The Nation Newspaper

Tag: china

  • China port explosion to drive insurance costs

    TWO explosions at the Chinese port of Tianjin, used by more than half of the Fortune 500 as the world’s third-largest port, likely will result in higher property insurance rates due to losses already in the billions of dollars.
    The late-night explosions on August 12 at a warehouse filled with toxic waste affected a substantial area of the port and surrounding residential areas and resulted in the deaths of more than 100 people. The event underlines the growing accumulation of risks in industrialized areas and touches a multitude of classes of insurance, experts say.
    While the port terminals have now resumed service, insurers and reinsurers are still unable to inspect damage on-site to assess losses caused by the destructive blasts.
    Insured losses from the event likely will be between $1 billion and $1.5 billion, according to Credit Suisse Group A.G. analysts, and could exceed $1.5 billion, according to analysis by Fitch (Hong Kong) Ltd.
    European insurers Allianz S.E. and Zurich Insurance Group Ltd. said they have received claims arising from the blast, while Chinese insurer Ping An Insurance Co. of China said it expected losses of between 300 million yuan and 500 million yuan ($47.0 million and $78.3 million).
    Other major insurers and reinsurers said it was still too soon to give loss estimates.
    About 40% of automobile imports in China pass through the port at Tianjin, sources noted, and more than 8,000 vehicles are thought to have been destroyed by the explosions.
    The International Union of Marine Insurance said losses on motor vehicles alone could be $300 million.
    Many major auto manufacturers suffered losses, including Hyundai Motor Co., which said it had about 4,000 cars parked at the port when the explosions occurred, and France’s Groupe Renault, which said about 1,500 imported cars stored in a warehouse at the plant had suffered burns.
    “Property damage claims will form a major part of the overall insured loss, which includes property and content losses at and near the blast site, which were damaged by fire or explosion,” A.M. Best Co. Inc., Oldwick, New Jersey, said in a briefing on the explosions.
    “Business interruption loss forms a large part of the uncertainty surrounding the ultimate loss for the insurance industry in this incident,” it added.
    “On the marine cargo side, it will take time for claims arising from damaged shipping containers to be reported and inspected by insurance companies,” Best said.

    •Culled from Business Insurance

  • China, Russia target U.S spies via hacked computer databases

    The White House is considering applying sanctions against Chinese companies and individuals who have benefited from the Chinese government’s alleged hacking of valuable United States (.S). trade secrets, which China has denied doing.

    Spy services in China and Russia, among others, are collecting and scrutinizing hacked United States computer databases to target American intelligence agents and officers. Foreign spies have penetrated government websites and emails, social media accounts and massive data troves containing personal information on millions of Americans, including medical forms, Social Security numbers and airline records.

    These data files are used to identify and track — or even blackmail and recruit — U.S. undercover operatives and agents overseas. The foreign spy services employ sophisticated software to reveal “who is an intelligence officer, who travels where, when, who’s got financial difficulties, who’s got medical issues, [to] put together a common picture,” William Evanina, the top counterintelligence official for the U.S. intelligence community, said in an interview with the Los Angeles Times.

    Evanina declined to say which countries were involved, but other U.S. officials speaking on condition of anonymity said Chinese and Russian adversaries in particular were aggregating and cross-indexing vast U.S. computer files for counterintelligence purposes. The Russian Embassy did not respond to requests for comment, but Chinese Embassy spokesman Zhu Haiquan said Friday China’s government “firmly opposes and combats all forms of cyberattacks in accordance with the law,” the Los Angeles Times reported.

    The White House is considering applying sanctions against Chinese companies and individuals who have benefited from the Chinese government’s alleged hacking of U.S. trade secrets, which China has denied doing. U.S. President Barack Obama’s administration has said China is the top suspect in the hacking of a U.S. government agency that compromised the personnel records of at least 4.2 million current and former government workers, the Washington Post reported Sunday.

    The Obama administration has scrambled to boost cybersecurity mechanisms for federal agencies and vital infrastructure. American intelligence officials have urged Obama to express concerns about Chinese hacking during Chinese President Xi Jinping’s visit to the White House on Sept. 25. U.S. Defense Secretary Ashton Carter said the military also needs to increase its cybersecurity systems.

    “We’re not doing as well as we need to do in job one in cyber, which is defending our own networks,” Carter said Wednesday, according to the Los Angeles Times. “Our military is dependent upon and empowered by networks for its effective operations… We have to be better at network defense than we are now.”

  • Lead China jitters, globalisation bode ill for Fed’s inflation goal

    Wild swings in world financial markets this week have shown how events in China can potentially disrupt the Federal Reserve’s carefully scripted policy plans. The turmoil, triggered by a rout in Chinese markets, also flagged a broader risk that the U.S. central bank may struggle to meet its inflation target until the rest of the world plays along.

    As they try to nudge U.S. interest rates away from zero, policymakers might have to rethink a basic assumption that solid economic growth and swelling payrolls at home are enough to do the job even as the world’s second-largest economy stutters.

    “The years when China could keep on growing and pump things up – that’s over. So you look around the world and ask who can take up the slack, and really the answer is nobody,” said Kevin Logan, chief U.S. economist at HSBC Securities, in New York.

    “I don’t see how it’s possible that inflation will be picking up in the United States. We’re just going to have a stronger dollar, falling commodity prices, growth prospects that aren’t that good, more competition from imports in the U.S. market so that labor won’t have any bargaining power and wages won’t be going up.”

    Only days ago, Fed officials had appeared ready to push interest rates higher in September based on a sense of “reasonable confidence” that inflation would rise to the central bank’s 2 percent target.

    Now, they are admitting things got more complicated after a rollercoaster week in financial markets caused by fears that China’s gradual slowdown could turn into a crash landing.

    New York Fed President William Dudley said on Wednesday that the prospect of a September rate hike “seems less compelling” than it was only weeks ago, even if he warned about overreacting to “short-term” market moves.

    Global central bankers meeting this week at the annual Federal Reserve retreat in mountainous Jackson Hole, Wyoming, are likely to focus on recent market turbulence, the divergence between the world’s two biggest economies and the question what is driving inflation in the post-crisis world.

    The recent market swoons follow a series of other shocks – crashing oil prices, weakness in Europe, the constant deflation threat in Japan – that have held down inflation globally.

    Up to now Fed officials have argued those problems would have only a passing effect on U.S. prices, even as they kept pushing the timeline for reaching their inflation goal further into the future.

    Part of the logic of the Fed’s two percent inflation target is to allow the central bank to lift its benchmark rate and build a cushion for monetary policy to respond to any new economic threat without tightening inflation-adjusted rates too much.

    Some economists, however, question long-held views such as that rising employment will eventually drive up wages and inflation, pointing out that global forces now play a prominent role in that equation.

    The opening up of markets in former Soviet bloc countries, China’s entry into the World Trade Organisation, regional free trade pacts have all allowed capital and goods to move more freely, helping to even out and hold down costs.

    In fact, as U.S. imports have increased to 15 percent of the national output by the middle of last decade from around 10 percent in early 1990s, inflation has been tracking import prices more closely, with headline inflation over that period matching the increases in prices of non-oil imports.

    Some analysts have also said that globalisation has been a factor in holding down U.S. wages and prices even at times of solid growth.

    Over the past year, the dollar’s rise has served as another anchor on consumer prices.

    A rebound in U.S. stock prices and a sharp upward revision in U.S. second quarter growth numbers may ease some fear that slow growth and volatility overseas will dull the U.S. recovery.

    But renewed disinflationary impulses from around the globe could still make the Fed more cautious and intensify the effort to better understand how inflation works.

    Some basic tenets are now in flux, also at least partly because of globalisation. Some researchers, for example, argue that “core inflation” – which strips out food and energy prices and is often used by bankers as their preferred gauge – may be less relevant in a world where futures contracts, global shipping and worldwide trade help even out retail level price swings for some of those goods.

    It is also far from clear how economies behave when interest rates are stuck at zero, as they have been in the United State since 2008.

    “I look at data and I think that we are in an unusual situation,” Michael Owyang, assistant vice president at the St. Louis Federal Reserve Bank, told Reuters. “I don’t have a good model for what is happening. I have not seen these conditions before.”

  • Toyota to restart production in China

    Toyota Motor Corporation said it will restart production at China plants that were shut after explosions in the city of Tianjin.

    Workers at two lines in the Tianjin Economic Technological Development Area were expected to return last Thursday and start preparation to begin production on Friday, Toyota said in an e-mailed statement.

    Employees at the Xiqing line also were to begin operations.

    Production has been shut at Tianjin FAW Toyota Motor Corporation, the Japanese carmaker’s local affiliate, since the August 12 blasts at a chemical storage site in the northern Chinese port city. The explosions killed at least 123 people and injured 67 Toyota workers who live in the area. About 4,700 Toyota and Lexus vehicles were also damaged.

    The automaker said decisions about working overtime or extra shifts to recover lost production will be made as it continues to assess the state of its facilities. Toyota said it can’t estimate lost output at this stage.

    Toyota said it doesn’t expect sales to be “significantly affected” as they have “certain amount of inventory.”

  • U.S. oil fall longest in 29 years after China data

    U.S. oil prices headed for their eighth consecutive week of falls last Friday, the longest losing streak since 1986, after a sharp drop in Chinese manufacturing increased worries over the health of the world’s biggest energy consumer.

    Activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, adding to worries about lower consumption of crude in the second-biggest oil user.

    Asian stocks followed Wall Street lower as fears took hold of a China-led slowdown in global growth.

    U.S. crude for October delivery CLc1 was 50 cents lower at $40.92 a barrel by 1230 GMT.

    Last Thursday, the September U.S. crude contract CLU5 saw its lowest intraday trade since March 2009 at $40.21 a barrel before it expired at the market close.

    Brent oil LCOc1 was on track for its seventh weekly decline in eight, down 60 cents at $46.02 a barrel, after settling 54 cents lower last Thursday.

    Both global oil benchmarks are near 6-1/2-year lows, with U.S. crude heading for its longest weekly losing streak in 29 years.

    “The market is stuck in a relentless downtrend,” said Robin Bieber, a director at London brokerage PVM Oil Associates.

    In late 1985, oil prices slumped to $10 from around $30 over five months as OPEC raised output to regain market share following an increase in non-OPEC production.

    “Weighing on prices is the continued ample supply with crude oil builds in the U.S. and OPEC pumping at record levels,” said Michael Poulsen at Global Risk Management. “Fear of slowing growth in China is increasing.”

    The dollar DXY fell on receding expectations of a U.S. interest rate rise in September, providing some support for oil. But technical price charts for almost all the big oil futures markets looked bearish, PVM’s Bieber said.

    U.S. crude inventories continued to rise, as imports rose and shale production fell more slowly than anticipated, despite dropping prices.

    “The only silver lining we are seeing coming from the United States is that refining rates remain high and that crude production continues to fall,” Daniel Ang at Singapore-based Philip Futures said.

  • 5,800 Jaguar, Land Rover cars hit in China blasts

    Carmaker Tata Motors Ltd said last  Friday that  ‘many’ of the 5,800 Jaguar and Land Rover vehicles it had at Tianjin port in China were likely to have been damaged in the recent chemical explosion that killed more than a hundred people.

    The company said it has yet to determine the exact extent of the damage, joining other global carmakers such as Volkswagen AG, Hyundai Motor Co, Toyota Motor Corp, Daimler DIAGn.DE and BMW AG that are still counting up their losses. The Jaguar Land Rover cars had recently been shipped to China and were stored at various locations in Tianjin port, Tata Motors said in a statement to the Indian stock exchange.

    Tata bought the British luxury carmaker JLR in 2008.

    “Whilst we believe many of these vehicles may have been damaged, we are presently unable to quantify the numbers of units affected,” a JLR spokesman said in the statement, explaining that access was still restricted to areas near the site of the explosion. The number of cars damaged at China’s largest auto import hub could climb to above 10,000 when accounting for all vehicles in the area. This will affect deliveries at a time when China’s auto market has been shrinking due to slowing economic growth and the recent stock market slump.

    Shares in Tata Motors extended losses to more than four percent after the statement, and ended nearly three percent lower in a weak Mumbai market.

  • China, U.S to invest $14b in NIPP

    Foreign firms from China and the United States (U.S) have pledged to invest over $14 billion in the second phase of the National Integrated Power Project (NIPP).

    The second phase projects include construction of large hydropower plants such as Mambilla, Gurara II and 10 small hydropower plants, transmission and distribution facilities and equipment.

    A source said the State Grid of China/CET/Westron, had committed to invest over $8 billion in first tranche and additional $4 billion later (on equity/loan participation) in Transmission Company of Nigeria through Niger Delta Power Holding Company (NDPHC)  Limited with a minimum of $600 million contribution by NDPHC which oversees the NIPP projects on behalf of the three tiers of the government.

    The source also noted that Africa Group from U.S. committed to invest over $2 billion in power projects in Nigeria using NDPHC as a fulcrum, adding that there are some other interested investors committed to financing small transmission projects in the range of $50 million and $200 million, citing a firm called Ak-Ay.

    He said following some challenges confronting the project and the over N64 billion owed the NDPHC by the Federal Government, the foreign investments may be stalled.

    He said: “On NIPP phase two programme implementation, the National Economic Council (NEC) approved the construction of some hydroelectric projects and additional strengthening of the transmission network from the proceeds of the sale of 80 per cent shares in NIPP generation projects for implementation as Phase II of NIPP.‘’

    The source said 80 per cent share sales’ transaction supported by Messrs. CPCS Transcom International of Canada resulted in $5.7 billion.

    However, the source added that as no payments had been received from the share sales transaction due to gas and market bankability limitations, the NIPP Phase2 implementation could not commence as planned.

    Earlier, he explained that because of the challenges confronting the NIPP projects, including litigations, bidders have started to withdraw their bid bonds.

    The source stated that share sales transaction has to be redesigned for phased closure, adding that public procurement process for the engagement of a project management consultant to support NDPHC in project selection, design and implementation of NIPP Phase two projects has been completed with AF-Consult/Otis emerging victorious.

    He noted that despite the challenge in gas supply, NIPP currently contributes about 25 per cent of the nation’s generation output.

  • China fears and global growth doubts grip markets

    Markets will be watching for China’s next move as signs of a slowdown in the world’s second-largest economy stack up, raising expectations it will act to stoke growth.

    A looming snap election in Greece and a closely watched conference hosted by the Federal Reserve in the United States are also likely to keep investors on their toes this week, in particular as they look for hints on when the U.S. will raise interest rates.

    Fears that Chinese growth is weakening, dragging down the global economy with it, are already hammering commodities and world stock markets.

    Both tumbled last Friday after a survey showed Chinese manufacturing slowed the most since the global financial crisis in 2009 – adding to other worrying clues about the country’s health, including its falling exports.

    China devalued the yuan earlier in August, by pushing its official guidance rate down 2 per cent. The central bank has said there was no reason for the currency to fall further, but investors are also bracing for further interest rate cuts.

    “It will be all eyes on the Chinese authorities for any further policy support steps, alongside the People’s Bank of China yuan fixings and trading swings,” analysts at Investec Economics said in a note to clients.

    China is also widely expected to relax reserve requirements ratios for its banks again in the coming months, a measure intended to spur lending by reducing the cash they need to hold. It is trying to keep its economy on course to grow 7 per cent in 2015 – its slowest pace in a quarter of a century.

    “We continue to expect a total of 100 basis points of reserve requirement ratio cuts by end-2015, with the first cut likely to take place within the next two weeks,” economists at Standard Chartered said.

    The cash reserves ratio has already been cut three times this year.

    By the end of next week attention may shift away to the Rocky Mountains, where policy makers are due to gather from 27-29 of this month for the Fed’s conference of central bankers, finance ministers, academics and financial market participants in Jackson Hole.

    Fed chair Janet Yellen is not expected to attend, raising the prospect that other Fed officials may be more tight-lipped about the likelihood of the first rate increase in almost a decade, some analysts said.

    The prospect of an increase as soon as September receded last week as the Fed released minutes of July meeting. They gave no clear signals as to the timing of such a move – which would affect markets across the world and could cause more pain for emerging market assets, already being hit by China’s woes.

    Fed policy makers are still concerned about the weakness of the global economy, the minutes showed, but they were also more confident about US growth prospects.

    Further clues on both matters should be gleaned from data releases last week, including second-quarter gross domestic product figures for the United States, due last Thursday.

    Quarter-on-quarter GDP growth in the period is expected to be revised upwards to 3.2 per cent from 2.3 per cent, according to a Reuter’s poll.

    In the euro zone, investors will also be looking at a German economic sentiment survey due tomorrow for a better idea of the scope of the bloc’s recovery.

    Preliminary August consumer price readings for Germany and Spain on Friday will provide further insight into how effective the European Central Bank’s bond-buying efforts have been at warding off deflation.

    But the spotlight will mainly fall once again on Greece, where Prime Minister Alexis Tsipras has resigned. That opened the way for early elections after he secured much-needed funds from the country’s third international bailout programme.

    The current Greek government aims to strengthen its position in the election after accepting a rescue deal it once opposed. But that creates more uncertainty for markets already on edge over whether Greece will deliver on promised reforms and get its economy and banks back on track.

  • NCDMB sponsors 22 to China for pipe mill training

    The Nigerian Content Development and Monitoring Board (NCDMB) has concluded arrangement to sponsor 22 young Nigerians to the Peoples Republic of China to acquire skills in the operation and maintenance of machines that will be used at the pipe mill being set up at Polaku, Bayelsa State by Mainland Pipe Mill Nigeria.

    The trainees, who will travel before the end of the month, will be heading for the Baoji Petroleum Steel Pipe Company Limited (BSG), Baoji in Shaanxi Province, China where they will undergo their 45-day training.

    The training is being facilitated by Mainland Pipe Mill, which has BSG of China as its technical partner.

    Speaking in Yenagoa, the Bayelsa State capital at the induction for the trainees ahead of their trip, the Executive Secretary, NCDMB, Mr. Denzil Kentebe, urged them to take the programme seriously and acquire the necessary training and certifications that will enable them successfully operate the Polaku pipe mill when it becomes operational.

    He said the trainees had been offered an opportunity, which millions of Nigerians were desirous of and charged them to comport themselves as worthy ambassadors and return home as successes.

    Kentebe cautioned the trainees against breaking the laws of their host country, especially on the possession and use of illicit drugs as such offence attracts stiff punishment by the Chinese authorities. Besides, offenders will be disappointment to their families and the nation that have reposed confidence in them.

    The General Manager, Capacity Building Division, NCDMB, Ikpomosa Oviasu, restated that the programme was part of the Board’s efforts to imbue Nigerians with critical skills required in the oil and gas industry.

    According to him, the trainees would be assessed during and after the programme and the best performers would be placed in existing pipe mills in Nigeria for further on-the-job training ahead of the start of the Polaku pipe mill.

    Oviasu also confirmed that the Board and BSG had made arrangements for the trainees’ accommodation.

  • $600m China Exim-Bank rail loan not diverted, says Okonjo-Iweala

    $600m China Exim-Bank rail loan not diverted, says Okonjo-Iweala

    The former Minister of Finance, Dr Ngozi Okonjo-Iweala, has described as false, the allegation that she diverted a substantial part of a one billion dollar loan from the China-Exim Bank.

    The refuttal is contained in a statement in Abuja yesterday by Mr Paul Nwabuikwu, Special Adviser to Okonjo-Iweala.

    The Permanent Secretary, Ministry of Transport, Alhaji Mohammed Bashar, said about $600 million of the one $1 billion loan obtained from the China-Exim Bank for Kano-Lagos rail project was diverted to other projects.

    Okonjo-Iweala said the Goodluck Jonathan administration never obtained a loan from the China-Exim Bank for Kano-Lagos rail project.

    “The alleged diversion has no substance for the simple reason that the Kano-Lagos project was not among the projects presented for funding by the China-Exim bank.

    “It was the Lagos–Ibadan rail project, not Lagos-Kano rail project that was proposed in the original application to the China-Exim Bank, but in the end, no funds were assigned for Lagos-Ibadan rail project.

    She said the projects covered by the China Exim-Bank loan were at different stages.

    They include “the $500 million expansion of four International airport terminals in Lagos, Kano, Abuja and Port Harcourt.

    “There is also the $500 million Abuja Light Rail project; $984 million Zungeru Hydro-electric power project and $100 million Galaxy Backbone project,” she said.

    Okonjo-Iweala said the diversion of the fund would have been extremely difficult due the terms attached to the loan.

    “The procedure is that funds for approved loans remain in the China-EximBank and are released directly to the Chinese firm executing the contract only after the presentation of duly certified proof of work by the responsible ministry.

    “In this case it would have been the Federal Ministry of Transport, based on the agreed milestones.

    “For the sake of emphasis, the China-Exim Bank does not disburse money directly to government and therefore the issue of diversion does not arise,” she said.