SOCIALISM BY ANY OTHER NAME

Kansas commits $304M to chip plant to lure federal funds

ALL CAPITALI$M IS STATE CAPITALI$M
By JOHN HANNA

Kansas Gov. Laura Kelly discusses plans by Integra Technologies, of Wichita, Kansas, to build a new, $1.8 billion semiconductor factory, during a news conference, Thursday, Feb. 2, 2023, at the Statehouse in Topeka, Kan. The state has pledged $304 million in taxpayer-funded incentives over 10 years, but the project also needs federal funding. (AP Photo/John Hanna)

TOPEKA, Kan. (AP) — Kansas plans to give $304 million in taxpayer-funded incentives to a semiconductor company in its largest city to build a huge new factory, but the project won’t go forward without funds the U.S. government has promised for rebuilding the nation’s chip-making capacity.

Gov. Laura Kelly announced Thursday that Kansas has an agreement with Integra Technologies, based in Wichita, for a 10-year package of tax breaks and reimbursement of expenses. State officials said the new, $1.8 billion plant would cover 1 million square feet, have 2,000 employees and create 3,000 additional jobs among suppliers and other local businesses.

The announcement comes with the U.S. trying to reverse a loss of capacity for making the chips that are vital to smartphones, laptops and other modern-day conveniences, as well as automobiles and life-saving medical devices. Congress last year approved a measure that provides more than $52 billion in grants and other incentives for the semiconductor industry.

Kelly told reporters during a Statehouse news conference that the state’s incentives are crucial to attracting the federal funds and “making Kansas an essential part of our country’s national security efforts.”

“This advanced manufacturing facility is part of a national push to restore our semiconductor industry so that U.S. workers and businesses can compete and win in the race for the 21st Century,” Kelly said.

Integra CEO Brett Robinson would not say how much federal funding the company needs, only that there is “no commercially viable way” to do the project without it. He and state officials said other states were trying to attract the project, though they did not disclose the competitors.

“It’s not just critical to the United States and to security, but it’s critical to the supply chain,” said Kansas Senate President Ty Masterson, a Wichita-area Republican.

President Joe Biden pushed Congress last year to boost the U.S. semiconductor industry, because of a shortage of chips made worse by the global coronavirus pandemic and concerns about competing with international rivals, particularly China. There’s been a decades-long shift to cheaper-to-operate Asian chip plants, and the industry is now dependent on Taiwan, which China has long claimed as its own.

“If we were ever to lose, for a sustainable amount of time, access to the southeast Asian supply chain, what we just went through would pale in comparison,” Robinson said.

Integra, founded in 1983, has about 500 employees in Wichita and Silicon Valley and describes itself as the largest U.S. provider of the last two major assembly and testing steps in the chip manufacturing process. The new factory is expected to pay an average annual wage of $51,000, about 46% higher than the state’s average of roughly $35,000.

For Integra to receive its incentives, it must invest at least $1.5 billion in the new factory in the next five years and consistently provide the equivalent of 1,600 full-time jobs for 10 consecutive years.

The incentives are part of a program Kansas created last year to ramp up its efforts to compete with other states for new, large factories. Under that program, the state was allowed to offer up to $1 billion in incentives to a single company each in 2022 and 2023.

In July 2022, Kelly and other state officials announced that Panasonic Corp. plans to build a mega-factory to produce electric vehicle batteries for Tesla and other carmakers. The state lured the Japanese electronics giant’s project to the edge of the Kansas City area with incentives worth $829 million over 10 years, the most the state has ever offered.

The law allowing the incentives required top leaders of the Republican-controlled Legislature to sign off any deal between a company and the state Department of Commerce, which is led by Lt. Gov. David Toland, a Democrat like Kelly. The legislative leaders gave their approval just minutes ahead of the announcement, after meeting in private with Kelly for half an hour to review the agreement, with no opportunity for public review or input.

The law also requires Kansas to drop its corporate income tax rates by half a percentage point for each mega-deal. If the Integra project goes forward, the top rate would decline to 6% from 7%, saving all corporations roughly $100 million a year.

While both mega-projects have had bipartisan support, some lawmakers are critical of promising such big taxpayer-funded incentives to a single firm.

“We have not written the checks for this first project and they’re starting the second one without even knowing that it works,” state Senate tax committee Chair Caryn Tyson, a conservative Republican from eastern Kansas, said before Thursday’s announcement.

___

Follow John Hanna on Twitter: https://twitter.com/apjdhanna

 

Oregon’s Port of Portland Gets State Funds to Maintain Container Ops

SM Line began operations to Portland in 2020 (Port of Portland)

PUBLISHED MAY 17, 2024 5:41 PM BY THE MARITIME EXECUTIVE

 

ALL CAPITALI$M IS STATE CAPITALI$M

The Port of Portland, Oregon’s only ocean-going seaport, announced it will reverse course and not suspend container operations. The move came after the state’s governor, Tina Kotek, released a letter on Thursday reporting she would provide stop-gap funding and would include long-term funding for channel maintenance in the state’s budget. In total, she is proposing $40 million in future support to the port and its container operations.

“Farmers, union members, shippers, and business leaders have all asked me what the state can do to keep this important service in place,” Governor Kotek wrote in announcing her decision. She said the port and specifically the container service provides a competitive advantage for Oregon growers and other businesses which would have been forced to truck their shipments hundreds of miles to neighboring ports.

In April, it leaked out into the media that the port authority had sent a letter to shippers informing them that it would be ending container operations at the port as of October 2024. The port reported losing $30 million from the container operations over the past three years, including a projected $14 million shortfall this year. They said talks with an independent operator had collapsed and that they had no other choice but to end container service at the T6 Terminal but would maintain the bulk, RoRo, and other operations at the port.

“The port has been working to rebuild container service since taking over the operation in 2018, following a temporary shutdown under former operator ICTSI,” the port authority writes in its response to the governor. “Without direct state support or a financially acceptable third-party lease, container operations have not been sustainable.”

The governor said it was important to send a strong signal to the state’s business partners and as such she would ask the legislature for $5 million in September to stabilize near-term operations at the port. It is part of an overall $40 million investment she said the state would be making to support the continuation of container service.

In offering the funding and support, the governor said she understands that the port’s location makes container operations economically challenging. She cites the limitations of an upriver port within a relatively small metropolitan area, saying she understands they can not fix those limitations. She however calls on the port authority to use the state’s commitment and to pursue an aggressive strategy to make the container operations sustainable for the long term.

“I expect the port to pursue all viable strategies for making T6 operations sustainable over the long-term,” writes the governor.

In addition to the stop-gap funding, she said she will include an initial investment of $15 million for dredging of the Lower Columbia River. She says the state previously committed nearly $28 million but notes the federal project is due to expire in 2025. She expects up to $70 million will be required in a new round of investment for the river. 

She also recognizes the high cost of repairing and replacing needed infrastructure at the port to support container operations. As part of the 2025-2027 recommended budget, she will also support a $20 million investment in a capital program to support container operations.

The Port of Portland has had a difficult history with container operations. They attracted ICTSI to operate the terminal but the company became embroiled in a dispute with the union that ultimately led to the company walking away and a long legal battle. The legal battle was recently settled, but the port had attempted to run the container terminal. It attracted several lines including SM Line during the pandemic offering an uncongested alternative.

Port officials came in for strong criticism from the union, elected officials, and others when they confirmed in April the decision to suspend the operation. In a press release, they said they were grateful to the governor for the declaration of support and for helping to maintain the operation.
 

NOCs, Not Big Oil, Are Responsible For Most Emissions

THE OLD STATE CAPITALI$M VS MONOPOLY CAPITALI$M TROPE

By Haley Zaremba 

- Jul 31, 2022

Big Oil has caught a lot of flack for its slow decarbonization efforts, but much of the criticism may be misguided.

Emissions from National Oil Companies far outpace those of Big Oil.

Not only do National Oil Companies emit more, but they also rake in more profit and receive much less attention than their private counterparts.


While much of the global pressure toward decarbonization has been directed toward privately owned and operated oil supermajors like BP, ExxonMobil, and Shell, a new report from the Economist suggests that much of this pressure and blame is misguided. It’s not that Big Oil doesn’t need to change its focus, strategy, and commitments in order to cut greenhouse gas emissions quickly and significantly enough to avoid the worst impacts of climate change – it does. The thing is, the emissions of privately owned oil companies pale in comparison to the enormity of state-owned oil enterprises, which are producing most of the oil, emitting most of the greenhouse gases, raking in most of the profits, and receiving much less attention. In fact, the Economist article, titled “State-run oil giants will make or break the energy transition,” says that in comparison to Big Oil, national oil companies (NOCs) are “enormous oil.” Together, NOCs represent three-fifths of the world’s crude oil production, half of global natural gas production, and two-thirds of the world’s remaining proven oil and gas reserves. “Four—Adnoc of the United Arab Emirates (UAE), Saudi Aramco, pdvsa of Venezuela and QatarEnergy—possess enough hydrocarbons to continue producing at current rates for over four decades.”

Taking into consideration the sheer scale of NOCs’ production power, it does make the global attention to these institutions’ climate actions (or rather non-actions) particularly stark and worrying. Especially when you take a look at just how bad most NOCs’ track records are when it comes to going green. To be clear, Big Oil’s track record isn’t stellar either, especially west of the Atlantic, but the greenhouse gas emissions of most supermajors have already stabilized or peaked. By contrast, just two NOCs can say the same: Brazil’s Petrobras and Colombia’s Ecopetrol.

So why aren’t we going after the big fish? The answer, of course, is complicated. Decarbonization is political no matter how you slice it, but pressuring governments themselves to divest of the very industry keeping their state economies afloat and their politicians in office is tricky and divisive business. Many countries with state-run oil companies are volatile nations with monopolized economies and no contingency plan if oil was to go the way of the dodo. What’s more, all too often, petrostates make for oil autocrats with itchy trigger fingers. “No matter how you define a petrostate – whether you look at a state’s oil-derived wealth, its dependence on oil revenues, or its exports and relative importance to world markets – there is strong evidence that petrostates are more likely than other countries to start wars,” Foreign Policy reported last month.

Not all NOCs are created equal, of course. They are as diverse as the nations that house them. Unsurprisingly, richer countries tend to have better run, more ecologically responsible outfits. They also often happen to have more geologically advantageous oil reserves – part of what made them rich in the first place. By contrast, many poor nations’ NOCs are poorly run, with tendencies toward inefficient and dirty practices. “The Algerian and Venezuelan companies emit three to four times as much carbon in oil production as do the more geologically blessed and better-managed firms such as [the United Arab Emirates’] Adnoc and Saudi Aramco, and flare seven to ten times as much methane, another potent greenhouse gas, per barrel as does QatarEnergy,” the Economist reports.

Ultimately, the “easy” tactics of boycotting, protesting, and naming and shaming that have some impact in the private sphere are effectively toothless strategies when it comes to state-run oil companies. Again, many of the NOCs with the dirtiest operations are operating in some of the world’s poorest countries, and no amount of public pressure will change their economic reality. Ultimately, it comes down to climate finance and holding the world’s richest nations accountable for their pledges to financially support the costly decarbonization efforts of the world’s poorest countries – a promise which has so far proven to be an empty one.

By Haley Zaremba for Oilprice.com

LONG LIVE THE BOURGEOIS DEMOCRATIC REVOLUTION
China Warns US Against Imposing Democratic Ideals After Biden Speech
By AFP News on April 29 2021 

China warned the United States on Thursday against imposing its democratic ideals, while criticising trade sanctions and military moves in Beijing's backyard just hours after President Biden's speech on American geopolitical priorities.

The remarks came after Biden's first address to Congress, in which the US leader placed a renewed focus on diplomacy and said the country was in competition with China and others to win the 21st century.

Biden added that "autocrats think democracies can't compete", while noting the US welcomes competition and is not looking for conflict.

Asked about the speech, Chinese foreign ministry spokesman Wang Wenbin said it was normal for the US and China to compete in some areas.

"But this kind of competition should be a track and field race, not a duel to the death," he told a regular press briefing on Thursday.

Wang also warned that "forcing other countries to accept one's democratic system... will only create divisions, intensify tension, and undermine stability."

China on Thursday warned the US against imposing its democratic ideals just hours after President Biden's speech on the US' geopolitical priorities POOL / JIM WATSON

In his speech, President Biden also said the US would stand up to unfair trade practices such as subsidies for state-owned enterprises and intellectual property theft.

COMMUNIST CAPITALI$M
But China lashed out a day later at the US for "violating the market principle of fair competition" and "politicising" issues such as the economy, trade and technology, in reference to the trade war between both countries in recent years.

YES VIRGINIA ALL CAPITALI$M IS STATE CAPITALI$M 

TO A VARYING DEGREE

"China is committed to developing a relationship with the US based on non-conflict and non-confrontation," Wang said.

While Biden said he told Chinese President Xi Jinping the US would maintain a strong military presence in the Indo-Pacific to prevent conflict -- just as it did with NATO in Europe -- China highlighted issues with US deployments in the region.

China's defence ministry spokesman Wu Qian added in a separate statement Thursday that, since the inauguration of the current US government, the frequency of US warships sent to China's maritime territory increased by 20 percent from last year.

The frequency of reconnaissance aircraft activity in the region also increased by 40 percent, Wu added, saying that China "resolutely opposes this".

"The US frequently sends warships and planes to carry out activities in maritime waters and airspace near China, advancing regional militarisation and threatening regional peace and stability," he said.

ALL CAPITALI$M IS STATE CAPITALI$M
North African sun offers green hope but state role key

Issued on: 01/09/2021 - 

This handout satellite imagery released by Maxar Technologies on May 20, 2021 shows a view of the Noor Ouarzazate solar complex in Morocco - 

Satellite image ©2021 Maxar Technologies/AFP


Cairo (AFP)

Blessed with year-round sunshine, North Africa has enormous potential for solar energy, but the huge investment and state subsidies required for large-scale projects are a challenge for cash-strapped regional governments.

The region boasts a few marquee projects that are among the largest in the world but renewable energy entrepreneurs say the focus should be at community level, helping whole villages to operate off the national grid and without using diesel fuel.

Egypt, the most populous Arab country, with more than 100 million people, has made solar power a priority in its quest to source 42 percent of its electricity from renewables by 2035.


In the western desert, about 40 kilometres (25 miles) north of the southern city of Aswan stands the Benban Solar Park. Visible from space, the $4 billion World Bank-funded project is the fourth largest solar park in the world, stretching over 37 square kilometres (14 square miles).

With six million solar panels, Benban was connected to Egypt's national grid in 2019 and currently produces 930 gigawatt hours a year, which is enough to light up 420,000 households, according to the UN.

Egypt's 42 percent target is an ambitious one. In 2016, just nine percent of its power needs came from renewable sources, according to official figures.

- Incentives -

But experts say the state will need to provide incentives if it expects much help from consumers, few of whom have the means or space to switch to solar energy for their household needs.

"In Cairo, it's a bit difficult to install solar panels because you need a lot of space on top of buildings plus it doesn't cover all your electricity needs like powering an air conditioner during summer," said Mohamed Abdel Raouf, an expert on green economies in the region.

]This handout satellite imagery released by Maxar Technologies on May 20, 2021 shows a view of the power substation at the Benban Solar Park in Egypt. The $4 billion World Bank-funded project is the fourth largest solar park in the world - 

Satellite image ©2021 Maxar Technologies/AFP

He said tourist resorts on the Red Sea and Mediterranean coasts as well as rural centres offered more fertile ground.

"The state needs to incentivise it for the average consumer because it would cost me around 60,000 pounds ($3,800) to switch over to solar energy for my home in urban Cairo," he said.

"Why would I invest in environmentally friendly technology that's expensive? The state really needs to take the lead in making it attractive."

The International Energy Agency said over the past decade North Africa has managed to increase its renewable energy production by 40 percent. But that does not mean that addiction to fossil fuels has waned.

In oil-rich Algeria, which receives around 3,600 hours of sun per year, renewable energy only represents a paltry 1.8 percent of the country's consumption.

- 'Monstrous projects' -

In Morocco, the gaps in its green strategy are embodied by the gigantic Noor Ouarzazate solar complex -- the world's largest multi-technology solar installation.

At the gateway to the Sahara, the enormous complex has four power plants with an installed capacity of 530 megawatts.

Blessed with year-round sunshine, North Africa has enormous potential for solar energy Ludovic MARIN AFP

"From the start, it was clear that the strategy was unbalanced. The strategic error was to want to invest in monstrous projects that are difficult to finance," Said Guemra, a specialist in energy management, told AFP.

Rabat sells its green energy at a loss with the generating costs double the price it is sold at to the national grid.

Concentrated solar power (CSP) stations produce energy costing between 1.6 and 1.4 dirhams (18 cents to 16 cents) per kilowatt hour, which is sold to the National Electricity Office (ONEE) at 0.8 dirhams.

The strategy has not paid off and the privately-owned, publicly-funded Moroccan Agency for Sustainable Energy (Masen), which runs the Noor complex, is more than $100 million in debt.

The CEO of Cairo-based start-up Karm Solar, Ahmed Zahran, says it is time to move away from the model of selling electricity to the state in a private public partnership like Benban.

"The business model... is pretty abusive and... not comprehensive. Companies are focusing on selling electricity to one offtaker (the state) and they're not interested in participating in the infrastructure of the countries they're operating in," Zahran told AFP.

"So they're always viewed as opportunistic investors, who are trying to get specific contracts in place, preferably with the government and that's it."

Zahran's company designs solar-powered buildings and water pumping systems to help whole villages operate off the national grid and without using diesel fuel.

It was the first private solar company to obtain a power distribution licence in Egypt.

"We realised that our future is not in being a solar developer but in being a utility-scale solar firm... We're working on the entire infrastructure from building the power plant, building the distribution network, we're doing the tower management, the power mix, everything," Zahran said.

His firm says it has saved 2.3 million litres (608,000 gallons) of diesel and offset 10,000 tonnes of carbon dioxide annually in the process of installing solar plant projects with over 71 MW capacity.

© 2021 AFP

China's Xi calls for patience as Communist Party tries to reverse economic slump

STATE CAPITALI$M IS STILL CAPITALI$M

JOE McDONALD
Updated Thu, August 17, 2023 

BEIJING (AP) — Chinese leader Xi Jinping has called for patience in a speech released as the ruling Communist Party tries to reverse a deepening economic slump and said Western countries are “increasingly in trouble” because of their materialism and “spiritual poverty.”

Xi’s speech was published by Qiushi, the party’s top theoretical journal, hours after data Tuesday showed consumer and factory activity weakened further in July despite official promises to support struggling entrepreneurs. The government skipped giving an update on a politically sensitive spike in unemployment among young people.

Xi, the country’s most powerful leader in decades, called for China to “build a socialist ideology with strong cohesion” and to focus on long-term goals of improving education, health care and food supplies for China’s 1.4 billion people instead of only pursuing short-term material wealth.

Since taking power in 2012, Xi has called for restoring the ruling party's role as an economic and social leader and has tightened control over business and society since taking power in 2012. Some changes come at a rising cost as successful Chinese companies are pressured to divert money into political initiatives including processor chip development. The party tightened control over tech industries by launching data security and anti-monopoly crackdowns that wiped out billions of dollars of their stock market value.

“We must maintain historic patience and insist on making steady, step-by-step progress,” Xi said in the speech. Qiushi said it was delivered in February in the southwestern city of Chongqing. It is common for Qiushi journal to publish speeches months after they are delivered.

Economic growth slid to 0.8% in the three months ending in June compared with the previous month, down from 2.2% in January-March. That is equivalent to a 3.2% annual rate, which would be among China’s weakest in decades.

A survey in June found unemployment among urban workers aged 16 to 24 spiked to a record 21.3%. The statistics bureau said this week it would withhold updates while it refined its measurement.

The government is trying to reassure uneasy homebuyers and investors about the deeply indebted real estate industry after one of China's biggest developers, Country Garden, failed to make a payment to bondholders and suspended trading of its bonds. A government spokesperson said Tuesday regulators are getting debt under control and risks are “expected to be gradually resolved.”

Beijing also has expanded anti-spying rules and tightened controls on information, leaving foreign and private companies uncertain about what activities might be allowed.

Xi stressed “common prosperity,” a 1950s party slogan he has revived. He called for narrowing China’s yawning wealth gap between a tiny elite and the poor majority and to “regulate the healthy development of capital” but announced no new initiatives.

“Common prosperity for all people” is an “essential feature of Chinese-style modernization and distinguishes it from Western modernization,” Xi said.

Western-style modernization “pursues the maximization of capital interests instead of serving the interests of the vast majority of people,” Xi said.

“Today, Western countries are increasingly in trouble,” Xi said. “They cannot curb the greedy nature of capital and cannot solve chronic diseases such as materialism and spiritual poverty."

People wait outside a restaurant in Beijing, Tuesday, Aug. 15, 2023. Chinese leader Xi Jinping has called for patience in a speech released as the ruling Communist Party tries to reverse a deepening economic slump and said Western countries are "increasingly in trouble" because of their materialism and "spiritual poverty." (AP Photo/Ng Han Guan)

Analysis-China's crackdowns rewrite investors' private sector playbook

 An electronic board shows stock indexes at the Lujiazui financial district in Shanghai

By Samuel Shen and Summer Zhen

Thu, August 17, 2023

SHANGHAI/HONGKONG (Reuters) - Buy the state, sell the capitalist - that's how global investors are trying to play China's latest anti-graft crackdowns as they see private enterprise increasingly sidelined in Beijing's quest for "common prosperity".

China's recent sweep of the medical sector came as a shock to many investors who had thought the end of Beijing's three-year regulatory purge of the property and tech sectors meant there would be no more industry-wide crackdowns as policymakers prioritised economic recovery.

Several government bodies in July launched a year-long anti-corruption campaign into the medical system, making clear that China's drive to deliver affordable housing, education and healthcare to its masses was more important.

That forced many investors to quickly draw parallels with last year's crusade against private tutoring and a long-running one against tycoon Jack Ma's consumer finance firm Ant Group.

The one unanimous conclusion they came to was that Beijing wants a greater state presence in these sectors.

"The underlying principle is that healthcare is kind of like a social service that should principally be in state hands," said Arthur Kroeber, partner and head of research at Gavekal in New York. Kroeber says the crackdowns are about "defining what the state does, what the private sector does, and creating a more limited sandbox for the private sector to play in."

"This links to the idea of common prosperity because it's the state's job to guarantee a level of provision of basic services, whether it's education or healthcare, so it's important for the state to have a role," he said.

That has left investors now picking the state over the private sector.

While the CSI Medical Services Index is down 4.4% this month and 20% so far this year, investors have snapped up shares of state-owned medicine producers such as Beijing Tongrentang Co, which is up 14% this month.

Similarly, the expectation that state-backed property firms will gain better access to funding and bigger market share has seen investors dump private developers' stocks and rush into state-owned developers such as Yuexiu Property and Poly Developments.

Zhang Kexing, general manager of Beijing Gelei Asset Management, expects healthcare companies with strong branding will benefit, as will firms in traditional Chinese medicine, which has political support, such as Beijing Tongrentang.

NATIONAL SERVICE

While President Xi Jinping has made graft busting a priority since 2012, the Chinese Communist Party's (CCP) two-year-old "common prosperity" campaign that targets financial services, private education and healthcare has accelerated that push.

The CCP's July Politburo meeting reinforced the message, with the top policymaking body pledging to put a floor under the property sector, help indebted local governments heal and boost consumer demand.

Investors now believe Xi will be relentless in his social and economic agenda, much of which draws on Mao Zedong's Marxist and socialist thinking.

Thomas Masi, a partner and equity portfolio manager at Boston-based GW&K Investment Management, spoke to heads of several Chinese firms that he reckoned were at the fore of innovation in healthcare.

"Basically the message they were getting from the government was that they should be doing some of this innovation for national service, as opposed to for profitability only. That was a lightbulb for us," said Masi, who was once bullish on healthcare.

"We basically understood...we were not necessarily going to be paid as shareholders."

Xi himself has often said that private companies should be "rich and loving," be "patriotic" and share the fruits of their growth with employees more equitably.

Nuno Fernandes, also a partner and portfolio manager at GW&K, says it is important for investors in China to recognise the power of the state to override private interests, which means companies will need to "make a profit out of whatever circumstances and situation they are given."

That is why Fernandes has slashed his portfolio holdings in Chinese drugmakers.

Huang Yan, general manager of private fund manager Shanghai QiuYang Capital Co, said Beijing will crack down on any sector seen as increasing people's economic burden.

"Whether it's healthcare or tutoring, a crackdown will befall any sector as long as the campaign benefits the majority of people at the cost of the minority," Huang said.

Huang points to inflated liquor prices as an example.

"Using pricey spirit to lubricate business at the banquet increases companies' cost which could be used in better ways. It's possible for this sector to be targeted," he says.

But Beijing may ignore other sectors such as infrastructure, where such excess is less visible, he said.

Kumar Pandit, portfolio manager at Somerset Capital Management's Emerging Markets Dividend Growth Fund in London, is not cutting his China exposure but has an "added layer of scrutiny" around sectors Beijing deems important to common prosperity.

While the probability of wider crackdowns is low, he said making decisions remains challenging.

"It is difficult to say with certainty whether the crackdown will spill into other sectors," Pandit said.

(Additional reporting by Jason Xue in Shanghai and Ankur Banerjee in Singapore; Writing by Vidya Ranganathan; Editing by Sam Holmes)

U$A 

IRA Subsidies Spark Green Energy Gold Rush In Conservative Regions

ALL CAPITALI$M IS STATE CAPITALI$M

By Irina Slav - Sep 05, 2023, 

• Massive federal funding available for wind, solar, and EV initiatives are prompting conservative states to re-evaluate low-carbon energy projects.
• 
  
• West Virginia, traditionally coal-dependent, approved three renewable projects worth $400 million, driven by the prospect of job creation.
• 
  
• Most of the Inflation Reduction Act funding for renewable energy is being directed to conservative states, with 27 out of 30 projects located in these areas, valued at over $35 billion.
• 
  

Massive federal subsidies for wind and solar energy are prompting conservative state governments to reconsider their opinions on low-carbon generation capacity or, indeed, consider having some.

With several hundred billion available in the form of subsidies for solar and wind farms, EV manufacturing, and batteries, among others, the Inflation Reduction Act passed by Congress last year has prompted a race among states for a piece of the subsidy pie.

It’s not just the money, either. West Virginia recently approved a titanium manufacturing project led by Berkshire Hathaway that will be powered by a solar+battery installation. It is one of three low-carbon energy projects the state has approved over the past year, the Wall Street Journal reported this week, worth $400 million in total.

This is a major breakthrough for a state so heavily dependent on coal it generates 90% of its electricity from it. The heart of coal country also, unsurprisingly, has a strong pro-coal lobby influencing energy decisions on the state government level. What did the trick, it appears, was the promise of new job creation.

The Berkshire factory, for instance, will employ some 200 people in its titanium production plant and another hundred in a facility for the production of utility-scale battery storage. That facility is being developed by a Berkshire partner in the West Virginia project, Michigan-based Our Next Energy.

Jobs are changing minds in conservative states, which also just so happen to have plenty of low-carbon resources, meaning a lot of sun and a lot of wind. Indeed, early this year, the Wall Street Journal reported that most of the IRA money for low-carbon energy was going into red states. Driven by the promise of generous subsidies, companies have also made pledges worth tens of billions for these states.

As of January, the report said, out of 30 low-carbon and other transition-related projects that had a location included in the description, 27 were in red states. Together, these 27 projects were worth over $35 billion.

Of course, investment pledges are not actual investments, and yet the abundant federal government support will likely motivate a lot of companies to really spend the promised sums. As for job creation, there seems to be a widespread misconception that everyone involved in every wind or solar project gets a job for life. This is not the case.

The number of people directly involved on a permanent basis in transition activities, that is, wind and solar power, battery and EV production, and green hydrogen, tends to be smaller than politicians like to boast. Scotland is a case in point: its government promised a few years ago offshore wind would create as many as 28,000 new jobs. The number of full-time jobs that industry actually created, as of 2021, was 3,100.

This has sparked an effort to define what a green job actually means. Perhaps this effort will spread to the United States as well as job creation as approving low-carbon generation and other transition-related projects gains popularity in the states with the most abundant wind, solar, and land resources.

While it becomes clear which of the prospective transition investors was indeed serious about it, the race between states will continue—there is still a lot of money to be distributed—and it will cost them money.

The FT wrote about that in May, saying states were competing to offer the best incentives to prospective transition investors looking for a place to set up shop and benefit from the IRA subsidy package. Some have questioned the outcome of such an approach to attracting investment, noting there is no certainty such incentives are necessary at all and what they would realistically achieve in terms of returns.

One executive at an accountability research company described the situation graphically: “The states are free to overspend and rip each other’s guts out and compete, race to the bottom, and waste gazillions of dollars,” Greg LeRoy from Good Jobs First told the FT.

By Irina Slav for Oilprice.com 

CRIMINAL CAPITALI$M
‘Largest Public Fraud In State History’: Mississippi Lawsuit Against Brett Favre and Others Untangles Web of Squandered, Misspent Millions Intended to Help the Poorest In The State

Nyamekye Daniel
Thu, May 12, 2022

This week the Mississippi Department of Human Services sued its former director and a Pro Football Hall of Famer for misusing more than $24 million meant to help the neediest families in the nation’s poorest state.

According to reports, John Davis, who was appointed to lead the state agency responsible for managing welfare programs in 2016, directed millions of dollars to two nonprofits who used the money to purchase luxury items, first-class airfare and pay Brett Favre for speaking arrangements he did not do, among other things.

The Mississippi Department of Human Services has sued former NFL Player Brett Favre ad 37 other defendants for misspending welfare funds. (Photo: Twitter/Brett Favre)

Mississippi State Auditor Shad White called it the “largest public fraud in state history.” White is requesting an overall repayment of $77 million. About $1.1 million was paid to the retired Minnesota Vikings quarterback, who lives in Mississippi.

“I applaud the team filing this suit and am grateful the state is taking another step toward justice for the taxpayers,” White said in a statement. “We will continue to work alongside our federal partners — who have been given access to all our evidence for more than two years— to make sure the case is fully investigated.”

U.S. Department of Agriculture data shows that 19.6 percent of Mississippians live below the poverty line. The state’s 2.9 million residents have a median household income of $45,081, or $24,362 per person, according to U.S. Census data.

However, Davis used the public funding from the Temporary Assistance for Needy Families (TANF) program that provides cash for families with children under 18 to boost his and his associates’ personal gain.

According to The Clarion-Ledger, the state agency approved 167 out of 11,717 TANF applications in 2016. The Department of Human Health Services is allowed to issue sub grants to supplement nonprofits that help poor families.

Reports show Davis routed about $19 million of the funding to nonprofits ran by mother and son Zachary, 39, and Nancy New, 69, who are also named in the suit.

“That illegal quid pro quo agreement and conspiracy between Davis and New resulted in all of the transfers of TANF funds for non-TANF purposes,” the lawsuit reads.

About $4 million reportedly paid for a volleyball center at the University of Southern Mississippi, which Favre backed.

The mother and son also agreed to give Florida-based pharmaceutical company Prevacus Inc. $1.7 million in exchange for them doing clinicial trials of a concussion drug in the state. Favre reportedly held the largest stake in the company.

Favre was also paid $1.1 million to speak in 2017 and 2018, which reports show he never did. He said he gave the speeches, but he would have never taken the money if he knew it was not being used as intended. He reportedly paid back $500,000. White said Favre still owes $828,000, including $228,000 in interest.

“I have never received monies for obligations I didn’t meet,” Favre tweeted on May 6, 2020. “To reiterate Auditors White’s statement, I was unaware that the money being dispersed was paid for out of funds not intended for that purpose, and because of that I am refunding the full amount back to Mississippi.”

The state is seeking $3.2 million from Favre in the lawsuit.

The News also paid for drug rehabilitation in California for former pro wrestler Brett DiBiase.

DiBiase, his father and his brother Ted DiBiase are among the 38 defendants in the civil suit. Davis also reportedly set up DiBiase with an agency job he was not qualified for but was paid $48,000 for work he allegedly did not do.

The News pleaded guilty to state fraud and bribery charges last month. Zachary New also pled guilty to mail fraud and federal conspiracy charges. His mother pleaded guilty to a state racketeering charge and federal wire fraud. They are now witnesses for the state against their four co-defendants.

“We will not tolerate the powerful preying on the weak,” Hinds County District Attorney Jody Owens said following the guilty verdict.

Davis left the state agency in 2019 and misspent the money during his tenure. He was indicted on 20 additional felony charges in relation to the scheme. Favre has not been charged in the criminal case.

MONOPOLY CAPITALI$M

Japan to buy semiconductor materials giant for $6.3 billion

• Dan Primack, author of Axios Pro Rata

ALL CAPITALI$M IS STATE CAPITALI$M

Illustration: Rebecca Zisser/Axios

Japan Investment Corp., a government-backed group, has agreed to buy Tokyo-listed chipmaking materials provider JSR for $6.3 billion.

Why it matters: This is part of a global trend of governments seeking to safeguard their semiconductor supply chains.

By the numbers: Japan Investment Corp. will offer around $30.40 per JSR share via a tender, representing a 35% premium to Friday's closing price.

• JSR has around a 30% global market share share for photoresists, light-sensitive polymers that are used as coatings on semiconductor substrates.

More, per Bloomberg: "Those compounds are needed to make semiconductors used in supercomputers, AI-harnessing data centers and missile control systems, not to mention gadgets including iPhones. Government control over the materials critical to powerful chips would grant Japan greater leverage in a world increasingly divided by an escalating US-China technological rift."

STATE CAPITALI$M IS STILL CAPITALI$M

Buttressing Greenland - a bailout in China's distressed property sector

By Engen Tham and Xie Yu 

© Reuters/TINGSHU WANG People walk past a building of Greenland Holdings Corp. Ltd. in Beijing

SHANGHAI/HONG KONG (Reuters) - Greenland Holdings Corp Ltd, a major Shanghai-based Chinese state-backed property developer responsible for marquee projects at home and abroad, was scrambling for funds late last year, people with direct knowledge of the matter said

.

© Reuters/TINGSHU WANG Sign of Greenland Holdings Corp. Ltd. is seen on its building in Beijing

In danger of defaulting on a $500 million offshore bond in December, it was rescued after Shanghai authorities told local state-owned enterprises (SOEs) to step in and buy new Greenland debt, sources told Reuters.

Greenland's financial straits and subsequent bailout, details of which are previously unreported, mark the first known example where Chinese SOEs have been directly ordered to participate in a property sector bond offering - highlighting more active and targeted action being taken by authorities as they seek to limit risks posed by the industry.

© Reuters/TINGSHU WANG People walk past a building of Greenland Holdings Corp. Ltd. in Beijing

Here is what happened.

Greenland, China's No. 7 property developer and highly leveraged, became swept up in a sector-wide debt crisis that roiled international markets last year amid fears that a large-scale developer collapse could derail the world's second-largest economy.

Like many of its peers, it was reeling from tighter caps on debt ratios introduced in January 2021 that resulted in a liquidity squeeze across the sector.

By October, some long-term lenders such as CITIC Bank were reducing their lending, two people with direct knowledge of Greenland's financial situation said, adding the state of affairs was not helped by downgrades to its debt ratings from credit rating agencies.

It had sought fresh financing from trust firms and leasing companies but a sharp rise in interest rates was proving to be a stumbling block, they said.

In the fourth quarter, Greenland embarked on more drastic steps - slashing real estate-related headcount by 30% and placing more strategic emphasis on infrastructure construction projects that accounted for half of its revenues, they added.

Even so, it did not have sufficient funds to cover the likely event that many holders of the $500 million puttable bond would seek to exercise their right to redeem it roughly a year early on Dec. 16, they said.

Sources for this article were not authorised to speak to media and spoke on condition of anonymity.

Greenland said in a statement to Reuters it has always repaid its domestic and overseas debts in full and kept financing costs low, adding that its liabilities reduction plan was progressing smoothly. CITIC Bank did not respond to requests for comment.

WHITE KNIGHTS

Concerned about Greenland's financial situation, Shanghai municipal authorities had sometime during the fourth quarter asked its lenders to be flexible with repayment extensions and to maintain rather than drop existing relationships, said one person with knowledge of the matter.

Then in early December, the Shanghai government's state asset administrator held a meeting with representatives of seven SOEs, ordering them to buy new dollar bonds issued by Greenland, according to four people briefed about the gathering.

Shanghai Municipal Investment Group, Bank of Shanghai, Shanghai Land (Group) Co and Lujiazui International Trust Co were among the SOEs, said two of the four sources.

On Dec. 14, Greenland announced it had raised $350 million in a dollar bond issue. Due August 2022 and carrying a 7.974% coupon, it was a rare developer bond deal at a time when concerns about the sector had dried up new note issuance. The only purchasers were the seven SOES, two sources said.

Three days later, Greenland said it had redeemed 85.9% of the $500 million bond after put options were exercised.

The Shanghai government's state asset administrator, the Shanghai municipal government and the four SOEs named above did not respond to requests for comment.

China's property sector crisis has posed a high-stakes quandary for President Xi Jinping, who is seeking to secure an unprecedented third term this year.

On one hand, the government wants to impose financial discipline on an industry known for unbridled borrowing and which by some metrics accounts for a quarter of China's economy. But it also can't afford to derail growth or fuel social unrest.

Bond defaults by China Evergrande Group, the world's most indebted developer with some $300 billion in liabilities, as well as by other developers, have seen authorities soften their initial stance that market forces would hold sway.

Rules relating to M&A and capital raising in the sector have been relaxed and developers have been given easier access to pre-sale funds held in escrow accounts. At last week's annual meeting of parliament, Premier Li Keqiang signalled more easing was in the works.

Local authorities have also encouraged SOEs to purchase developer assets, sources have previously said, although it is unclear if any SOEs have been ordered per se into an acquisition.

SHIMAO TOO

Shimao Group Holdings, a developer which has put all its property up for sale to repay debt, has also had a helping hand from Shanghai municipal authorities.

Twenty-seven of Shimao's creditors were asked to maintain lending positions and to not publicly undermine Shimao's creditworthiness, said a separate person who attended a creditor meeting. "Everyone was stony-faced, no one had any reaction," said the person.

Shimao did not respond to requests for comment.

Greenland, however, appears to have had more government intervention than most other developers. The sources who spoke with Reuters were not sure why but noted Greenland is state-backed and has high-profile projects.

It recently built Sydney's tallest residential tower and has billions of dollars worth of projects in London, New York, Los Angeles and Paris. At home, its projects include construction of the tallest building in northwest China and it is heavily involved in building subways, highways and bridges.

The use of government-backed credit support rather than the purchase of fire-sale assets is becoming the preferred policy option for reducing risk in the sector, one government policy advisor told Reuters.

There is also a growing consensus that when deciding which firms will gain government support, it will be size rather than whether a firm is government-backed or private that will be the key factor, the person said, adding the bottom line is to prevent a financial crisis.

Just how far the government will support Greenland remains to be seen. Its financial difficulties are not over. It has $190 billion in total liabilities, and according to Refinitiv data, outstanding bonds worth $7.1 billion, of which $3.7 billion is due to mature this year.

The order to SOEs to support Greenland only pertained to the $350 million purchase of new debt, the sources said.

At one SOE at least, there is fear that Greenland might fall further into financial strife and of the potential fallout if that happens.

The written instructions with a Shanghai SASAC letterhead that ordered the purchase of Greenland's bonds are being kept in a safe place in case Greenland defaults and SOE officials are called to account for their actions, said one person with knowledge of the matter.

(Reporting by Engen Tham, Xie Yu, Zhang Yan, Julie Zhu and Clare Jim; Additional reporting by Andrew Galbraith; Editing by Sumeet Chatterjee and Edwina Gibbs)