SINGAPORE (Mar 19): On March 13, China unveiled a government restructuring plan to consolidate its agencies, delineate areas of responsibility and better coordinate funding for the country’s Belt and Road regional infrastructure plan. Several hours later, US President Donald Trump announced over Twitter that he is replacing his secretary of state.

The contrast between what is taking place at the White House and in Beijing was not lost on political commentators. “Xi Jinping has made it clear that China is ready to project influence globally and will present the Chinese model of governance for other countries to emulate as an alternative to Western liberal democracy,” Yanmei Xie, a China policy analyst for Gavekal Dragonomics in Beijing, told Bloomberg. “So far, it is difficult to discern a coherent strategy from the Trump team, if it can be called a team.”

China’s influence is becoming increasingly visible in the financial markets. According to Cushman & Wakefield’s Global Investment Atlas 2018, launched on March 15, Asian investors are the driving force behind last year’s record level of real estate investment. Money from the region accounted for more than half of the US$1.6 trillion ($2.1 trillion) deployed. Notably, real estate investments in the US have declined. “The US remains the main target for international investors, but its lead has fallen,” says the real estate services firm. Meanwhile, China was the most targeted country for the first time in four years. Investments into the Chinese real estate market increased 37% to US$639.5 million, while investments into the US fell 7% to US$431.3 million.

Locally listed APAC Realty is looking to tap Chinese demand for real estate. On March 14, the company inked a partnership agreement with Chinese overseas real estate firm MLN Overseas (Singapore) to provide the latter’s clients with real estate services for properties in Singapore, Malaysia and Thailand. In our story (see “APAC Realty inks deal to serve rich China clients, eyes further regional expansion” on page 10), APAC Realty CEO Chua says: “If the Chinese mass market could buy property in Singapore, I think our high-end properties would all be sold out.”

Another locally listed company we have featured this week that is also counting on ties with China to grow is Sapphire Corp. The Chinese railway infrastructure player seemed set to become an associate of conglomerate HNA Group, which has been buying stakes in big international firms such as Deutsche Bank and Hilton Worldwide Holdings. The deal to transfer the ownership of Sapphire has fallen through, but Sapphire CEO Wang Heng tells The Edge Singapore (see “Sapphire shrugs off cancelled HNA deal, sees more China infrastructure contracts” on page 11) that Sapphire is not severing ties with HNA. The two companies still have ongoing projects. Sapphire is also looking to take advantage of China’s huge budget for railway and tunnel infrastructure to secure more contracts.

Links to China aren’t always positive. AnAn International, a trader of petroleum products formerly called CEFC International, is now trying to distance itself from CEFC China Energy. The latter’s chairman, Ye Jianming, is reportedly being investigated for economic crimes. Ye is also the single largest shareholder of AnAn. Nevertheless, AnAn is growing — and internationally too. It has recently received clearance from the French Ministry of Economy and the European Commission to buy 51% of Rompetrol France. Rompetrol is the holding company of Dyneff, a leading independent fuel distributor in France and Spain. AnAn now intends to expand its business in Europe.

<hr/><a href="https://www.theedgesingapore.com/print-edition/anan-international-under-pressure-china-investigates-its-key-shareholder" target="_blank">See: AnAn International under pressure as China investigates its key shareholder</a><hr/>

Even as countries and companies open their doors to China, however, the US appears to be locking itself in. As our Cover Story details, the US is blocking communications chip maker Broadcom’s proposed acquisition of rival Qualcomm on the grounds that the merger of the two companies “threatens to impair the national security of the US”.

<hr/><a href="https://www.theedgesingapore.com/print-edition/largest-ever-tech-deal-unravels" target="_blank">See: Largest-ever tech deal unravels</a><hr/>

Because Broadcom is not a US-based company (it is in fact Singapore-domiciled), the deal required the approval of the Committee on Foreign Investment in the US. The CFIUS has grown increasingly wary of any deals with potential national security ramifications linked to China. Last year, it blocked a deal by a Chinese government-linked entity to buy a small American programmable logic devices maker called Lattice Semiconductor. Now, the CFIUS says Broadcom’s reputation for cutting back on R&D funding is cause for concern. US chip makers need to invest if they are to keep up with Chinese tech companies such as Huawei Technologies and ZTE, it says. “Given well-known US national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States,” the CFIUS adds.

Against the backdrop of Trump’s recently announced tariffs on steel and aluminium imports, the blocking of the Broadcom deal makes the US look increasingly insular. Indeed, the world’s growing interest in China makes Trump’s animosity against it bewildering. Undoubtedly, governments need to put the interests of their citizens first. But poking the dragon hardly seems wise.

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