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China Retreats Globally | By Milton Ezrati

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China has retreated globally – not from its artificial islands in the South China Sea but economically and financially. It seems just yesterday that the Middle Kingdom, as China calls itself, resembled an unstoppable juggernaut, cutting constructions contracts and buying properties all over the world. That is no longer the case.

Trade war with the United States bears much of the blame (or gets the credit, depending on one’s perspective), but even if Washington and Beijing were to sign a deal tomorrow, China would not regain its old momentum.

Official Ministry of Finance (MOF) figures, not surprisingly, offer a soothing picture of moderate decline, but private sources tell a much more dramatic story. According to the American Enterprise Institute’s well-regarded China Global Investment Tracker (CGIT), Chinese overseas investments of all kinds in the first half of this year averaged only $27.5 billion, half the rate averaged during the same time in 2018 and barely a quarter the rate of 2017’s first half.  This year’s figures are lower than any time since 2008. Construction contracts, largely in the third world as part of China’s Belt and Road initiative, have fallen off, too, but less dramatically. China clearly has become much less engaged with the world than it was.

Two things have caused this retreat. One is a growing hostility among host countries toward Chinese investment. Especially developed countries, the United States in particular, have balked over the Chinese practice of extracting technology. Suspicions along these lines have held up approvals for Chinese purchases and other direct flows of funds. Some familiar with Chinese practice have gone a step further. The European Chamber of Commerce has warned against developing a dependence on China and Chinese funds. This combination of concerns and suspicions have centered primarily on China’s huge state owned enterprises and less on private Chinese investment. But if private investment has fallen off less dramatically, this growing reluctance in the West has had its effect there, too.

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More significant is China’s relative shortage of hard currency. Despite Beijing’s efforts to make the yuan a global currency, it is little used in currency transactions – no more than 2% of the total in fact – and so is of little use in overseas purchases.  Meanwhile the trade war with the United States has already begun to cut into Beijing’s supplies of foreign exchange.  Beijing actually anticipated the problem and in 2017 and began to ration foreign exchange even before the White House added any tariffs. The first major investment declines occurred in late 2018, when the While House first imposed 10% tariffs on a range of Chinese products. The next drop coincided with this past spring’s increased tensions. To be sure, Beijing’s foreign exchange hoard remains huge, but officials are wary of how rapidly it has shrunk, falling some 25% from almost $4 trillion at its peak in 2014 to barely over $3 trillion during the first half of this year.  Beijing’s rationing of these financial resources has affected the state-owned sector in particular. Private companies have a greater willingness and ability to borrow hard currencies abroad.

Within the investment pullback, North America, which historically has accounted for some 17% of China’s overseas investment flows, has seen the biggest drop. No doubt, the hostility created by trade friction has played a role.  But China has also pulled back in Europe, where British and Swiss destinations have long dominated.  Australia and Singapore, which historically have accounted for about 10% of Chinese overseas investment flows, have seen less relative shortfall but some nonetheless.

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China has concentrated its remaining financial resources on less developed countries. The reasons are two fold.  First, activities in these countries center more on construction contracting than investing. Such efforts may require subsidies, but they demand little hard currency. Indeed, China collects fees on many of these projects. Second, Beijing has clearly made its Belt and Road initiative (BRI) a political priority. This effort at land trade routes between China on one side and Europe and the Middle East on the other may not generate the secure financial returns that investments in the developed world offer, but monies spent in these projects pay Beijing huge political dividends by tying these countries to China and by advancing a project that China has touted as an alternative to U.S.-led, mostly maritime trade arrangements. BRI historically has captured more than three-fifths of China’s overseas construction volumes with almost three quarters of the monies involved in energy and transportation in such places as Pakistan and Iran, Saudi Arabia and Nigeria. Preliminary figures for 2019 show that as all other efforts have diminished BRI has captured a still larger proportion of China’s efforts.

Even if China and the United States were to sign a trade deal tomorrow, these trends would likely persist. Though trade would increase with a new treaty, the terms would no doubt create a more even balance than previously, making it highly unlikely that China could replenish its reserves of hard currency quickly, if at all. At the same time, suspicions of Beijing’s agenda and practices, especially China’s state-owned enterprises, will persist, trade deal or no. Political imperatives will, of course, keep China focused on BRI and its construction projects.  For the investment flows, the best to expect is stability. It seems that for better or worse, the world has already seen the high water mark of Chinese investment flows.

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Source : Forbes

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Makinde spends 74 hours with state officials drawing plan to transform agriculture

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IITA, AfDB salute Makinde’s vision

At a retreat in Cotonou, Republic of Benin to chart a path for transforming agriculture, Oyo State Governor, Engr. Seyi Makinde set a record in governance, by spending more than 72 hours with his state officials designing an implementation plan for Oyo state agribusiness.

The governor also promised officials of the state that the administration will give agriculture the necessary ‘political will’ to play its role and transform the economic fortunes of the state.

“I want to assure all the participants that Oyo State will provide the political will needed to make the state the agribusiness hub of Nigeria,” Gov Makinde said at the retreat that was facilitated by the International Institute of Tropical Agriculture (IITA) in Cotonou, Republic of Benin, 15-19 August.

Gov Makinde pledged to attract more private investments to agriculture by providing an enabling environment for the private sector to invest in the state. He said the state would ensure agribusiness-friendly policies that would boost investor confidence.

Since assumption of office on 29 May 2019, Gov Makinde has pledged to transform the narrative of agriculture with the view to making it the pillar of the state’s economic development. The retreat provided an opportunity for the Governor to unveil his vision for agriculture in the state.

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Dr Kenton Dashiell, IITA Deputy Director-General, Partnerships for Delivery commended the governor for demonstrating an uncommon leadership style by participating in all the sessions of the three-day retreat.

“I have never seen such a commitment from a governor… and I believe the document coming out of this retreat will help the state to achieve the vision of an agribusiness hub for Nigeria,” he added.

Dr. Martin Fregene, Director for Agriculture and Agro-Allied division with the African Development Bank said the commitment of the state to agriculture was a step in the right direction.

“Let me also commend you (the governor of Oyo state) for organizing this very important meeting, and participating fully in it to have a vision and an implementation plan for agribusiness in the state,” he added via skype.

Dr. Fregene urged the state government to adopt the agri-business approach to unlock the potential of agriculture in the state.

“For Oyo state to move forward in agriculture, you must treat agriculture as a business,” he explained.

According to the AfDB director, the Bank would be willing to support the state in its quest to transform agriculture.

The retreat had four sessions comprising: Developing a vision for the state in agriculture, identifying the obstacles to the vision, developing strategic actions to deal with the obstacles to the vision, and developing an implementation plan.

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Adebowale Akande, Executive Adviser to the Governor on Agriculture gave thumbs up to the retreat, adding that recommendations from the retreat would help the state to achieve its vision of becoming an agribusiness hub.

Makinde appoints Owoseni, former Lagos, Benue Commissioner of Police, Special Adviser.

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Bola Ige complex wants to reclaim lost glory, as Oyo govt reveals plan

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As part of the efforts of the Oyo State Government in creating conducive environment for businesses within the State to thrive, the present administration has revealed its plan in restoring Bola Ige International Business Complex, Gbagi, Ibadan back to international standard as provided in the master plan of the market.

 

This was contained in a communique issued after a stakeholders’ meeting held recently at the market between the market leaders and the task force committee set up by Governor Seyi Makinde to restructure the business complex.

 

The Chairman of the task force committee, Sanitarian Olusoji Oyewole in his briefing, assured the market men and women that the State Government remained committed to providing them the basic facilities that would promote the economic activities in the market.

 

“The Oyo State Government under the leadership of Engineer Seyi Makinde has deemed it fit to ensure that Bola Ige International Business Complex regains its lost age-long status as a major hub of wholesale textile materials, servicing both neighboring, far and distant States in Nigeria,” he said.

 

“The intention of the administration in setting up this task force is not to witch-hunt anyone in the market but rather towards seeking their cooperation and support for proper waste dumping of refuse, hygienic toilet facilities,

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large number of parking lots for convenience and easy access to the market as well as considerable open spaces in construction of approved buildings.”

 

He, thereafter urged the market community to keep to the environmental laws and town planning regulations of the State, noting that the market stood to benefit if commercial activities were carried out in clean and serene environment.

 

In his remarks, the representative of the elders’ forum in the market, Chief Adebayo expressed appreciation to the State Government and further pledged support of the market community towards the actualization of restoring the market to international standard.

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Pay For Temporary Use of Road Setbacks or We Take Them Over’ – Oyo Govt Warns Business Organizations

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Business organizations that built on the mandatory setbacks on major roads in Oyo State for temporary usage have been warned to pay for these spaces or have them taken over by government.

 

The Executive chairman, Oyo State Internal Revenue Service (OYSIRS), Aremo John Adeleke disclosed this on Thursday, saying the State administration was not happy with the attitude of most organizations using these spaces for failing to meet their financial obligations to the State despite being served many demand notices by the Board of Internal Revenue (BIR).

 

Adeleke who spoke with Journalists at his office shortly after an enforcement exercise under the Management of Public Space Scheme (MOPS) embarked upon by Oyo State Internal Revenue Services (OYSIRS) and the Ministry of Environment and Water Resources.

 

He stated that for Government to be able to provide amenities in the State, organizations and other business owners needed to remit taxes, levies and dues to the rightful place as their civic duties.

 

He said, “Setbacks in public places are government properties and to use them, there should be payment for temporary use of such places. Most organizations have taken this for granted for so long and that is what necessitated our action at this point.

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“The focus of the first phase of the enforcement exercise is on the Banking Industry after that we will move to other sub-sectors. The government will recover the setbacks unless those affected do what is required.

 

“In the past, series of correspondence, plea and stakeholders meeting with those concerned yielded no response. Also,the second phase will come soonest and will reach others that refused to comply with the payment option.”

 

While appreciating those that complied,The Executive chairman implored other business owners and individuals with outstanding taxes,levies,charges and fees to pay up so as to forestall drastic step against them.

 

Among areas covered during the exercise are Total Garden, Agodi and Bodija all within Ibadan metropolis.

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