Second, and this is the tricky bit, Mr Anwar will have to “balance” the representation in Cabinet. After a decades-long wait for the prime ministership, Mr Anwar was finally sworn into power on Nov 24 last year. There were many twists and turns, but a Pakatan Harapan (PH)-led ruling coalition finally came together comprising previous ruling coalition Barisan Nasional, Gabungan Parti Sarawak, Gabungan Rakyat Sabah and Parti Warisan.
Each party in his unity government must get their share or it will lead to political instability. There is already unhappiness among the Chinese that PH component party Democratic Action Party, with the largest number of seats in Parliament on the government side, is under-represented. UMNO and the East Malaysians, on the other hand, are over-represented.
On top of that, Mr Anwar must consider the status of those he wishes to appoint. Obviously, they must hold senior positions in their respective parties or have some special skill set.
Mr Anwar must also carve up the work in “overlap” areas to avoid perceptions of conflict. For example, sections of the business community are not happy with the way the Ministry of Economy under Rafizi Ramli and the Ministry of Investment, Trade and Industry under Tengku Zafrul Aziz are creating additional red tape and approvals because two ministries are involved.
Many in the business community would prefer the Economy Ministry, which was first established in 2018, to be scrapped and its core functions returned to the finance ministry.
In contrast to Dutch manufacturing equipment maker ASML’s position at the center of the US-China trade and technology conflict, most European semiconductor makers are maintaining a low profile.
For those who have not been following the issue, Netherlands-based ASML has a monopoly on the most advanced semiconductor lithography equipment (EUV), which it is not permitted to sell to China under US export restrictions.
Europe’s largest semiconductor makers are Germany’s Infineon, Switzerland-headquartered STMicroelectronics and the Netherlands’ NXP, which rank 9th, 10th and 12th worldwide in terms of sales. In the second quarter of 2023, Infineon’s sales were 35% as large as industry leader Intel’s.
In July, on a visit to the Inter-University Microelectronics Center (IMEC) in Belgium, European Commission President Ursula von der Leyen said, “We need to reduce our dependency on too few suppliers from East Asia. And we actively have to de-risk our supply chains for chips – it is vital.”
The Europeans think their semiconductor industry is too small and, in fact, data from market research and industry organizations indicate that only 5% of global semiconductor production capacity is based in Europe and that European companies account for only 9% of global chip sales. Europe buys about 20% of the world’s semiconductors.
With this in mind, von der Leyen said, “We need to promote the design, testing and production [of semiconductors] here in Europe. For that, the Chips Act is the game changer.”
That was a reference to the European Chips Act, which was adopted on July 25. In the words of the European Commission, it “will mobilize more than 43 billion euros (US$45.5 billion) of public and private investments and set measures to prepare, anticipate and swiftly respond to any future supply chain disruptions, together with Member States and our international partners.”
The European Chips Act aims to:
More specifically, it entails:
All that should keep EU bureaucrats busy but might be enough only to keep pace – not catch up – with technology and workforce development, market security measures, capacity additions and industry subsidies in the US, Taiwan, South Korea, Japan and China. But it needs to be done and should make a substantial future contribution to Europe’s economy.
On August 8, TSMC, Bosch, Infineon and NXP announced plans to establish a joint venture known as the European Semiconductor Manufacturing Company (ESMC). Situated in Dresden, Germany, it will provide semiconductor manufacturing services for the automotive, industrial (including IoT, or internet of things) and other economic sectors. One of the world’s largest semiconductor manufacturing complexes is already in Dresden.
Headquartered in Taiwan, TSMC is the world’s largest and most technologically-advanced integrated circuit (IC) foundries. It is the most prominent of von der Leyen’s “too few suppliers from East Asia” upon which Europe now depends. Bosch is a leading German supplier of automotive, industrial, IoT and other technology and services.
TSMC will own 70% of the ESMC joint venture and its three local partners – which will also be its main customers – will own 10% each. The total investment is expected to exceed 10 billion euros ($10.6 billion), including equity, bank borrowings and subsidies from the EU and German government and falls within the framework of the new European Chips Act.
Construction of a wafer fabrication facility (fab) with a monthly production capacity of 40,000 300mm (12-inch) wafers per month is scheduled to start in the second half of 2024. The scale is similar to that of TSMC’s operations in Nanjing, China, and its joint venture in Japan.
TSMC will operate the fab, utilizing its 28/22 nanometer (nm) planar CMOS and 16/12nm FinFET process technology. Most German semiconductors are fabricated at these process nodes. Production is scheduled to commence by the end of 2027.
TSMC deputy spokesperson Nina Kao told electronic engineering trade paper EE Times that “Bosch, Infineon and NXP are all long-time TSMC customers and key European players in the automotive segment and industrial semiconductor supply chain.” ESMC will make chips that would otherwise be made in Taiwan.
The production start date might seem less than urgent, but is probably realistic. On September 26, The Wall Street Journal reported that Intel’s heavily-subsidized fab construction project in Germany faces delays due to an acute shortage of technicians, high energy prices and “an at-times Byzantine bureaucracy.” Production is slated to begin four or five years from now.
By the end of the decade, Intel plans to build two leading-edge fabs in Magdeburg, a Germany city between Hanover and Berlin, to make Intel products and serve Intel foundry customers. The total investment is expected to exceed 30 billion euros ($31.7 billion) – “the single largest foreign direct investment in German history,” according to Chancellor Olaf Scholz.
“Along with Intel’s existing wafer fabrication facility in Ireland and its recently announced assembly and test facility in Poland,” says Intel, “the new wafer fabrication site in Magdeburg will create a first-of-its-kind, leading-edge end-to-end semiconductor manufacturing value chain in Europe, serving European customers and helping to fulfill the EU’s ambitions for a more resilient semiconductor supply chain.”
There are currently no European companies among the world’s leading semiconductor foundries, memory chip makers or makers of cell phone, computer and AI processors. But over the next several years, TSMC and Intel will add foundry services and processors to Europe’s production base. The Europeans can also buy memory chips from America’s Micron Technology if they don’t want to overly depend on South Korea.
That said, the Europeans are adept at making automotive ICs. According to market research firm TechInsights, Infineon, NXP and STMicro ranked first, second and third worldwide in terms of sales in 2022, with a combined global market share of 33%. They also have a major presence in other industrial-use ICs.
In June, STMicro announced a joint venture with China’s Sanan Optoelectronics to make SiC (Silicon Carbide) power semiconductors in Chongqing for electric vehicle, industrial and alternative energy (solar and wind) applications. The total investment is expected to reach about 3 billion euros ($3.2 billion) and production is scheduled to start by the end of 2025.
In August, Infineon announced plans to spend up to 5 billion euros ($5.3 billion) on a large additional expansion to its fab in Kulim, Malaysia, with an aim of raising its share of the global market for SiC power devices from 12% to 30% by 2030.
This investment decision is supported by design wins and prepayments from six customers in the auto industry, three of them from China; four customers in renewable energy, including three Chinese photovoltaic and energy storage companies; and a capacity reservation for Schneider Electric.
These projects are driven by market dynamics, not the European Chips Act, and they were launched without interference from Brussels or Washington, DC.
Follow this writer on Twitter: @ScottFo83517667
The electricity tariff consists of four components – energy costs paid to the generation companies, network costs and market support services fees paid to SP Group, as well as market administration and power system operation fees paid to the energy market company and power system operator. The energy costs componentContinue Reading
Getty ImagesA crisis at the world’s most indebted company has worsened after its chairman was placed under police surveillance.
It follows earlier reports that other current and former executives at Chinese property giant Evergrande had also been detained.
Evergrande suspended the trading of its shares in Hong Kong on Thursday until further notice.
It marks another low for the firm which was declared to be in default in 2021 after missing a crucial repayment deadline, triggering China’s current real estate market crisis.
Businessman Hui Ka Yan founded Evergrande, formerly known as the Hengda Group, in 1996 in Guangzhou, southern China.
According to the company’s website, Evergrande Real Estate currently owns more than 1,300 projects in more than 280 cities across China.
The broader Evergrande Group encompasses far more than just real estate development.
Its businesses range from wealth management to making electric cars and food and drink manufacturing. It even owns a controlling stake in what was one of the country’s biggest football teams, Guangzhou FC.
Mr Hui was once China’s richest person with his fortune estimated at $42.5bn (£34.8bn) by Forbes, but his wealth has plummeted since then, largely as Evergrande’s problems have grown.
Evergrande expanded aggressively to become one of China’s biggest companies by borrowing more than $300bn.
In 2020, Beijing brought in new rules to control the amount owed by big real estate developers.
The new measures led Evergrande to offer its properties at major discounts to ensure money was coming in to keep the business afloat.
Now it is struggling to meet the interest payments on its debts.
This uncertainty has seen Evergrande’s shares lose 99% of their value in the past three years.
In August, the firm filed for bankruptcy in New York, in a bid to protect its US assets as it worked on a multi-billion dollar deal with creditors.
There are several reasons why Evergrande’s problems are serious.
Firstly, many people bought property from Evergrande even before building work began. They have paid deposits and could potentially lose that money if it goes bust.
There are also the companies that do business with Evergrande. Firms including construction and design firms and materials suppliers are at risk of incurring major losses, which could force them into bankruptcy.
The third is the potential impact on China’s financial system: If Evergrande collapses, banks and other lenders may be forced to lend less.
This could lead to what is known as a credit crunch, when companies struggle to borrow money at affordable rates.
A credit crunch would be very bad news for the world’s second largest economy, because companies that can’t borrow find it difficult to grow, and in some cases are unable to continue operating.
This may also unnerve foreign investors, who could see China as a less attractive place to put their money.
The very serious potential fallout of such a heavily indebted company collapsing has led some analysts to suggest that Beijing may step in to rescue the company.
However, Jackson Chan from financial markets research platform Bondsupermart does not think that will now happen.
“To be honest, Evergrande has already collapsed,” says Mr Chan, adding that he believes “it is on the brink of a forced liquidation”.
This could have a major effect on China’s economy as the property sector contributes roughly a quarter of its growth.
Mr Chan also suggests that the country could be following a similar path to Japan in the 1980s, when it slipped into decades of economic stagnation.
However, others think it is unlikely that Evergrande will be allowed to completely collapse.
“That could spiral, affecting other indebted companies and further hurt the overall property sector which is very important to the growth of the economy,” Dexter Roberts, director of China affairs at the Mansfield Center at the University of Montana, told the BBC.
“At the same time, many people whose household wealth is mainly in their apartments will also be badly hurt,” he added.
Mr Roberts, who spent more than two decades in China as a journalist, said “the old Evergrande no longer exists” and while the authorities may keep it afloat, “it will be as a radically diminished company.”
Reporting by Peter Hoskins and Mariko Oi
Western nations and multinational corporations, severely impacted by Covid-19 restrictions and supply chain disruptions, are reevaluating their approaches toward China. While many Western businesses view China as a vital market, there is considerable uncertainty about the Chinese economy’s potential recovery.
Amid the backdrop of uncertain economic trends in China and globally, the interactions between the world’s two largest economies, China and the United States, hold significance. Relations are continuing to deteriorate. Chinese President Xi Jinping even accused the United States of trying to hinder China’s technological advances in March 2023.
Geopolitical tensions also exist, particularly over the Taiwan issue. While a military resolution to the matter remains largely hypothetical, the dynamics within the business community demonstrate that political tensions tend to take a backseat to economic considerations.
Since China lifted its restrictive Covid-19 measures in late 2022, it has reopened to foreign visitors and businesspeople. But despite political criticism of Beijing’s assertive stance in the South China Sea and Taiwan, Western businesses recognize the Chinese market’s importance to their companies or personal wealth accumulation.
If they ever need to take definitive actions, they would prefer to “de-risk” rather than completely sever ties with China.
The CEOs of prominent US companies such as Apple, Pfizer and BHP attended the China Development Forum in Beijing in April 2023. Elon Musk, Tesla founder and currently the wealthiest individual on Earth, visited China two months later.
China is Tesla’s second-largest sales market after the United States, accounting for around one-quarter of total revenue. In June, Microsoft CEO Bill Gates held a meeting with Xi in Beijing, during which the Chinese leader referred to Gates as the first “American friend” he has encountered in recent times.
Poor economic data indicates that even Chinese consumers harbor doubts about the future trajectory of China’s economic development. Statistics reveal challenges in the real estate sector, traditionally a key driver of China’s GDP.
Despite recent efforts by Chinese banks, such as slashing interest rates to stimulate consumption and investment, the outlook for the Chinese economy remains lackluster.
As the Washington–Beijing relationship deteriorates, European Union member states are adopting divergent strategies in their interactions with China. These strategies are influenced by multiple drivers, including each nation’s economic interests, historical experiences with authoritarian regimes during the Cold War, and values such as freedom and democracy.
For example, Lithuania adopts a distinct and principled policy towards China. Lithuania actively champions the fundamental values and democratic principles of the European Union.
It openly cultivates political relations with Taiwan and does not shy away from critiquing human rights violations in authoritarian regimes. After Lithuania agreed to exchange diplomatic offices with Taiwan, China effectively imposed an unofficial blockade against Lithuanian imports.
France – the second-largest economy in the European Union – adopts a more prudent approach when it comes to engaging with China. During French President Emmanuel Macron’s visit to China in April, he led a delegation of business leaders to forge new agreements. While this does not imply indifference to human rights issues, France recognizes the crucial significance of its business ties with China.
There is also a divergence in political approaches towards China within individual countries. In Germany, there is a faction characterized by a “business first” approach, exemplified by individuals as well as German manufacturers with business operations in China.
On the other side, there is a cohort of EU advocates who closely align themselves with the US stance on China, including the German Foreign Minister Annalena Baerbock.
This group advocates for reduced reliance on Chinese exports, intensified scrutiny of Chinese investments within the European Union and more stringent regulations on outbound investments into China. The Netherlands’ ban on exports of ASML chipmaking machines to China in June 2023 is in line with this policy.
Many European officials are increasingly aligning with US views on China while safeguarding their economic interests. For example, the Italian government has indicated its intention to pull out of China’s Belt and Road Initiative.
European Commission President Ursula von der Leyen is pushing for export controls on sensitive technologies. Hungary and Poland are both stepping up their economic cooperation with China. For the seventh consecutive year, China is Germany’s largest trading partner, with bilateral trade reaching US$322 billion in 2022.
As its overall trade deficit with China rises to unprecedented levels, the European Union is becoming more pragmatic about future economic cooperation with China. This leads to the de-emphasizing of China for many multinational companies and calls for “decoupling.”
Germany’s latest China strategy affirms the pressing need to establish effective frameworks for future engagements with Beijing.
Despite undeniable evidence of worsening relations between the United States and China, Western businesses continue to maintain ties with China. But even within the European Union, member states have varying approaches when it comes to dealing with China.
While at the EU level, China is perceived as a competitor, at the national level, each country possesses a unique set of business interests related to China, which shape their official policies.
Striking a balance between accommodating these interests and upholding EU approaches is an arduous task for every country.
Marian Seliga is head of China Desk and advisor to the board at J&T Banka, Czech Republic.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
