Investigation in the US reveals China's undue control over shipbuilding, according to insiders

Chinese embassy representative counters the report, stating 'US is pointing fingers at China for its own issues'

Chinese embassy representative counters the report, stating 'US is pointing fingers at China for its own issues'

The administration of US President Joe Biden has determined that China employs unjust strategies and methods to gain control over the global maritime, logistics and shipbuilding industries, according to three sources who have knowledge of the findings of an extensive trade inquiry, as reported to Reuters.

In April 2024, Katherine Tai, the United States Trade Representative, initiated an investigation following the appeal from the United Steelworkers and four other American unions. This investigation was carried out under Section 301 of the 1974 Trade Act, which permits the US to impose penalties on overseas nations that partake in actions deemed "inexcusable" or "unreasonable", or those that place a strain on US commerce.

The probe determined that China strategically aimed at controlling the shipbuilding and maritime sector, employing methods such as financial backing, creating obstacles for international companies, compulsory technology sharing, intellectual property infringement, and acquisition strategies to favor its own shipbuilding and maritime sector, according to an insider who wished to remain anonymous.

The individual also claimed that Beijing significantly and deliberately held down labor expenses in the marine, ship construction, and logistics industries, referencing sections of the report.

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Biden declares that China 'will never outdo us', in his parting statement a week prior to his departure from office.

There was no instant response available from USTR, the White House, or President-elect Donald Trump's transition team.

The US suggests enhancing supervision over 'de minimis' exemption for low-cost imports. The new regulation is aimed at assisting customs officials in managing more than 4 million deliveries that they receive each day, with approximately half believed to come from China.

On Monday, the United States suggested a fresh rule to boost the monitoring of low-cost imports under the de minimis guideline. This rule currently allows goods worth US$800 or less to bypass strict screening and duty charges.

The United States Customs and Border Protection (CBP) agency announced a proposed rule for the entry of low-value shipments. The rule is designed to improve the agency's capability to intercept dangerous and unlawful goods. This would be achieved by requiring more shipment information and initiating an entirely digital filing process.

The suggestion arises as CBP struggles with an unparalleled surge of de minimis deliveries – exceeding 4 million each day – which authorities claim saturates their capability to focus on potentially hazardous parcels.

Pete Flores, the interim leader of the organization, described the suggested alteration as crucial in tackling escalating dangers.

"Every single day, CBP's male and female personnel seize items that pose a risk to the health and security of US citizens, as well as to our nation's economic prosperity," stated Flores.

"This suggested regulation will provide us with some of the resources required to tackle a greater number of these hazards."

Restrictions are expected on the global growth of Chinese tech businesses under a prospective second Trump administration, according to UBS analyst Kenneth Fong. Despite a slowdown in domestic growth, Chinese firms will persist in their international endeavors. However, Fong warns that they will encounter increased risks.

With the inception of the new US administration, we anticipate a surge in policies or announcements impacting the international operations of Chinese firms, spanning areas such as cross-border e-commerce, video gaming, and artificial intelligence," stated Kenneth Fong, the leader of China internet research at UBS, during a press conference in Shanghai on Monday.

Despite the geopolitical uncertainties, he noted that Chinese firms will persist in making investments in foreign markets.

Fong suggests that Chinese tech firms should be concerned about three things in terms of geopolitical risks: the potential for American businesses to be prohibited from investing in Chinese tech corporations, possible further limitations on the procurement of AI chips, and the effect of trade disputes on their international operations.

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Biden's objective for China's tech policy: a decade-long disadvantage

The number of distressed property transactions is expected to increase this year due to a downturn prompting property owners and receivers to lower prices. The surge in distressed transactions in 2025 is attributed to high interest rates and global economic instability.

"Given the persistent high interest rates and instability in the worldwide economy, we anticipate a rise in the count of troubled properties throughout this year," expressed Eunice Tang, the executive director of capital markets at JLL. "Since the latter part of the previous year, there's been a noticeable increase in individual consumers and investors who are keen on the investment market, as sellers become more open to reducing their demand prices."

Tang stated that the total worth of troubled property deals in Hong Kong reached HK$15 billion (US$1.9 billion) in 2024. The highest value of these kind of transactions was recorded in 2012, amounting to HK$82.7 billion.

During the final quarter of 2024, the major point of interest for investors was assets that were either in receivership or being sold at a reduced price, making up almost 50% of the significant transactions in Hong Kong, based on information collected by Colliers. This tendency is expected to persist into the current year, they reported.

"Tang mentioned that numerous property owners may not openly express their readiness to sell, but they would probably entertain substantial bids from buyers. He added that although the worth of sales related to financially troubled properties may not hit unprecedented levels, there could be a rise in the volume of such deals."

A new real estate listing has been made for the Sheraton Hotel in Tung Chung, which boasts 1,219 rooms. The property comprises two distinct hotel brands: the Sheraton Hong Kong Tung Chung Hotel that has 218 rooms and the larger Four Points by Sheraton with 1,001 rooms, as per the information provided by the exclusive broker, Savills. Insiders have informed the Post that the desired selling price for the whole property is approximately HK$4.5 billion. The hotel, situated near the Hong Kong International Airport, covers a total floor area of roughly 610,000 square feet.

Hong Kong shares recover from a four-month downturn as Chinese authorities pledge to steady the market. The Hang Seng Index breaks its six-day decline following the CSRC's commitment to sustaining the market's dynamism.

The Hang Seng Index saw an increase of 1.8 per cent, closing at 19,219.78, breaking its six-day streak of a 4.5 per cent decrease, which had brought the index to its lowest since September 23. The Hang Seng Tech Index also experienced a gain of 3.1 per cent. Meanwhile, in China, the CSI 300 Index went up by 2.6 per cent, and the Shanghai Composite Index recorded a 2.5 per cent rise.

The biotechnology company, Wuxi AppTec, saw an increase of over 4 per cent following its sale of a share in one of its divisions. Alibaba Group Holding and Tencent Holdings, the largest stocks on the Hang Seng index, also made gains.

"Officials are attempting to boost the market by enhancing support initiatives during a period of 'policy inactivity' lasting until March," remarked Shen Fanchao, a researcher at Zheshang International based in Hong Kong. "Despite there being a few positive aspects in China's economy, the overarching pattern is a sluggish rebound. The pressure for a downward adjustment of business profits is escalating."

Investors are holding off on significant stock investments as they seek further insight into China's commitment to implementing the financial and economic stimulus plans promised during high-level discussions last year. They are also anticipating whether new tariffs will be imposed on Chinese exports following the swearing-in of US President-elect Donald Trump in a week. March will be a crucial time to observe China's policy progression, as lawmakers convene for the yearly National People's Congress to debate the country's growth objectives and key economic strategies.

The CEO of Nvidia, Jensen Huang, is scheduled to visit China in light of Beijing's investigation into antitrust practices and restrictions on US AI chips. Huang's itinerary includes trips to the major Chinese cities of Shenzhen, Shanghai, and Beijing, followed by a visit to Taipei later in the week.

The CEO of Nvidia is anticipated to land in Shenzhen to join in the yearly Lunar New Year festivities of the staff around the 15th of January. This is just days prior to when the newly elected US President, Donald Trump, is set to take his oath for the second term, as per sources acquainted with the situation.

The co-founder is also reportedly intending to visit Shanghai and Beijing, according to sources who wish to remain anonymous due to the private nature of the matter. Furthermore, he is expected to travel to Taipei later this week, as per someone acquainted with his itinerary.

Huang is traveling around China during a crucial period for the firm, which has been caught up in the wider US-China technology dispute as the leading manufacturer of chips for AI advancement.

Leading CIOs express wariness over worldwide economic expansion due to unpredictability in Trump and China's policies. According to Manraj Sekhon from Templeton Global, the worldwide markets might experience a prolonged phase of instability despite having impressive growth last year.

The top financial overseers at some of the world's biggest investment firms are maintaining a cautious stance regarding the global economic forecast, following the market upturn last year. They are cautiously treading potential challenges this year.

Senior leaders' optimism towards worldwide economic expansion is at a near historical low, as incoming U.S President, Donald Trump, prepares to assume office next week. Meanwhile, there remains uncertainty regarding China's strategies to revive its economy.

"Over the past few years, we've seen excellent economic expansion, yet the world continues to grapple with uneven growth and risk profiles," said Manraj Sekhon, Chief Investment Officer of Templeton Global Investments, during a panel discussion at the Asian Financial Forum in Hong Kong on Tuesday. Templeton Global serves as the private investment division of the US-based asset management company, Franklin Templeton, which oversees assets worth $1.6 trillion.

He mentioned that there would be notable gains and losses, and he anticipated witnessing prolonged fluctuations across various asset categories this year.

The S&P 500 Index saw a rise of 23 percent in the previous year. Similarly, China's CSI 300 Index experienced a 15 percent increase, while Hong Kong's Hang Seng Index went up by 18 percent, breaking a record of four consecutive annual declines.

The investment sector is closely monitoring the difficulties arising from changes in geopolitics and politics. The incoming policies on trade, tariffs, and immigration by the Trump administration have introduced an additional level of intricacy to the markets, according to panel members.

Hong Kong serves as a link between China, Asean, and the Middle East as business relationships strengthen: says a representative from HKEX. The establishment of an office in Riyadh and the proposal for a metal warehouse highlight HKEX's importance, as stated by Vanessa Lau at the Asian Financial Forum.

After purchasing the London Metal Exchange (LME) in 2012, HKEX is now considering the construction of Hong Kong's first LME-approved storage site. This would enable the tangible trade of metals like aluminium and zinc between mainland China and other global locations. A similar establishment already exists in Jeddah, Saudi Arabia.

Numerous fresh endeavors are underway and we hold the conviction that both the Middle East and Asean [Association of Southeast Asian Nations] will offer crucial prospects for Hong Kong and its exchange," stated Lau.

Last year, Carlson Tong Ka-shing, the chairman of HKEX, stated that high-ranking authorities in Saudi Arabia have suggested that Middle Eastern companies are considering going public in Hong Kong to acquire financing for infrastructure initiatives.

WeRide from China commences its third autonomous driving experiment in Switzerland. The firm is intensifying initiatives in Southeast Asia, the Middle East, Europe, Japan, and South Korea, according to CEO Tony Han.

WeRide, a Chinese company specializing in autonomous driving technology, is accelerating its global growth with a pilot project in Switzerland. The project involves testing fully self-driving vehicles and is conducted in collaboration with Switzerland's national railway operator.

"He stated that the initiatives are not solely focused on penetrating the market with our associates. As a tech firm, we bear a societal obligation to foster local growth through autonomous services, which carry significant worth for the worldwide economy."

To start with, two self-driving cars equipped with WeRide's tech will be operational in the Furttal area of Switzerland. The national rail service of Switzerland, Schweizerische Bundesbahnen (SBB), is financially backing the project, with Swiss Transit Lab overseeing the operation of these autonomous vehicles. The fleet is projected to increase to eight vehicles, including minibuses, by 2026, with plans for additional expansion thereafter.

The SBB initiative marks the third venture WeRide has embarked on in Europe within the past eight months. Just a week prior, the firm announced the inauguration of Europe's pioneering commercial self-driving minibuses at Zurich airport. Earlier in June, WeRide teamed up with Renault to offer self-operating shuttle services at the French Open tennis tournament.

"Han anticipates that their international ventures will make up over fifty percent of their total enterprise down the line. He believes WeRide to be one of the limited tech firms capable of managing self-driving businesses on a global scale."

Investors suggest that Hong Kong can attract family offices due to its low tax rates and stable currency. To prevent losing its charm to affluent families, Bonds Group suggests that Hong Kong should explore alternatives, besides tax hikes, to address budget deficits.

Some investors have suggested that Hong Kong should continue with its minimal tax system, keep its currency linked to the US dollar, and start dealing in digital assets in order to pull in more funding from international family offices.

"Hong Kong is a desirable place for family offices due to its favorable tax environment," stated Anson Chan, the CEO and chairman of his family-run real estate firm, Bonds Group of Companies. "The metropolis offers low corporate tax rates and doesn't levy any estate tax."

In order to maintain their edge, Chan stated that the Hong Kong government needs to explore alternatives to increasing taxes for boosting its revenue and minimizing its budget deficit. He made this statement at the Asian Financial Forum on Tuesday. The success of this will rely on the strategies implemented by Financial Secretary Paul Chan Mo-po to either balance the budget or prevent excessive withdrawal from its reserves.

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What strategies could Hong Kong implement to recover from its close to HK$100 billion shortfall?

In May 2023, the government declared tax incentives, incorporating a cash-for-residency scheme, to attract affluent entrepreneurs. Family offices aim for profitable investments, arrange inheritance plans, and engage in charitable activities. Last year, over 2,700 single-family offices were recorded in Hong Kong, as stated in a report by Deloitte.

Investors suggest that Hong Kong can attract family offices with its low taxes and stable currency.

The Bonds Group states that if Hong Kong wants to maintain its allure for affluent families, it should consider methods other than increasing taxes to manage budget deficits.

Some investors suggest that Hong Kong needs to uphold its minimal tax system, continue its currency affiliation with the US dollar, and welcome the exchange of digital assets to pull in more funding from worldwide family offices.

"Hong Kong appeals to family offices due to its minimal tax regulations," stated Anson Chan, head and CEO of his family's property business, Bonds Group of Companies. "The metropolis boasts of low corporate tax rates and does not impose an inheritance tax."

To maintain their edge, Chan expressed that the Hong Kong government must explore alternatives to raising taxes in order to replenish its treasury and cut down its budget deficit. He voiced this during the Asian Financial Forum on Tuesday. Whether this can be achieved will rely on the efforts of Financial Secretary Paul Chan Mo-po to either balance the budget or prevent excessive withdrawal from its reserves.

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What measures can Hong Kong take to recover from its almost HK$100 billion shortfall?

In May 2023, the government disclosed several tax incentives, featuring a cash-for-residency scheme, aimed at attracting affluent business proprietors. Family offices are in pursuit of investment profits, succession planning, and philanthropic endeavors. As per a report from Deloitte, last year, over 2,700 single-family offices were established in Hong Kong.

Hong Kong and Gulf countries aim to strengthen connections through financial and infrastructural collaborations

Representatives from Saudi Arabia, UAE, Oman, and Qatar believe Hong Kong could significantly contribute to broadening their economic bases.

Government representatives announced on Tuesday that Hong Kong and Middle Eastern nations are exploring ways to enhance cooperation in areas such as finance, artificial intelligence (AI), logistics, and large-scale infrastructure projects.

The robust financial market of the city could assist nations in the Gulf Cooperation Council (GCC) in securing funds for projects, as they aim to broaden their economic bases, according to Gulf authorities, who are open to investments from Hong Kong. The GCC includes countries such as Saudi Arabia, United Arab Emirates, Oman, Qatar, Bahrain, and Kuwait.

"According to the country's investment plan, Saudi Arabia is ready to strengthen its partnership with Hong Kong," stated Faris Algarni, the assistant deputy minister of investment for Saudi Arabia, during a panel discussion at the Asian Financial Forum held in Hong Kong.

Saudi Arabia's Vision 2030 plan is designed to decrease the nation's dependence on oil and enhance industries such as manufacturing, tourism, renewable energy, digital infrastructure, and healthcare. According to Algarni, this plan presents abundant possibilities for businesses in Hong Kong.

Hong Kong is aiming to build connections with countries in the Gulf region. Paul Chan Mo-po, the Financial Secretary, headed a team to the Future Investment Initiative (FII) conference in Riyadh towards the end of October. The Public Investment Fund, which is Saudi Arabia's sovereign wealth fund, and the Hong Kong Monetary Authority have consented to initiate a US$1 billion fund. This fund is designed to assist companies based in Hong Kong in expanding their operations in the Middle East.

During the FII summit, Saudi Arabia's Tadawul stock exchange listed two exchange-traded funds (ETFs) worth a total of US$1.8 billion. This marked the first time investors from the Middle East could trade stocks from Hong Kong. This completes a reciprocal flow of capital, following the listing of an ETF that tracks Saudi's leading stocks in Hong Kong in November 2023.