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The agreement includes Beijing’s pledge to purchase US$200 billion in American goods and services over the next two years in exchange for a lessening of some tariffs. (The Logic)

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Talking point: The deal includes some language on technology, such as Chinese concessions on strengthening intellectual property provisions, protecting trade secrets and cracking down on forced technology transfers. However, China has made these kinds of commitments before and not followed through on them. In any event, larger issues remain: the U.S. is cracking down on a loophole that let its firms sell to Huawei from their overseas offices, and pressuring allies to ban Huawei from their 5G networks. U.S. Treasury Secretary Steve Mnuchin said today that there are both technology and cybersecurity issues that need to be resolved in the next phase. President Donald Trump has raised the possibility of delaying that second deal until after the November 2020 election.

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The stock hit US$471.10 per share in afternoon trading, up 4.33 per cent and beating its previous record of US$454 per share set last Friday. The investors’ vote of confidence follows CEO Elon Musk’s announcement that Tesla will build the Model Y in China and design a new vehicle in the country, where it began selling locally made Model 3s on Tuesday. (The Wall Street Journal)

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Talking point: Building cars locally for the Chinese market could help Tesla lower its costs and avoid tariffs it would have to pay by importing Chinese supplies to its U.S. plants. The company lowered its Model 3 price in the country by nine per cent last week ahead of the launch, putting it in line with Chinese competitors, which could help the San Francisco-based company maintain its lead in the electric-vehicle market. The prospect of Tesla’s growth in China has also spurred an investment frenzy in Chinese companies supplying parts for the vehicles: stock of Tesla’s Chinese suppliers increased 60 per cent in the past year—including Shenzhen-listed VT Industrial Technology, a component manufacturer, whose stock jumped 66 per cent in the last month, and solar-glass company Changzhou Almaden, whose stock went from US$14.27 per share a month ago to US$29.21 by late afternoon trading on Tuesday.

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The US$427-million contract is the third for Bombardier Sifang (Qingdao) Transportation, a joint venture with China’s CRRC Sifang Locomotive & Rolling Stock. All told, the consortium will have built 448 of its CR400AF locomotives for the government-run railway. Bombardier’s stock rose by just over a percentage point following the news. (The Logic)

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Talking point: As half of the only Sino-foreign entity to win a train bid, the Montreal-based company is well placed to cash in on China’s rapidly expanding high-speed rail network. Spurred in part as a tonic to the 2008 financial crisis, it will count some 30,000 kilometres of track by 2020—the largest HSR network in the world. The government is again turning to rail to counter China’s slowing economy: China approved 35 projects in 2019 alone, the majority of them for HSR.

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The Communist Party of China is urging local officials to find ways to stabilize pork prices in the country and reinstate supply, which dropped more than 40 per cent between August 2018 and August 2019 amid a massive African swine fever outbreak. Solutions include increasing imports as well as production. (Bloomberg, The New York Times)

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Talking point: The limited supply and high cost of the Chinese food staple drove a spike in inflation in the country, which reached a seven-year high in November with the consumer price index up 4.5 per cent. The government’s urgency to address the problem is expected to be a boon to Canada. China suspended all pork imports from the country in June, after the RCMP arrested Huawei executive Meng Wanzhou at the request of the U.S. The ban was lifted in November, as the economic impacts of swine fever intensified. Canada’s pork industry anticipates the gains will continue: Olymel, Canada’s largest supplier of pork to China, now expects Chinese imports to rise 60 per cent this year.

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Stocks in China, Europe and the U.S. traded up. The S&P 500 index was up 0.44 per cent in late afternoon trading, with its tech sector up the most among the 11 major sectors. (Financial Times, Reuters)

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Talking point: There’s plenty of positive macroeconomic news for stock markets today. China’s manufacturing sector is growing. The number of people filing jobless claims in the U.S. ticked down. Earlier this week, U.S. President Donald Trump said he’d sign a phase one trade deal with China on January 15. Apple and Microsoft, both of which have extensive presences in China, led the tech sector rally, up 1.67 per cent and 1.40 per cent, respectively. However, much of this positive news could be temporary. The initial China-U.S. deal leaves many contentious issues unresolved. Chinese manufacturing strength is tied closely to the trade deal; today’s numbers, while strong, are down from the three-year high reached in November.

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China is also raising fines for securities fraud, increasing disclosure requirements and cutting how much regulators review companies that want to go public. (The Wall Street Journal)

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Talking point: The changes are part of a broader attempt by China to attract new listings and help its tech sector raise larger sums from more diverse sources of capital. In July, China launched its Star exchange, which caters to tech startups; it’s already attracted about a third of all new listings in the country in 2019. These new reforms move China closer to the Canadian-style system, where individual investors are on the hook for making their own decisions about what to invest in. China’s shift to allowing unprofitable companies go public comes as a number of high-profile unprofitable firms in the U.S. have either had lacklustre IPOs, such as Uber and Lyft, or tried to debut but then pulled back, like WeWork.

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The Shenzhen-based tech firm is looking for a person to lead a cryptocurrency research unit tasked with integrating a digital coin into its payments platform and ensuring regulatory compliance. (CoinDesk, TechNode)

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Talking point: The People’s Bank of China is considering letting Tencent be an issuer of the bank’s digital yuan, which is set to be rolled out in 2020. The firm is increasingly working with China on fintech initiatives: earlier this month, its bank, WeBank, became the first technical infrastructure provider for China’s blockchain network. Government work aside, the market potential for Tencent is significant. Over 900 million people used its WeChat Pay service in 2017, and the firm has an approximate 40 per cent share of China’s mobile payments industry. Today’s news is a further challenge to Facebook’s Libra, about which both the Chinese government and Tencent have raised concerns. Tencent’s ambitions are not without their critics. In May, Nepal banned WeChat Pay for not registering with domestic authorities.

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The prime minister wants businessman Michael Spavor and former diplomat Michael Kovrig, both detained December 2018, to be released prior to a deal. (TVA)

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Talking point: The appeal comes as the U.S. and China are increasingly signalling progress in their talks. The U.S. expects a “phase one” deal to be signed in January, and earlier today China announced it would exempt six U.S. chemical products from additional tariffs for a year. Kovrig and Spavor were arrested after Canadian officials detained Huawei CFO Meng Wanzhou in Vancouver as part of an extradition attempt by the U.S. The two Canadians have had no access to family members or lawyers while in custody. Ottawa has made repeated appeals to China to have them released. Asking the U.S. to intervene is a sign those efforts have been ineffective. It also follows federal opposition parties’ move earlier this month to form a committee to look at ways of freeing the two detainees.

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The launch of an additional two satellites means the BeiDou navigation service now has 24 satellites orbiting 20,000 kilometres above the planet’s surface, and coverage of every place on earth, according to the state news agency Xinhua. The system is expected to be fully operational in the first half of 2020. (South China Morning Post)

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Talking point: BeiDou is an alternative to the Global Positioning System (GPS) run by the U.S. Air Force. While the service was initially a military project, the Chinese government has been pushing consumer adoption—Beijing authorities made half of the city’s cabs install it in August 2018, and domestic smartphone manufacturers like Huawei and Xiaomi have built it into their models. BeiDou will become one of four global navigation systems, joining GPS, Russia’s Glonass and Europe’s Galileo. Its service is correct to within five metres in the Asia-Pacific region and double that elsewhere; the U.S. GPS system can get within centimetres of a target object.

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Bankers were forced to cut the Chinese financial technology firm’s offering size and price after investors hesitated to jump on board, saying the company’s business model was too reliant on a majority owner. The IPO valued OneConnect at US$3.7 billion, about half what it was worth when SoftBank invested in it in 2018. (Reuters)

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Talking point: The management of SoftBank’s US$100-billion Vision Fund, which was the means through which the company bet on OneConnect, has been raising red flags pursuant to several high-profile setbacks, including WeWork’s failed IPO attempt and subsequent US$9.5-billion rescue. Many China IPOs have recently been hurt by tense trade relations with the United States and slow economic growth, but SoftBank’s involvement in China-related companies has become a sign that a firm was likely overvalued. Said one person involved in the OneConnect IPO, “SoftBank has become a signal that the market has peaked.”