August 21, 2017

If you were to read only one thing…

WSJ – China Tightens Rules on Cash Leaving Country as Growth Slows – Liyan Qi 8/18

  • “China formalized existing measures to curb outbound investment, underscoring persistent capital-outflow pressure faced by Beijing.”
  • The government must restrict overseas investment in sectors such as property, hotels, cinema, entertainment and sports teams, the State Council said in guidelines released on the main government website Friday.”
  • A cannon was just fired through the hallway.
  • “Officials have warned against rising risks in such investment over the past year, but it is the first time the cabinet has publicized such controls in the form of official guidance.”
  • “Establishment of equity-investment funds and any investment platforms that aren’t linked to any specific projects are also restricted by the government, according to the measures jointly drafted by the country’s top economic planner, Commerce Ministry, central bank and Foreign Ministry.”
  • “Authorities must also step up oversight of investment projects that aren’t considered to meet the technology, environment and security standards required by the governments of the destination countries, according to the guidelines dated Aug. 4.”
  • “The government is setting up a list to track down and penalize offenders, the cabinet said.”
  • “China’s outbound direct investment outside the financial sector declined 44.3% over the first seven months from a year earlier, with investment in property and entertainment down by 81.2% and 79.1%, respectively, the Commerce Ministry said on Tuesday.”
  • “’Irrational outbound investment has been effectively contained further,’ the ministry said.”

Perspective

WSJ – Daily Shot: Tax Foundation – What is the Real Value of $100 in Metropolitan Areas? – Kari Jahnsen 8/17

FT – Trump says it is ‘foolish’ to remove Confederate symbols – Neil Munshi 8/17

Worthy Insights / Opinion Pieces / Advice

Project Syndicate – The Lost Lesson of the Financial Crisis – Mohamed El-Erian 8/17

NYT – We Need Immigrants With Skills. But Working Hard Is a Skill. – Jeff Flake 8/18

Energy

WSJ – OPEC’s Sick Man, Venezuela Could Jolt Oil Market – Spencer Jakab 8/17

  • “Venezuela’s already falling oil production will get worse, maybe much worse, before it gets better, potentially roiling global energy markets. The cash-strapped country has been unable to maintain its oil fields, meaning some of the production losses will be permanent.”
  • “The country now produces between 1.9 million and 2.2 million barrels a day, depending on whether one uses unofficial or official data, down from around official estimates of 2.5 million in late 2015 and 3.4 million before Hugo Chávez took power in 1999.”
  • “The decline in production is so dramatic that Venezuela, home to the world’s largest proven crude reserves, is actually importing barrels of light crude, which it needs to mix with its heavy varieties to make them usable.”
  • “The problem is cash, debt and production. Venezuela is struggling under $120 billion in debt, and it has pledged barrels of oil as repayment for Russian and Chinese loans. After supplying the domestic energy market and paying for crude imports, Venezuela only has 600,000 to 800,000 barrels a day left over to generate net cash flows, according to Columbia University’s Center on Global Energy Policy. The country earns some 90% of its foreign currency revenue from oil exports.”
  • “If the country can right itself, output might stabilize, but any rebound would be modest. Years of underinvestment may have done permanent damage to Venezuela’s conventional oil reservoirs. Reviving output would require substantial foreign investment, including in heavy-oil deposits. Now that Venezuela has burned not just western multinationals but also state companies from Russia and China, doing so will be a tall order without regime change.”

China

NYT – Joshua Wong and 2 Others Jailed in Hong Kong Over Pro-Democracy Protest – Alan Wong 8/17

  • “The sentences risked casting the three young men as Hong Kong’s first prisoners of conscience, undermining the city’s reputation as a haven of civil liberties with special status in China.”

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