China’s $941 Billion Sovereign Fund Seeks More Resilient Assets

China Investment Corp. is looking for more resilient assets in markets battered by the coronavirus pandemic as the nation’s $941 billion sovereign wealth fund seeks to boost long-term returns, Executive Vice President Zhao Haiying said.

The Beijing-based company added to its investments in credit markets in recent months, especially investment-grade loans in the U.S., after the Federal Reserve eased a liquidity crunch, Zhao said in an interview with Bloomberg News on Saturday. CIC, as the fund is known, also bolstered holdings in healthcare and information technology stocks and added exposure in regions like Asia where there was “less uncertainty” about the spread of the virus, she said.

CIC, led by Chairman Peng Chun, is finetuning its investment strategies. It sees a diversified portfolio as the best way to weather its biggest test since inception in 2007. A plan to boost alternative and direct investments to 50% of global assets by the end of 2022 remains unchanged, with the private portfolio, which includes real estate and private equity, avoiding any “serious damage” even as cash flows slow, Zhao said.

“As a long-term investor, we want to invest in growth,” Zhao said in Beijing. “Given the many external shocks, you need to be more focused on the more resilient areas, strategies and themes, and avoid fragile areas.”

23,790 in U.S.Most new cases today

-14% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​073 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

-4.​8% Global GDP Tracker (annualized), April


CIC’s overseas investments returned about 17% last year based on unaudited results, she said, as global stocks rallied. That comes close to a record 17.6% gain in 2017 and reverses a loss in 2018 when equities tumbled.

Hedge-Fund Allocations

The pandemic and the collapse in global oil markets have caused more serious disruptions to other sovereign wealth funds. Norway, for example, is planning to draw a record 382 billion kroner ($38.2 billion) from its wealth fund, forcing the world’s largest sovereign investor to embark on a historic asset sale to generate cash.

While the steep declines in global equity markets earlier in the year made stocks the hardest hit asset class for many investors, there has since been a “very good rebound,” Zhao said. Fixed-income investments helped mitigate volatility in equities, and CIC’s hedge-fund allocations, among the world’s largest, also played a “positive role” in absorbing the market impact.

Zhao said the situation is less stable in emerging markets. She called for more cooperation among governments and cautioned against policy missteps, citing rising geopolitical tensions and long-term issues like debt burdens.

“The liquidity crisis may be over and the darkest may be behind us,” she said. “But we must be very careful to avoid going back to the ICU.”

— With assistance by Sharon Chen, and Dingmin Zhang

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China Pledges to Implement U.S. Trade Deal Amid Rising Tensions

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China reiterated a pledge to implement the first phase of its trade deal with the U.S. despite setbacks from the coronavirus outbreak, and as tensions escalate between the world’s two biggest economies.

“We will work with the United States to implement the phase one China-U.S. economic and trade agreement,” Premier Li Keqiang told an annual gathering of lawmakers in Beijing on Friday. “China will continue to boost economic and trade cooperation with other countries to deliver mutual benefits.”

Over the past two years, the Trump administration had imposed punitive duties on roughly $360 billion in Chinese goods, and China retaliated by raising levies on more than half of America’s exports. The two sides signed a phase-one trade pact on Jan. 15 and rolled back some of the tariffs, but the agreement has come under treat as the two nations escalate disputes on many fronts.

The centerpiece of the January agreement was China’s promises to buy more U.S. goods and services, but even before the coronavirus hit analysts were questioning whether those targets were realistic. Now, with both Chinese demand and U.S. manufacturing and transport capacity down due to the virus — and prices falling for energy and other goods — those promises look even further out of reach.

Chinese Vice Premier Liu He, and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin earlier this month pledged to create favorable conditions for implementing the trade deal and cooperating on the economy and public health. But President Donald Trump said later in an interview that he is having “a very hard time with China” and last week said the U.S. would “save $500 billion” if it cut off ties with China.

China on Friday also abandoned its usual practice of setting a numerical target for economic growth this year due to the turmoil caused by the virus, breaking with decades of Communist Party planning habits in an admission of the deep rupture that the disease has caused.

Beijing is using the legislative session to pass a bill establishing “an enforcement mechanism for ensuring national security” for Hong Kong, setting up a potential showdown with Trump, who has come under pressure in Washington to reconsider the city’s special trading status. Secretary of State Michael Pompeo has delayed an annual report on whether the city still enjoys a “high degree of autonomy” from Beijing, telling reporters Wednesday that he was “closely watching what’s going on there.”

— With assistance by Sharon Chen, and Miao Han

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Kudlow says China will not sell US debt despite coronavirus feud

Kudlow: Entering gradual phase-in of coronavirus reopening

National Economic Council Director Larry Kudlow on economic recovery from the coronavirus, helping workers and small businesses struggling from the outbreak and U.S.-China relations.

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President Trump's chief economic adviser Larry Kudlow said Tuesday he does not believe China will sell U.S. debt, despite escalating tensions between the world's two largest economies over the novel coronavirus outbreak.

"I don’t believe they’ll sell our debt, because those are the crown jewels of their foreign exchange reserves," Kudlow told FOX Business' Maria Bartiromo. "And of course they would lose even more money by doing that. It’s like catching a falling knife."

Beijing is the second-largest owner of U.S. government debt, holding more than $1.1 trillion worth of treasuries.

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The latest flare-up has reignited concerns that China could weaponize its holdings and flood the markets with U.S. bonds. Last week, President Trump and other White House officials directed a government retirement fund to halt ts plans to invest in Chinese stocks this year.

At issue was whether administrators of the Thrift Savings Plan — a retirement savings plan similar to a 401(k) for federal employees and members of the military — should be allowed to move to a benchmark index that includes Chinese companies the U.S. has accused of committing human rights abuses.

"Look, the solution here is for the Chinese to open up their investment system and to play according to the rules set by long-time authorities in the U.S.," Kudlow said.

Relations between China and the U.S. have iced over since the virus outbreak began earlier this year, with the two nations engaging in a vicious war of words.

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The Chinese government has been widely criticized for its initial response to the virus and is frequently attacked by President Trump.

"We could cut off the whole relationship," Trump said during an interview with FOX Business last week.

The central leadership has tried to shift blame to local authorities, including for censuring doctors who tried to warn the public about the disease, The New York Times reported. Health authorities in the country first learned about the outbreak after unknown whistle-blowers leaked two internal documents online.

A recent report, whose authors include an expert from Wuhan's Municipal Center for Disease Control and Prevention, found that if China had taken aggressive action just a week earlier in mid-January, the number of infections could have been reduced by two-thirds.

The feud over the virus, however, has spilled into a broader fight over trade and technology.

"The solution for China is to not sell U.S. bonds, which would bankrupt the Chinese government," Kudlow said. "The solution for China is to put some transparency and openness into it."

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Boeing Airlifts 150,000 PPE From China To US

Boeing has transported more than 150,000 personal protective equipment or PPE units from China to the U.S. as part of the company’s COVID-19 airlift missions.

The aerospace and defense giant said it deployed thee Dreamlifter aircraft to transport protective eye goggles and face shields to frontline health care professionals in South Carolina.

Boeing worked in partnership with the Medical University of South Carolina or MUSC to deliver the PPE supplies to frontline health care professionals in the MUSC system.

The MUSC Health team will use the PPE for their statewide COVID-19 community testing and outreach efforts as they ramp up diagnostic testing and antibody testing across South Carolina.

Boeing noted that the MUSC Health team was first in the U.S. to launch a combined virtual urgent care platform and drive-through specimen collection site. They are now bringing a version of this successful model to the communities that need it most.

Boeing has used the Dreamlifter, a converted Boeing 747-400 Large Cargo Freighter, for its current and previous airlift missions. The medical cargo was transported in the lower lobe of the aircraft, while 787 component parts were flown in the main deck cargo hold.

Boeing said it has donated the cost of the mission transport, while Atlas Air operated the flights on behalf of Boeing.

The company has scheduled additional flights to deliver a total of 400,000 units of PPE to MUSC in the near future.

Last week, Boeing resumed all 787 operations at its South Carolina facility that were temporarily suspended on April 8 in response to the COVID-19 pandemic.

Boeing has also resumed operations in production facilities in Philadelphia as well as the Puget Sound-region.

The airplane maker had said in late April that it would not seek additional funding through the capital markets or the U.S. government options after it successfully raised $25 billion in a bond offering.

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China, S. Korea Ask Japan to Allow Business Travel, Yomiuri Says

China and South Korea have asked Japan to join them in relaxing controls on business travel as virus cases tail off, the Yomiuri newspaper reported, without saying where it got the information.

Japan remains reluctant to loosen what are currently some of the tightest border controls in the developed world, which were introduced over the past few weeks in a bid to help contain the coronavirus. The country has seen far fewer infections than in the U.S. or parts of Europe.

China and South Korea have allowed some business travel to resume with virus testing from this month, seeking to revive their ailing economies.

Tokyo Discusses Reopening as Virus Cases Drop to Single Digits

Health ministers from the three countries met by video conference on Friday and agreed to share information, data and expertise on the infection in a transparent fashion, according to Japan’s health ministry.

Japanese Foreign Minister Toshimitsu Motegi told reporters Friday that Japan needs to bring the outbreak under control domestically and examine the situation in other countries before considering relaxing border restrictions.

“Some countries are seeing a second wave,” Motegi told reporters, according to the ministry website. “We want to take into account the infection situation in the other country, as well as various other information, in considering what approach we can take to movement.”

When Japan does begin to open its borders, business people and experts will be prioritized, while tourism and other ordinary travel will come much later, Motegi said. Japan is also thinking of dividing countries into groups of 10 for travel approval, and hopes to coordinate mutual access at the same time, he said.

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Goldman Says Tariffs Are Key Metric for Yuan in U.S.-China Rift

For investors wondering what it will take to shake the yuan out of its recent slumber, Goldman Sachs Group Inc. has an answer: focus on tariffs.

Events related to tariffs in the China-U.S. trade dispute have a bigger influence on the currency than other issues, such as as restrictions on the technology industry or those linked to Hong Kong or Taiwan, Goldman economists led by Hui Shan wrote in a note dated May 8.

The yuan weakened an average of about 1% in the week after five events related to tariffs in 2018 and 2019, according to Goldman. News about other points of contention in the China-U.S. relationship led to “no consistent moves,” the bank said.

Swings in China’s currency have been muted recently, with a measure of historical volatility dropping to the lowest level in more than three months. The yuan rose just 0.3% in April, which was the smallest monthly move since November. It slipped 0.1% to 7.0805 a dollar as of 12:28 p.m. Monday in Shanghai.

China-U.S. tensions have worsened recently, with a dispute between the nations over the origins of the coronavirus threatening to derail an initial trade agreement. U.S. President Donald Trump cast doubt on the future of that deal on Friday, saying he’s “having a very hard time with China.”

Stephen Innes, chief Asia market strategist at AxiTrader Ltd., said he had been turning “bullish on the yuan until the trade war rhetoric ratcheted up,” adding that he is “more neutral now.”

He predicted the yuan will trade around 7.05-7.15 into the fourth quarter.

— With assistance by Chris Anstey

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U.S., China Trade Chiefs to Speak After Trump Threat to End Deal

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Top Chinese and U.S. trade negotiators will speak as soon as next week on progress in implementing a phase-one deal after President Donald Trump threatened to “terminate” the agreement if Beijing wasn’t adhering to the terms.

Chinese Vice Premier Liu He will be on the call, according to people familiar with the matter. The U.S. will be represented by Robert Lighthizer, one of the people said.

The planned phone call will be the first time Liu and Lighthizer speak officially about the agreement since it was signed in January, just before the global coronavirus pandemic walloped the world’s two biggest economies and upended global supply chains. The deal called for Liu and Lighthizer to meet every six months, making next week’s call slightly ahead of schedule.

Trump also seemed to suggest a development was on the horizon when he told reporters at the White House on Wednesday that he’d be able to report in the next week or two if he’s happy with how the trade deal is progressing.

On Sunday, in response to a question at a town hall from a business owner who said he was losing money on the tariffs, Trump noted that the duties prompted China to promise to buy $250 billion worth of U.S. goods.

Search for Virus Origin Heats Up as WHO Seeks Mission to China

“Now they have to buy,” the president said. “And if they don’t buy, we’ll terminate the deal, very simple.”

Beijing plans to show the U.S. it is sincerely working to fulfill its commitments despite the virus causing delays to some targets, one of the people said. For example, some measures that boost enforcement of intellectual property protection need to be approved by the annual National People’s Congress, which was postponed from March to later this month.

China’s commerce ministry didn’t immediately respond to a request for comment on the talks. The U.S. Trade Representative’s office also didn’t respond to emailed questions sent after normal business hours.

Relations between the U.S. and China have deteriorated further since America became one of the countries hardest hit by the coronavirus. Trump has blamed China for misleading the world about the scale and risk of the disease, and even threatened more tariffs as punishment. China’s foreign ministry has in turn accused some U.S. officials of trying “to shift their own responsibility for their poor handling of the epidemic to others.”

— With assistance by Jenny Leonard, and Steven Yang

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Pompeo Says ‘Enormous Evidence’ Connects Virus to Wuhan Lab

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U.S. Secretary of State Michael Pompeo said “enormous evidence” shows the novel coronavirus outbreak began in a laboratory in Wuhan, China, but didn’t provide any proof for his claims.

“I can tell you that there is a significant amount of evidence that this came from that laboratory in Wuhan,” Pompeo said on ABC’s “This Week.” “These are not the first times that we’ve had a world exposed to viruses as a result of failures in a Chinese lab.”

Pompeo stopped short of saying the virus was man-made, noting that he agreed with a report by the Office of the Director of National Intelligence that ruled out genetic modification or it having been man-made.

The virus’s origin has become a flash point in the pandemic and ratcheted up tensions between the U.S. and China. President Donald Trump has escalated efforts to attach blame to China as U.S. pandemic deaths pass 66,000.

“I’ve seen what the intelligence community has said,” said Pompeo. “I have no reason to believe that they’ve got it wrong.” Pompeo declined to say whether the Chinese intentionally released the virus. “I don’t have anything to say about that,” he said.

Trump and his aides sharpened their criticism of Beijing last week, demanding answers about the virus’s origin. The president tweeted Friday that some U.S. television networks are “Chinese puppets,” while his super-political action committee unleashed anti-China ads.

“China behaved like authoritarian regimes do, attempted to conceal and hide and confuse,” Pompeo said on ABC. “It employed the World Health Organization as a tool to do the same.”

The secretary said China continued to block access by health experts from the WHO, as well as U.S. scientists, from getting access to samples of the virus needed for study.

“This is an ongoing threat, an ongoing pandemic,” Pompeo said. “The Chinese Communist Party continues to block access to the Western world, the world’s best scientists, to figure out exactly what happened.”

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China Opposes Taiwan Participation in U.N. After U.S. Tweet

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China said it firmly opposes any participation by Taiwan in the United Nations as it responded to a tweet by the U.S. mission to the international body for the island to become involved.

The U.S. isn’t in any position to speak for Taiwan, is interfering in China’s internal affairs and “hurts the feelings of the 1.4 billion Chinese people,” China’s mission to the U.N. said in a statement on its website on Friday. It also criticized the timing of the U.S. comments as the world tries to deal with the coronavirus pandemic.

The U.S. mission said barring Taiwan from the U.N. was an affront to the international body’s founding principles promoting human freedom and providing a forum welcoming diverse views.

U.S. President Donald Trump is escalating efforts to blame China for the Covid-19 pandemic and is exploring ways to hold Beijing accountable. He and his aides have sharpened their criticism of China, hinting at possible retaliation through tariffs. On Monday, a top U.S. health official spoke with his Taiwan counterpart on giving the island a bigger role in the virus fight.

“The Chinese Mission hereby expresses strong indignation and firm opposition,” it said in the statement. “The government of the People’s Republic China is the sole legal government representing the whole of China, and Taiwan is an inalienable part of China,” it said.

— With assistance by Sharon Chen, and April Ma

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China to host online shopping festival to boost economy impacted by coronavirus

Pompeo: China caused lost lives, economic challenges

Sectretary of State Mike Pompeo says China will ‘pay a price’ for what they did to America.

China is hosting an online shopping festival from April 28 to May 10 in an effort to boost the country's consumption, state newspaper The People's Daily reported Thursday, citing the Chinese Ministry of Commerce.

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The decision to host the nearly two-week-long festival comes after China's gross domestic product fell 6.8 percent year over year in the first quarter of 2020, according to the National Bureau of Statistics.

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The festival is the second of its kind in China and will include 100 e-commerce companies selling a range of goods from agricultural products to electronics, The People's Daily reported.

In this Tuesday, March 10, 2020, photo released by China’s Xinhua News Agency, Chinese President Xi Jinping talks by video with patients and medical workers at the Huoshenshan Hospital in Wuhan in central China’s Hubei Province. (Xie Huanchi/Xinhua v

Participating companies are expected to offer discounts and better services in an effort to entice more sales, according to the outlet.

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The festival is similar to Singles Day, the world's busiest online shopping day organized by Chinese tech giant Alibaba. The company broke its record in Singles Day sales in November 2019 when gross merchandise volume reached 268.4 billion yuan (more than $38 billion).

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Alibaba, JD.com, Baidu and other e-commerce giants have expanded into consumer finance, entertainment and offline retailing.

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FOX Business' Ken Martin contributed to this report.

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