China - Political

[Luke]

42 minutes ago, Spekulatius said:

You cannot move capital out of China without regulatory approval. This is true for domestic as well as subsidies of foreign companies.

 

The Yuan is not freely convertible into other currencies either.

 

3 hours ago, crs223 said:

 

According to ChatGPT, this would not be a viable option to return capital to shareholders:

 

 

Alibaba wants to return more USD to shareholders via buybacks and dividends on the NYSE but it was run out of USD.  Can Alibaba bypass CCP capital controls and simply exchange their CNY to CNH and then to USD?

 

 

Alibaba, like other Chinese companies, faces strict capital controls imposed by the Chinese government, which regulate the conversion and outflow of renminbi (RMB) into foreign currencies like USD. Here's why the approach you suggested—converting CNY to CNH and then to USD—would not be a simple workaround:

1. CNY vs. CNH: CNY (onshore renminbi) is subject to strict regulatory oversight by the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE), while CNH (offshore renminbi) is traded more freely in markets like Hong Kong. However, converting large amounts of CNY to CNH is still monitored and restricted.

2. Capital Controls on CNY-CNH Conversions: Even though CNH is more freely traded, the ability of a Chinese company like Alibaba to convert onshore CNY to CNH is not unlimited. The Chinese government carefully monitors and restricts large conversions to prevent capital flight.

3. USD Liquidity Constraints in Offshore Markets: While CNH can be converted to USD in offshore markets, it would still require sufficient USD liquidity. If Alibaba attempted to do this at scale, authorities would likely intervene.

4. Regulatory Oversight: Given Alibaba’s prominence, any large-scale attempt to bypass capital controls would likely attract regulatory scrutiny, leading to potential penalties or restrictions on future transactions.

Isnt Alibaba also mainland listed now and can just buy back shares locally without this USD conversion problem?

[rogermunibond]

Not sure what the big deal is.  PetroChina, a state owned enterprise, has been making dividend payments to shareholders since the 2000s.

 

Sure the VIE is cumbersome and has never had its regulatory status "blessed" but there are SOEs that have listed using the VIE.

 

And China VIE controlled companies have made dividend payments to ADR/ADS over the last 4-5 years.  No issues.

 

SAFE review and approval, but if you read the rules it's mostly related to payment of dividends or share buybacks funded from retained earnings.

[crs223]

2 hours ago, rogermunibond said:

Not sure what the big deal is.  PetroChina, a state owned enterprise, has been making dividend payments to shareholders since the 2000s.

 

Sure the VIE is cumbersome and has never had its regulatory status "blessed" but there are SOEs that have listed using the VIE.

 

And China VIE controlled companies have made dividend payments to ADR/ADS over the last 4-5 years.  No issues.

 

SAFE review and approval, but if you read the rules it's mostly related to payment of dividends or share buybacks funded from retained earnings.

 

BABA could not get enough USD to perform buybacks last year... so they issued convertible bonds denominated in USD to fund the buybacks.

[winjitsu]

12 hours ago, Luke said:

 

Isnt Alibaba also mainland listed now and can just buy back shares locally without this USD conversion problem?

Via stock exchange from HK, not exactly "listed." I think it's for institutional and retail investors, not sure if the firm itself can use this mechanism for buyback. Atleast I haven't seen anything in english

[mt04]

On 2/17/2025 at 11:35 PM, Spekulatius said:

Why not lay a trap and get foreign capital suckered in before letting it snap shut. It makes perfect sense to me.

imo this would destroy trust over the long term leading to them being unable to raise (foreign) capital post snap shut 

[formthirteen]

What Does Xi’s Meeting With Entrepreneurs Mean for the Private Sector?

https://carnegieendowment.org/posts/2025/02/what-does-xis-meeting-with-entrepreneurs-mean-for-the-private-sector?lang=en

 

Quote

The right kind of pep talks may indeed create short-term boosts to confidence, which in turn can create short-term boosts to household consumption and spur businesses to eagerly respond. However, the structural view of the decline in consumption growth implies that without a transformation of the growth model toward a higher household share of GDP—which inevitably requires either explicit or implicit transfers from businesses or governments, showing why it is so difficult to pull off)—confidence-boosting pep talks won’t create sustainable increases in domestic demand.

 

Quote

Before they change their minds about Chinese growth prospects in 2025, most analysts will be watching to see if there is a transformation in Chinese fiscal policy, with more fiscal expansion directed toward the demand side of the economy rather than to the supply side. If that happens, then meetings like the one over which Xi presided on February 17 may indeed help, but if it doesn’t, these meetings are unlikely to cause much more than a surge in hopeful articles in the Chinese and foreign press.

 

[nsx5200]

https://www.reuters.com/world/china/chinas-parliament-meets-shield-economy-us-tariff-salvos-2025-03-04/

"China unlocked more fiscal stimulus on Wednesday, promising greater efforts to support consumption and cushion the impact of an escalating trade war with the United States"

"The term "consumption" was mentioned 31 times in Li's report, up from 21 times last year..."

 

It seems like the CCP's finally shifted their position and starting to turn on the money spigot to juice household consumption.

 

[Paarslaars]

Surprisingly down today, even JD after crushing earnings..

[nsx5200]

https://www.tomshardware.com/tech-industry/tsmcs-usd100-billion-u-s-deal-shows-taiwans-ruling-party-is-selling-out-taiwan-say-critics

"TSMC's $100 billion U.S. deal shows Taiwan's ruling party is 'selling out Taiwan,' say critics"

 

The critic in the article is a mouthpiece for CCP.  When nobody except the CCP is complaining, we know TSMC/Taiwan and the US is on the right path.

[John Hjorth]

CNN - World/China [March 7^th 2025] : China slams Trump’s return to the ‘law of the jungle’.

 

This from China's Foreign Minister Wang Yi. Great fun on a Friday, if you think about it. 

[Spekulatius]

Well when China gets the moral high ground, it’s not because they have risen, It’s because somebody else has sunk.