Tag: China

Eskom to get R20bn boost from Chinese bank

Eskom will sign a $1.5bn (R19.78bn) loan agreement with China Development Bank on Thursday, as the state-owned utility powers ahead with its funding requirements for 2017.

Last week, new acting Eskom CEO Johnny Dladla revealed that Eskom had secured 77% of its funding requirements for the 2017/18 financial year.

He said that for the 2016/17 financial year, Eskom increased its borrowings by over R60bn.

“We remain resolute that we will fully execute the required funding for the year, albeit under challenging market conditions,” Dladla said in a statement last week.

“Our liquidity levels remain healthy and Eskom’s financial profile continues to improve and stabilise.

“Backed by the availability of the government guarantees and the stable financial profile, we do not foresee significant impediments in the execution of the remainder of the FY17/18 funding requirement,” said Dladla.

Eskom is expected to use R43.6bn of its guarantee in 2016/17 and R22bn annually over the medium term, Treasury said in its 2017 Budget Review. Eskom has a R350bn guarantee for the 2016/17 year, with an exposure of R218.2bn.

“Gross foreign borrowings are expected to account for the majority of total funding over the medium term, largely as a result of Eskom’s efforts to obtain more developmental funding from multilateral lenders,” Treasury said in the Budget Review.

The borrowings come despite the power utility being downgraded by rating agencies this year, after Moody’s, S&P and Fitch cut South Africa’s sovereign credit ratings.

By Matthew le Cordeur for News24

China’s growing power

Napoleon Bonaparte once said of China, “Let her sleep, for when she wakes, she will shake the world.”

A spate of articles and books has appeared on the rise of China and its possible domination of the world. The Middle Kingdom has received special attention because it is ideologically and culturally different from the West.

Military strategists and geopolitical thinkers have their own concerns: the country’s leadership does not make its political ambitions clear, nor has the military been open about the degree of its expansion.

The United States still remains the sole superpower but with the rise of “the rest,” particularly China, the present structure of the world order will eventually be reconfigured. In reality, China is not rising but as Aaron Friedberg states, “it is returning to the position of regional preeminence that it once held.” Indeed, China dominated that region for centuries.

Among those who argue that China will rule the world in the near future is Martin Jacques – a British journalist who is the author of When China Rules the World: The End of the Western World and the Birth of a New World Order.
However, before China can become a legitimate superpower, it must meet its internal and external challenges and make some fundamental political changes.

China’s nine percent economic growth rate since 1990 has enabled it to expand its sphere of influence and gain ground not only in Asia but also in Africa and South America. This influence will probably continue to grow in the future.
In Central Asia, China has invested billions of dollars in oil and natural gas companies to secure its long-term energy demands. China is making large investments in South America as well – America’s own backyard. In addition, China is the preferred partner of many governments in Africa and is becoming the largest trading partner of Brazil and South Africa – both rising economic giants.

Nevertheless, all these investments and China’s attempt to spread its soft power do not guarantee that China is becoming the next world power, for it has major internal issues to deal with. It must deal with an aging population and gender imbalance produced by its one-child policy. It must deal with its water shortage problem and with pollution. These are not the only problems facing China. It must also find a way to produce millions more jobs in order to continue its economic growth. It must overcome internal ethnic issues, economic disparity, virile nationalism, and as Henry Kissinger observes, it must be able to “absorb six million people moving into the cities every year.”

Besides fighting separatist groups in Xinxiang, a problem China will face for years, it also has Taiwan to worry about. This issue remains China’s top foreign policy priority. I believe China can become a superpower when it is no longer focused on its domestic issues. Think about the United States. It was able to focus on external issues when it won the last battle against American Indians in 1890 in South Dakota. In brief, China cannot rule the world until it consolidates its territory.

In order for China to gain hegemonic status on the world stage it must also become an innovative society, a society that nurtures political and economic institutions. It has had tremendous economic growth, but that has not launched it on a trajectory of scientific revolution that led to the rise and ascendancy of the West. Nor does it have innovative and creative companies that could parallel Apple, Google, Twitter or Facebook. Given these challenges, China has a long and complicated road ahead before it can claim the status of a superpower.

By Fahim Masoud for www.intpolicydigest.org

Getting a fat hongbao, or red envelope, stuffed with crisp new notes is one of the hallmarks of Chinese New Year, which started on 8 February and runs for two weeks.

As China’s tech companies build their financial services, they want to convince people that hongbao exchanges can be just as fun when performed through a smartphone.

This year, the country’s three biggest Internet companies— Baidu, Alibaba, and Tencent — are offering their own version of online red envelopes and dressing up the custom with games and giveaways. Even the Chinese government is latching on to the digitised version of the tradition, giving away a total of RMB300 000 (about $50 000) through Alipay, Alibaba’s mobile payment service.

Red envelopes are traditionally gifted to children during the holiday, but they can also be given to unmarried adults, elderly relatives, friends, and employees. The companies — which are referred to by the acronym BAT — run competing mobile payment platforms and their red envelope programs may convince people to keep using their mobile wallets even after the holiday is over.

It’s still too early to tell how many people will gift money online this year, but if the past popularity of WeChat’s red envelope service is a fair indicator, smartphone users are eager to try new twists on a beloved tradition. The messenger — which is owned by Tencent and China’s most popular with 650-million monthly active users — first enabled people to send red envelopes through the app’s WeChat Pay mobile payment service in 2014.

In 2015, the company says WeChat delivered over one billion red envelopes. Then on Jan. 1, 2016 (the start of the Gregorian calendar is also an excuse for red envelope giving in China), more than 2.3 billion red envelopes were sent.

To send gift money on WeChat, users click on a “red envelope” button in the main menu, then chose an amount and enter a gift message. Depositing money into each other’s WeChat Pay accounts is quick and more convenient than withdrawing cash and counting it out into packets, but it lacks the finesse of getting an actual red envelope stuffed with brand new notes.

To make giving money online a little bit more personable, WeChat has come up with a game that randomises the amount dispersed among your gift recipients and then shows who got the most after everybody opens up their envelope.

Meanwhile, users of Baidu Wallet, which is made by China’s largest search engine developer, got into the action early. Between 28 January and 8 February, the company says users sent 4,2-billion red envelopes online containing a total of RMB 300-million (about $45,6-million).

China’s largest e-commerce company Alibaba put its own spin on the custom by handing out virtual red envelopes with cash or gift coupons during the Spring Festival Gala, a popular annual show that airs the evening before Chinese New Year starts.

The company hasn’t disclosed yet how much the publicity stunt cost or the total worth of the envelopes it handed out, but its mobile payments service Alipay is one of China’s largest, with about 400-million users.

Of course, the start of the lunar calendar isn’t just celebrated in China. Line, which has been banned in China for more than a year, is offering a red envelope service through Line Pay in Thailand and Taiwan, two of its top markets (the third is Japan).

By Catherine Shu for www.techcrunch.com

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