World News
China Plays Shell Game in Moves to Cut Debt Burdens

China’s state-owned banks agreed to accept shares in the company to repay half the 60 billion yuan ($9 billion) it owes, as a model for debt reduction.
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BEIJING – Drowning in debt, metals trader Sinosteel Corp. got an unprecedented lifeline last month from the Chinese government – a multibillion-dollar debt-for-equity rescue that could be the first of many for struggling state-owned companies.
China’s economy is still growing relatively quickly, but a prolonged slowdown is raising fears that companies in many industries have borrowed and invested too much, too fast, posing a serious risk for the world’s second-largest economy.
The government hailed the Sinosteel deal, in which state-owned banks agreed to accept shares in the company to repay half the 60 billion yuan ($9 billion) it owes, as a model for debt reduction. Analysts are more skeptical. They say such maneuvers are typical of the ruling Communist Party’s tendency to avoid bold action and support politically favored state industry.
“They are still tinkering at the edge of the problem instead of tackling it head on,” said Mark Williams, chief Asia economist for Capital Economics.
Total debt owed by companies and households in China is estimated by private sector analysts to amount to 270 percent of annual economic output – high for a developing country and close to the levels of the United States and the European Union before the 2008 crisis.
Debt has risen at double-digit annual rates since the crisis as Beijing repeatedly used infusions of credit to shore up economic growth and avoid politically risky job losses.
In 2016, lending grew by 17 to 18 percent, outpacing the rise in savings by China’s famously thrifty households, according to Standard & Poor’s. It said that leaves banks with slimmer “funding buffers.”
Explosive economic growth that peaked at 14.2 percent in 2007 helped China power its way out of previous financial quandaries. That is no longer assured now that growth has tumbled to less than half that level – at 6.7 percent for the first nine months of last year the weakest since 1990.
The bank regulator reported in October that loans on which borrowers have made no payments in 90 days had passed 2 trillion yuan ($300 billion).
That is equivalent to a relatively modest 2.15 percent of total lending, but private sector analysts say the true level is far higher at up to 19 percent, or nearly 18 trillion yuan ($2.5 trillion). They say banks fail to include loans to state companies in their count because they assume the government will bail them out.
A banking crisis like those that hit Japan and South Korea in the 1990s is unlikely because both Chinese lenders and major borrowers are state-owned, so as a last resort, the government could order creditors to keep lending and then replenish their balance sheets, economists say.
That would keep banks solvent, but might divert money from investment in productive companies or from paying for schools, health care and other public services needed in China’s rapidly aging society.
“You can get away without a crisis over the next few years, but you won’t be able to avoid slower growth,” Williams said.
The latest plan for Sinosteel calls for transforming some of its debt into “convertible bonds” that creditors can redeem later for stock, according to Bank of China Ltd., which led a consortium of lenders. It said regulators would press the company for “internal reform.”
The business magazine Caixin reported that half of Sinosteel’s debt would be turned into such bonds.
Lenders that accept Sinosteel stock still can lose money if its finances fail to improve, said Sheng Hong, director of the Unirule Institute in Beijing, an independent economic research group.
“Banks should have refused the deal right from the start,” he said.
The debt dilemma reflects the leadership’s conflicting desires for the prosperity that comes from free-market competition and for ensuring state companies will still dominate the economy.
Under President Xi Jinping, the Communist Party has pledged to clear up debt and get banks to finance productive activity instead of subsidizing state companies. But the debt burden has kept rising as Beijing avoided taking painful, decisive action.
Regulators say they will use market forces to force state companies that control industries including steel, utilities, telecoms, airlines, banking and insurance to become more efficient. But they have ruled out allowing any to go bankrupt: The ruling party’s latest economic blueprint for 2017 promises “financial stability,” which suggests Chinese leaders might be leery of pushing companies so hard they might collapse.
Bailing out companies such as Sinosteel that are deemed strategically important could set back efforts to shrink bloated heavy industries.
A glut of production in steel, aluminum and other industries where supply exceeds demand has led to price-cutting wars and complaints that low-cost Chinese exports are threatening jobs in the United States and Europe.
Instead of state-engineered bailouts, the companies could just sell off equity stakes and use the proceeds to pay debts, Citigroup economists Li-Gang Liu and Xiaowen Jin said in a report.
Sinosteel has operations in mining, steel trading and engineering. It came close to defaulting on a 2 billion yuan ($315 million) bond payment in 2015 before regulators intervened and persuaded creditors to wait.
Bank of China described the Sinosteel debt-for-equity deal as a model for future debt restructuring.
But some companies that get such relief might “lose motivation to improve,” said Zhang Yingjie, research director for China Chengxin International Credit Rating Co. “The key lies in how to select the enterprises.”
“They are selling this as dealing with the debt problem and creating viable businesses,” said Williams, “but it seems to me it is aimed at making sure state-owned firms can continue to dominate.”
By JOE McDONALD – The Associated Press
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AP researcher Yu Bing contributed.

World News
Marine Le Pen’s National Rally Wins the First Round in France 2024 Election

Exit polls in France showed that Marine Le Pen’s right-wing National Rally (RN) party made huge gains to win the first round of election on Sunday. However, the final outcome will depend on how people trade votes in the days before next week’s run-off.
Exit polls from Ipsos, Ifop, OpinionWay, and Elabe showed that the RN got about 34% of the vote. This was a big loss for President Emmanuel Macron, who called the early election after his party lost badly in the European Parliament elections earlier this month.
The National Rally (RN) easily won more votes than its opponents on the left and center, including Macron’s Together group, whose bloc was predicted to get 20.5% to 23% of the vote. Exit polls showed that the New Popular Front (NFP), a hastily put together left-wing alliance, would get about 29% of the vote.
The results of the exit polls matched what people said in polls before the election, which made Le Pen’s fans very happy. But they didn’t say for sure if the anti-immigrant, anti-EU National Rally (RN) will be able to “cohabit” with the pro-EU Macron in a government after the runoff election next Sunday.
Voters in France Angry at Macron
Many French people have looked down on the National Rally (RN) for a long time, but now it is closer to power than it has ever been. A party known for racism and antisemitism has tried to clean up its image, and it has worked. Voters are angry at Macron, the high cost of living, and rising concerns about immigration.
Fans of Marine Le Pen waved French flags and sang the Marseillaise in the northern French district of Henin-Beaumont. The crowd cheered as Le Pen said, “The French have shown they are ready to turn the page on a power that is disrespectful and destructive.”
The National Rally’s chances of taking power next week will rest on what political deals its opponents make in the next few days. Right-wing and left-wing parties used to work together to keep the National Rally (RN) out of power, but the “republican front,” which refers to this group, is less stable than ever.
If no candidate gets 50% of the vote in the first round, the top two candidates and anyone else with 12.5% of the registered voters immediately move on to the second round. The district goes to the person who gets the most votes in the runoff.
France is likely to have a record number of three-way runoffs because so many people voted on Sunday. Experts say that these are much better for the National Rally (RN) than two-way games. Almost right away on Sunday night, the horse trade began.
Macron asked people to support candidates who are “clearly republican and democratic.” Based on what he has said recently, this would rule out candidates from the National Rally (RN) and the hard-left France Unbowed (LFI) party. Leaders on the far left and the center left both asked their third-placed candidates to drop out.
Minority government
Jean-Luc Melenchon, leader of France Unbowed, said, “Our rule is simple and clear: not a single more vote for the National Rally.” But the center-right Republicans party, which split before the vote when some of its members joined the RN, didn’t say anything.
The president of the RN party, Jordan Bardella, who is 28 years old, said he was ready to be prime minister if his party gets a majority of seats. He has said he won’t try to make a minority government, and neither Macron nor the communist NFP will work with him.
“I will be a “cohabitation” Prime Minister, respectful of the constitution and of the office of President of the Republic, but uncompromising about the policies we will implement,” he said.
A few thousand anti-RN protesters met in Paris’s Republique square on Sunday night for a rally of the leftist alliance. The mood was gloomy.
Niya Khaldi, a 33-year-old teacher, said that the RN’s good results made her feel “disgust, sadness, and fear.”
“This is not how I normally act,” she said. “I think I came to reassure myself, to not feel alone.”
Election Runoff
The result on Sunday didn’t have much of an effect on the market. In early Asia-Pacific trade, the euro gained about 0.23%. Fiona Cincotta, a senior markets expert at City Index in London, said she was glad the outcome “didn’t come as a surprise.”
“Le Pen had a slightly smaller margin than some of the polls had pointed to, which may have helped the euro a little bit higher on the open,” she noted. “Now everyone is waiting for July 7 to see if the second round supports a clear majority or not. So it does feel like we’re on the edge of something.”
Some pollsters thought the RN would win the most seats in the National Assembly, but Elabe was the only one who thought the party would win all 289 seats in the run-off. Seat projections made after the first round of voting are often very wrong, and this race is no exception.
On Sunday night, Reuters reported there were no final results for the whole country yet, but they were due in the next few hours. In France, exit polls have usually been very accurate.
Voter turnout was high compared to previous parliamentary elections. This shows how passionate people are about politics after Macron made the shocking and politically risky decision to call a vote in parliament.
Mathieu Gallard, research head at Ipsos France, said that at 1500 GMT, nearly 60% of voters had turned out, up from 39.42% two years earlier. This was the highest comparable turnout since the 1986 legislative vote. It wasn’t clear when the official number of people who voted would be changed.
World News
Pakistan Seeks US Support for Counter-Terrorism Operation Azm-e-Istehkam

(CTN News) – Pakistan’s Ambassador to the United States, Masood Khan, has urged Washington to provide Pakistan with sophisticated small arms and communication equipment to ensure the success of Operation Azm-e-Istehkam, a newly approved counter-terrorism initiative in the country.
The federal government recently approved the reinvigorated national counter-terrorism drive, which comprises three components: doctrinal, societal, and operational.
Ambassador Khan noted that work on the first two phases has already begun, with the third phase set to be implemented soon.
Addressing US policymakers, scholars, and corporate leaders at the Wilson Center in Washington, Khan emphasized the importance of strong security links, enhanced intelligence cooperation, and the resumption of sales of advanced military platforms between Pakistan and the US.
He argued that this is crucial for regional security and countering the rising tide of terrorism, which also threatens the interests of the US and its allies.
“Pakistan has launched Azm-i-Istehkam […] to oppose and dismantle terrorist networks. For that, we need sophisticated small arms and communication equipment,” said Ambassador Khan.
Pakistan–United States relations
The ambassador observed that the prospects of Pakistan-United States relations were bright, stating that the two countries “share values, our security and economic interests are interwoven, and it is the aspiration of our two peoples that strengthens our ties.”
He invited US investors and businesses to explore Pakistan’s potential in terms of demographic dividend, technological advancements, and market opportunities.
Khan also suggested that the US should consider Pakistan as a partner in its diplomatic efforts in Kabul and collaborate on counterterrorism and the rights of women and girls in Afghanistan.
He stressed that the bilateral relationship should be based on ground realities and not be hindered by a few issues.
“We should not base our engagement on the incongruity of expectations.
Our ties should be anchored in ground realities, even as we aim for stronger security and economic partnerships. Secondly, one or two issues should not hold the entire relationship hostage,” said the ambassador.
World News
China Urges Taiwanese to Visit Mainland ‘Without Worry’ Despite Execution Threat

China has reassured Taiwanese citizens that they can visit the mainland “without the slightest worry”, despite Taiwan raising its travel alert to the second-highest level in response to Beijing’s new judicial guidelines targeting supporters of Taiwanese independence.
Last week, China published guidelines that could impose the death penalty for “particularly serious” cases involving “diehard” advocates of Taiwanese independence.
In response, Taiwan’s government urged the public to avoid “unnecessary travel” to mainland China and Hong Kong, and raised its travel warning to the “orange” level.
However, Zhu Fenglian, a spokeswoman for a Chinese body overseeing Taiwan affairs, stated that the new directives are “aimed solely at the very small number of supporters of ‘Taiwan independence’, who are engaged in malicious acts and utterances”.
She emphasized that “the vast majority of Taiwan compatriots involved in cross-strait exchanges and cooperation do not need to have the slightest worry when they come to or leave mainland China”.
“They can arrive in high spirits and leave fully satisfied with their stay,” Zhu added.
What’s Behind The China-Taiwan Tensions?
The tensions stem from the longstanding dispute over Taiwan’s status. Mainland China claims Taiwan as part of its territory and has refused to rule out using force to bring the democratic island under its control, while Taiwan sees itself as a sovereign state.
Beijing has not conducted top-level communications with Taipei since 2016, when the Democratic Progressive Party’s Tsai Ing-wen became Taiwan’s leader. China has since branded her successor, President Lai Ching-te, a “dangerous separatist”.
“The DPP authorities have fabricated excuses to deceive the people on the island and incite confrontation and opposition,” Zhu said in her statement.
Despite the political tensions, many Taiwanese continue to travel to mainland China for work, study, or business.
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