Bitcoin tops $1T for first time amid cryptocurrency surge

A100X Managing Partner Nisa Amoils and former UBS Investment Bank Board Member David Sacco provide insight on ‘Fox and Friends Weekend.’

Recommended Stories

  • Musk Floats ‘Starbase’ Name Change for Texas Launch Town

    (Bloomberg) -- Elon Musk is eyeing a name change for Boca Chica, Texas, the Gulf Coast community where his Space Exploration Technologies Corp. is building its futuristic deep-space rocket.“Creating the city of Starbase, Texas,” Musk tweeted Tuesday. “From thence to Mars, And hence the Stars.”A SpaceX representative made a “casual inquiry” recently about requirements to incorporate Boca Chica and rename it the City of Starbase, said Cameron County Judge Eddie Trevino. In a statement, he said county commissioners have been notified of the discussions about Boca Chica, a small burg near the Mexican border where SpaceX’s new Starship prototypes dominate the seaside skyline.“Sending a tweet doesn’t make it so,” Trevino said in an interview. “They have a lot of hoops and hurdles to go through before they can make it so.”Renaming Boca Chica would further deepen Musk’s imprint on Texas. In addition to SpaceX’s activity, his automaker, Tesla Inc., is building a massive factory in East Austin for its forthcoming electric pickup truck. The private Musk Foundation has moved to Austin from California, and Musk himself has said he has relocated Texas, though he still spends time in the Golden State.SpaceX also tests rockets in McGregor, Texas, which is near Waco. The Starship prototypes it’s developing in Boca Chica are one day meant to fly people to the moon and to Mars.Separately, SpaceX posted engineering positions at Starlink for “a new, state of the art manufacturing facility” it’s building in Austin. Starlink is the company’s space-based Internet service, which is available in parts of Canada, the U.S. and U.K. Austin television station KXAN reported earlier on the new job postings.As for Boca Chica, the incorporation process is handled under Texas law by Cameron County commissioners. That process would also include utilities in the town, which doesn’t have a public water system. Water is transported by truck from nearby Brownsville and stored in tanks at each home.An Austin-based lobbyist for SpaceX referred all calls to the company, which didn’t respond to requests for comment.Added Judge Trevino, “I think they may be getting a little ahead of themselves.”(Updates with county statement in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Iran’s Rouhani Tells Macron No Renegotiating Nuclear Deal

    (Bloomberg) -- Iranian President Hassan Rouhani told his French counterpart in a Tuesday phone call that the 2015 nuclear deal wasn’t up for renegotiation and the only way to restore the accord was for the U.S. to formally rejoin it.According to a statement on Rouhani’s official website, President Emmanuel Macron said Europe was ready to “be more active in the coming weeks in order to revive” the deal, and that both the U.S. and Iran had to “take the first steps” for all parties to return to full compliance with the agreement.Iran, U.S. Told Not to Use Atomic Monitor as Bargaining Chip Iran and the U.S. remain locked in a stalemate over which side should move first to re-establish the multiparty deal after former President Donald Trump violated its terms and abandoned it almost three years ago.Tehran in response has gradually ramped up its nuclear activity by increasing uranium enrichment and limiting the scope of United Nations inspections of its nuclear sites.While President Joe Biden pledged to rejoin the agreement during his campaign, his administration has so far decided against a swift re-entry into the landmark deal and is maintaining Trump’s sanctions on Iran.Macron urged Rouhani to bring Iran back into compliance with its obligations under the nuclear accord, his office said in a statement. He called on the Iranian to give “clear signals” of goodwill without waiting for further concessions in order to revive dialogue. (Updates with French statement in last paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Texas Lifts Mask Mandate Despite Dire Warnings About Fourth Wave

    (Bloomberg) -- Texas Governor Greg Abbott lifted the mask mandate and other anti-pandemic restrictions, defying warnings from health officials about the perils of dropping those precautions too soon.Effective March 10, all businesses will be allowed to open at full capacity, Abbott said during a media briefing in Lubbock on Tuesday. Although his executive order allows counties to reimpose anti-virus rules should hospitalizations surge, it forbids them from jailing or fining scofflaws.“This will kill Texans,” Texas Democratic Party Chairman Gilberto Hinojosa said in a statement. “Our country’s infectious disease specialists have warned that we should not put our guard down even as we make progress towards vaccinations.”Abbott acted at what federal authorities warn is a critical juncture in the pandemic that has killed 516,000 Americans: While hospitalizations and caseloads have dropped in Texas and nationwide, U.S. vaccinations are not yet widespread enough to provide so-called herd immunity, and new, easier-to-spread variants of Covid-19 are proliferating.Abbot’s move drew immediate criticism from Democrats while giving the Republican governor an opportunity to shift attention from the weather-induced blackouts that crippled the state two weeks ago. Texas’ deregulated electric market, a product of the state’s GOP leadership, is at the center of blame for the failures.Hard-Earned GroundThe announcement flies in the face of pleas by federal health officials for a continuation of masking and other anti-virus protocols.Abbott’s anti-pandemic measures also have grated on his conservative electoral base, which saw them as government overreach, and may have wounded any presidential aspirations. He received 0% of the vote in a presidential straw poll at the Conservative Political Action Conference this past weekend.“At this level of cases with variants spreading, we stand to completely lose the hard-earned ground we have gained,” Rochelle Walensky, director of the Centers for Disease Control and Prevention, said during a Monday briefing. “Please stay strong in your conviction, continue wearing your well-fitted mask and taking the other public health prevention actions that we know work.”Biden’s WarningWalensky warned that a fourth wave of Covid-19 infections could be in the offing without continued vigilance. On Tuesday, President Joe Biden reinforced her admonition.“I urge all Americans to please keep washing hands, stay socially distanced, wear masks,” Biden said. “Now is not the time to let our guard down.”New Covid-19 cases in Texas dropped to a five-month low of 1,637 on Monday, state health department figures showed. Virus hospitalizations slipped to the smallest tally since Oct. 28.“Too many Texans have been sidelined from employment opportunities; too many small-business owners have struggled to pay their bills,” the governor said. “It is now time to open Texas 100%.”Earlier Tuesday, Abbott said in a tweet that Texas is administering more than 1 million Covid-19 vaccinations weekly.“Texans have mastered the daily habits to avoid getting Covid,” Abbott said.As of Sunday, none of the state’s 22 trauma-service areas had more than 15% of hospital capacity occupied by virus patients. The pandemic has claimed almost 43,000 Texans since it emerged in early 2020.“An irresponsible decision guided by political expedience and nothing else,” Houston City Controller Chris B. Brown said in a tweet. “Not only will this set us back in the battle against #COVID19 in the region, it will likely prolong the economic pain brought on by the pandemic.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • China Revs Up Grand Chip Ambitions to Counter U.S. Blacklistings

    (Bloomberg) -- In just two decades, China sent people into space, built its own aircraft carrier and developed a stealth fighter jet. Now the world’s youngest superpower is setting out to prove its capabilities once more -- this time in semiconductors.At stake is nothing less than the future of the world’s No. 2 economy. Beijing’s blueprint for chip supremacy is enshrined in a five-year economic vision to be unveiled during a summit of top leaders in the capital this week. It’s a multi-layered strategy both pragmatic and ambitious in scope, embracing aspirations to replace pivotal U.S. suppliers and fend off Washington, while molding homegrown champions in emergent technologies.China wants to build a coterie of technology giants that can stand shoulder-to-shoulder with Intel Corp. and Taiwan Semiconductor Manufacturing Co., conferring the same priority on that effort as it accorded to building atomic capability. While specifics of that endeavor won’t emerge for months, comments by government officials, Party mouthpieces like the People’s Daily and state think-tanks provide important clues about the envisioned road map.Read more: Xi Mobilizes China for Tech Revolution to Cut Dependence on WestThe approach entails making do over the next five years or so with aging semiconductors that are adequate for electric cars and even military applications, but can’t run advanced smartphones and similar devices. That buys China time to focus on fields like so-called third-generation chipmaking in which no country yet dominates and -- Beijing hopes -- create an array of indigenous giants in areas including machinery, software and new materials. The ultimate goal is to groom local alternatives to global linchpins like Cadence Inc. and Synopsys Inc. in design software and Europe’s ASML Holding NV in chipmaking gear.“Semiconductors are a crucial sector in the information era that will lead the future of economic development,” Science & Technology Minister Wang Zhigang said at a press conference last week. “At the same time, China will strive to achieve self reliance and strengthen our own capabilities.”The World Is Short of Computer Chips. Here’s Why: QuickTakeChina’s efforts gained urgency because the Biden administration is escalating a battle against what it called “techno-autocracies.” That could extend or even expand blacklistings that banned key transactions with corporations from Huawei Technologies Co. to ByteDance Ltd. and Tencent Holdings Ltd. To a country that imports $300 billion of chips annually, a worsening global shortage drives home the risk of relying on potentially hostile suppliers for the building blocks of everything from artificial intelligence to sixth-generation networking and autonomous vehicles.It will take years for local companies to match foreign counterparts in manufacturing and design expertise, during which there’s no ready answer to the dominance of Japanese and American names in chipmaking equipment. Chinese companies will still only supply 35% of its domestic demand by the end of this decade, IDC analyst Mario Morales estimates.They’ll also have to contend with Washington. The U.S. signaled it intends to go ahead with a Trump administration-proposed rule to secure the technology supply chain next month, a move that gives the Department of Commerce broad authority to prohibit transactions involving “foreign adversaries” like China.“The United States and its allies should utilize targeted export controls on high-end semiconductor manufacturing equipment ... to protect existing technical advantages and slow the advancement of China’s semiconductor industry,” the National Security Commission on Artificial Intelligence, headed up by former Google chairman Eric Schmidt, recommended to Biden and Congress this week.Huawei, the country’s largest technology company by revenue, underscores the leverage Washington wields. Once the world’s biggest smartphone maker, Huawei was forced to sell its Honor division and run at close to minimum production capacity after it lost access to chips from the likes of TSMC under American regulations.Read more: China Said to Plan Broad Chip Sector Support to Fight Trump“It just stimulates the Chinese community to accelerate their internal developments and eventually they may come out even stronger,” said Luc Van den hove, president of the Imec research center in Leuven, Belgium, which focuses on innovation in semiconductor technology. “And I think that’s certainly a risk of trying to keep the two worlds further apart.”Read more: Biden Putting Tech, Not Troops, at Center of U.S.-China StrategyBeijing had set aside at the start of its last five-year plan around 1 trillion yuan ($155 billion) for potential investment in semiconductors over five to 10 years, according to McKinsey. It will now continue to bankroll research and investment in coming years, Wang said last week. That should galvanize the much larger influx of private capital needed to produce genuine breakthroughs.It’s an approach that’s worked before for the internet, where a mix of government and private capital helped build the likes of Alibaba Group Holding Ltd. and ride-hailing giant Didi Chuxing Inc. In February, the state-backed Global Times reported smartphone makers Xiaomi Corp. and Oppo acquired stakes in Jiangsu Changjing Electronics Technology Co., exemplifying the sort of private-sector involvement Beijing’s counting on.When it comes to the chips, “we will see more support relative to private firms, because they play a bigger role in those sectors,” said Wendy Leutert, GLP-Ming Z. Mei Chair of Chinese Economics and Trade at Indiana University.Read more: The U.S.-China Conflict Over Chips Is About to Get UglierIn the meantime, up-and-comers such as Semiconductor Manufacturing International Corp. and Tsinghua Unigroup can help tide the country over a deficit of mobile processors, memory and telecom modules should Washington close off supply routes. They will mainly operate mature processes of 14 nanometers and older, sufficient for all but the most exacting applications such as smartphones, high-performance computing and graphics processors. Meanwhile, global leader TSMC is ramping up for mass production of 3 nm chips in 2022, about five or six generations ahead.At the same time, they’ll act as focal points for the country’s most capable brains to work on stop-gap measures such as advanced packaging that can improve chip computing power in the absence of more sophisticated U.S. technology. The hope is that such fine-tuning buys time for the homegrown development of advanced technologies, such as in 7-nanometer chips and silicon design software.Some of the key local players in that space include Shanghai Micro Electronics Equipment Co. and Naura Technology Group Co., who are working on equipment that can someday replace ASML’s extreme ultra-violet lithography or EUV machines -- a prerequisite for any advanced chipmaking.Local startups like Empyrean are trying to replicate the similarly indispensable software tools licensed by Synopsys and Cadence, employed by most of the world’s chip designers from Intel on down. Even in the commoditized realm of memory, a subsidiary of state-backed Tsinghua Unigroup is spending billions on mass production to challenge Samsung Electronics Co. and Micron Technology Inc.What Bloomberg Intelligence SaysTSMC may lose market share in China in the next three years to local contract chipmakers such as Semiconductor Manufacturing International. These Chinese peers are accelerating advance-node technology development and will likely gain orders from local chip designers such as Will Semiconductor and Unisoc, which are trying to avoid dependence on U.S. technology due to bilateral trade tensions and the risk of sanctions.- Charles Shum and Masahiro Wakasugi, analystsClick here for the research.Read more: China Still Buying $300 Billion of Chips From U.S., ElsewherePresident Xi Jinping has pledged an estimated $1.4 trillion through 2025 for technologies ranging from wireless networks to AI. A big chunk of that is geared toward semiconductors.Chinese firms such as Tsinghua will be responsible for building half the world’s 30-odd new fabrication plants or fabs in the next two years alone. It’s already spending 2.4 times more than the U.S. on semiconductor equipment, much of it made by American companies, Morales wrote in a report.The World Is Short of Computer Chips. Here’s Why: QuickTakeThe bet is that its corporations can compete if they accelerate research into burgeoning, adjacent fields like AI and quantum computing now. That’s where third-generation chips come in. Those are mainly made of materials such as silicon carbide and gallium nitride, can operate at high frequency and in higher power and temperature environments, with broad applications in fifth-generation radio frequency chips, military-grade radar and electric vehicles.The country may secure first-mover advantage, even if traditional silicon-based semiconductors will continue to account for the vast majority of global use for the foreseeable future, Citigroup analysts have said. U.S.-based Cree Inc. and Japan’s Sumitomo Electric Industries Ltd. are just beginning to grow this business, while Chinese rivals such as Sanan Optoelectronics Co. and state-owned China Electronics Technology Group Corp. have made inroads.The country’s other chipmakers, which include SMIC, Will Semiconductor Ltd. and National Silicon Industry Group Co., benefit more broadly from the state support.“The investment commitment that China is making ensures that the Chinese semiconductor ecosystem will continue to play an important role in the progress of our industry and the overall IT market,” said IDC’s Morales.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Government policies, economics creating market for carbon capture: Exxon CEO

    Exxon, under pressure from activist investors who want the company to develop more ambitious plans for the energy transition, recently launched a Low Carbon Solutions business to focus on carbon capture and storage. Exxon will "leverage into what we see as a converging set of forces," Woods said at IHS Markit's CERAWeek virtual conference, as technologies improve and government policies, especially in the United States, focus on supporting carbon capture and storage.

  • Two U.S. men charged with aiding Ghosn's escape land in Japan

    An American father and son accused of helping former Nissan Motor Co Ltd Chairman Carlos Ghosn flee Japan arrived in Tokyo on Tuesday to face questioning from prosecutors and the prospect of charges that could carry a three-year prison term. The plane carrying U.S. Army Special Forces veteran Michael Taylor and his son Peter, who were extradited by U.S. authorities on Monday, landed at Tokyo's Narita airport, and the two men were escorted on to waiting police buses, according to a Reuters witness. The Taylors will not be indicted immediately, but will likely face charges after an investigation is concluded.

  • U.S. panel recommends export 'choke points' to prevent Chinese dominance in semiconductors

    A U.S. national security commission on Monday recommended Congress tighten up "choke points" on chipmaking technology to prevent China from overtaking the United States in semiconductors in the coming years. The National Security Commission on Artificial Intelligence (NSCAI), led by former Google Chairman Eric Schmidt, recommended clamping down on China's ability to procure the manufacturing equipment needed to make advanced computing chips. "China is making an aggressive push to promote authoritarianism around the world," an NSCAI official told Reuters.

  • Here are Warren Buffett's 15 largest stock holdings

    Buffett views his stock portfolio as a 'collection of businesses.'

  • This Tesla rival sees its $220,000 hypertruck hitting roads soon

    Hyliion's founder Thomas Healy offers Yahoo Finance a timeline on when his hypertruck will come to market.

  • Jack Ma loses title as China's richest man after coming under Beijing's scrutiny

    Alibaba and Ant Group founder Jack Ma has lost the title of China's richest man, a list published on Tuesday showed, as his peers prospered while his empire was put under heavy scrutiny by Chinese regulators. Ma and his family had held the top spot for China's richest in the Hurun Global Rich List in 2020 and 2019 but now trail in fourth place behind bottled water maker Nongfu Spring's Zhong Shanshan, Tencent Holding's Pony Ma and e-commerce upstart Pinduoduo's Collin Huang, the latest list showed.

  • Tech Leads Stock Losses Amid Valuation Warnings: Markets Wrap

    (Bloomberg) -- U.S. stocks dropped after the biggest rally in nine months spurred speculation about excessive investor optimism. Treasuries stabilized, following a recent spike in yields. The dollar retreated.Technology shares led losses in the S&P 500 as Apple Inc. and Tesla Inc. dragged down the Nasdaq 100 -- with the electric-car maker tumbling more than 4%. Target Corp. sank on an underwhelming profitability outlook. Rocket Cos., a Detroit-based holding company, soared after a news report that the stock could become a Reddit target for its high short-interest.Bullishness among Wall Street strategists is near levels that have presaged potential trouble for stocks, according to a Bank of America Corp. gauge. The measure assesses the average recommended allocation to equities and is close to triggering a sell signal. A valuation methodology, sometimes called Fed model that compares corporate profits to bond rates, recently showed stocks were losing their edge. Earlier Tuesday, China’s top banking regulator said he was “very worried” about risks from bubbles in global financial markets.For Bill Northey, senior investment director at U.S. Bank Wealth Management, rising rates are seen as an important element of what’s “giving investors pause at this point in time.” He also noted that they’re relevant when it comes to figuring out the appropriate level of valuations against the stream of corporate earnings.“Did we come too far, too fast in pricing in a strong economy and corporate earnings recovery?” he said.An almost year-long surge in U.S. stocks is due for a pause about now, according to Ryan Detrick, chief market strategist at LPL Financial LLC. “History would say be open to some type of weakness or consolidation,” he said in a blog post Friday. Detrick cited the S&P 500’s performance after bull markets that began in 1982 and 2009, the two fastest starters before the current advance. Both rallies faltered near the one-year mark, and the S&P 500 was little changed to lower six months later.There are some key events to watch this week:U.S. Federal Reserve Beige Book is due Wednesday.OPEC+ meeting on output Thursday.U.S. factory orders, initial jobless claims and durable goods orders are due Thursday.The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.These are some of the main moves in markets:StocksThe S&P 500 fell 0.8% at 4 p.m. New York time.The Stoxx Europe 600 Index increased 0.2%.The MSCI Asia Pacific Index declined 0.4%.The MSCI Emerging Market Index decreased 0.1%.CurrenciesThe Bloomberg Dollar Spot Index decreased 0.3%.The euro gained 0.3% to $1.2089.The Japanese yen was unchanged at 106.76 per dollar.BondsThe yield on 10-year Treasuries fell one basis point to 1.41%.Germany’s 10-year yield dipped two basis points to -0.35%.Britain’s 10-year yield decreased seven basis points to 0.687%.CommoditiesWest Texas Intermediate crude fell 1.6% to $59.65 a barrel.Gold rose 0.5% to $1,733.71 an ounce.Silver added 0.5% to $26.71 per ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Here are 9 get-rich tips from Warren Buffett's annual shareholder letters

    Among investors, Buffett’s annual advice is eagerly awaited and closely followed.

  • A better way to raise the minimum wage

    A tiered minimum wage would allow different pay levels for different parts of the country.

  • China ‘Worried’ About Bubbles in Property, Foreign Markets

    (Bloomberg) -- China’s top banking regulator said he’s “very worried” about risks emerging from bubbles in global financial markets and the nation’s property sector, sparking fresh concerns about further tightening in the world’s second-biggest economy. Stocks dropped across Asia.Bubbles in U.S. and European markets could burst because their rallies are heading in the opposite direction of their underlying economies and will have to face corrections “sooner or later,” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary of the central bank said at a briefing in Beijing on Tuesday.READ MORE: Asian stocks slip as investors weigh impact of bond yields and China’s asset-bubble warningChina’s financial regulators are walking a fine line of trying to curb risks at home while limiting disruptions from abroad as the economy opens wider to foreign capital. The CBIRC vowed in January to stay “ahead of systemic risks,” after capping bank lending to the property market, slashing shadow banking activities and claiming victory in unwinding a wild expansion in peer-to-peer lending.“China’s monetary policy has not been as easy as the U.S. and Europe,” said Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd. “This latest comment will create worry of further tightening.”Asia stocks tumbled and U.S. futures declined on Guo’s comments. The MSCI Asia Pacific Index erased earlier gains of as much as 0.8%. The CSI 300 Index in China fell as much as 1.4% and Hong Kong’s main gauge dropped almost 1%. Chinese government bonds gained from a shift toward haven assets, sending yields on benchmark 10-year notes to a nearly three-week low.“Beijing calling the overseas market rally a bubble won’t help sentiment in Hong Kong stocks, which had been seeing strong inflows from the mainland,” said Castor Pang, head of research at Core Pacific-Yamaichi.Regulators are watching capital inflows into China, where the economy is still growing and interest rates are higher, although the size and speed of such inflows remain controllable at the moment, Guo said.China’s top financial regulator also weighed in on the fintech sector, saying platforms that offer banking services must comply with the same capital requirements as traditional lenders to curb risks. The regulator has set different deadlines for each type of service, with the longest grace period of no more than two years, Guo said, without elaborating.Guo also said bubbles in China’s property market remain relatively big, with many people buying homes for investment or speculative purposes, which is “very dangerous.”A strong economic recovery, combined with a credit surge and a renewed fear of missing out have stoked buyer enthusiasm across China’s largest cities despite stricter curbs this year. Authorities have responded with a slew of policies to fine tune the industry, including a new mechanism on bank lending for real estate and fresh land-bidding rules designed to curb high-flying land costs.Still, home prices in the secondary market, which faces less government intervention, gained the most in 18 months in January, official data showed last week. Existing-home prices of certain popular projects in Shanghai surged more than 30% last year, according to China Real Estate Information Corp.“Guo’s comment reflects that Beijing wants a very stable financial market,” said Linus Yip, a strategist at First Shanghai Securities. “Stabilization is the ultimate goal of its monetary policy.”Other comments from Guo:China lending rates are likely to rebound this yearFinancial firms in Hong Kong not bound by U.S. sanctionsChina supports more Chinese firms listing in Hong KongReaction: Here’s What Analysts Are Saying on China’s Concern Over Bubbles(Updates with chart)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • UK banks face savings glut on road to pandemic recovery

    Britain's big four banks amassed more than 200 billion pounds ($277.52 billion) of new deposits last year as customers reined in spending through pandemic lockdowns, far outstripping extra lending to struggling businesses and households. Full-year earnings reported by HSBC, Barclays, Lloyds and NatWest last month revealed the extent to which lenders' finances have been upended by the crisis. The banks now face a glut in savings, a Reuters analysis of the banks' results show, as domestic customers of the four lenders deposited 221 billion pounds of extra cash.

  • Xi Mobilizes China for Tech Revolution to Cut Dependence on West

    (Bloomberg) -- For U.S. politicians, China’s potential to dominate sensitive cutting-edge technologies poses one of the biggest geopolitical threats of the next few decades. President Xi Jinping is similarly worried the U.S. will block China’s rise, and this week will unveil plans for greater self-sufficiency.At an annual session of China’s legislature, top Communist Party leaders will approve a five-year policy blueprint to cut dependence on the West for crucial components like computer chips while also making big bets on emerging technologies from hydrogen vehicles to biotech. The push to mobilize trillions of dollars could help China surpass the U.S. as the world’s biggest economy this decade and cement Xi’s goal of turning the nation into a superpower.“The most important thing is the magnitude of the ambition -- this is bigger than anything Japan, South Korea or the U.S. ever did,” said Barry Naughton, a professor at the University of California, San Diego, and one of the world’s top researchers on China’s economy. “The ambition is to push the economy through the gateway of a technological revolution.”The race to develop the most advanced technology is stoking U.S.-China tensions following decades of integration that raised living standards around the globe. Now both countries are aiming for self-sufficiency in strategic areas, each fueled by fear the other wants to upend their political system: One that sees free speech and democracy as essential to prosperity, and another that puts one-party rule above individual liberty to deliver economic growth.At stake for Xi is more than just improving the lives of China’s 1.4 billion people, which is key to the Communist Party’s justification for effectively banning political opposition. He also wants to show the party can play a successful role in guiding the economy, particularly after U.S. President Donald Trump’s administration sought to undermine its legitimacy to rule and destroy national champions such as Huawei Technologies Co. and Semiconductor Manufacturing International Corp., China’s largest microchip manufacturer.Beijing’s confidence in its political system has grown after it quickly contained Covid-19 following delays by local officials in sharing information that allowed it to spread around the globe. Economists predict China’s economy will expand 8.3% this year, compared with 4.1% in the U.S. “The pandemic once again proves the superiority of the socialist system with Chinese characteristics,” Xi said last year. On Monday, he called the party’s “glorious traditions” a “precious spiritual treasure.”But the U.S. is now looking for allies to help thwart Xi’s aspirations, both through denying Beijing access to key technology and shoring up its own supplies of strategic goods. Last week, U.S. President Joe Biden announced a wide-ranging supply-chain review of semiconductors, pharmaceuticals, rare-earth metals and high-capacity batteries, part of a broader plan to out-compete China that includes $2 trillion in infrastructure spending.“If we don’t get moving, they’re going to eat our lunch,” Biden told reporters in February after holding his first call with Xi. EU Trade Commissioner Valdis Dombrovskis separately highlighted concerns that Beijing was giving unfair advantages to Chinese companies, telling Bloomberg Television last month that the bloc would cooperate with the U.S. on challenges stemming “from the socio-economic model of China.”Global investors are closely watching the National People’s Congress session, which starts Friday and runs for about a week. While the Communist Party has shown it can quickly channel billions of dollars to control the supply chains of emerging sectors like solar power and electric vehicles, it has also swiftly reined in the private sector if risks escalate -- seen most recently by the 11th-hour halt of an initial public offering by billionaire Jack Ma’s Ant Group Co.Premier Li Keqiang will outline plans Friday to keep the economy humming over the next 12 months, which may include fresh measures to boost consumption even as he stops short of giving an official growth target for a second straight year. Perhaps more importantly, the legislative session will also reveal details of longer-term plans to develop more than 30 “choke-hold” technologies China currently can’t produce, from chipmaking equipment to mobile-phone operating systems to aircraft design software.The focus on technology is more urgent due to the waning efficiency of China’s economic model, which has relied on channeling credit into property investment and infrastructure to shore up growth. Yet with housing sales peaking as urbanization slows and local governments struggling to find viable infrastructure projects, Beijing must leverage technology to boost productivity in order to meet a 2035 target of doubling the size of its economy from 2020 levels.One key number to watch is spending on research and development: Authorities are expected to reveal a target that will match or exceed U.S. annual spending of around 3% of gross domestic product. More will be allocated to state-funded research, with China’s Science and Technology Ministry announcing priority areas such as hydrogen energy, electric vehicles and supercomputing.From 2014 to 2019, China’s government raised at least 6.7 trillion yuan ($1 trillion) in a series of venture-capital funds to take stakes in hi-tech companies, according to estimates from Naughton at the University of California, San Diego. China has already announced plans to invest $1.4 trillion from 2020 to 2025 in high-tech infrastructure, from artificial intelligence to 5G base stations to high-speed rail.“If that does end up paying off and Xi Jinping is able to engineer a more centrally steered growth model, then China will overcome the long list of challenges that it’s facing domestically,” said Jude Blanchette, a researcher at the Center for Strategic and International Studies in Washington. “If the state-led model is as unproductive as many think it is, then China will have wasted a generation’s capital pursuing a dream of centrally planned technological innovation.”China’s record of success is mixed. ​An example of what Beijing has in mind is biotech, which barely existed in China a decade ago and was earmarked as a “strategic industry” in the most recent five-year plan. From 2016 to 2020, the market capitalization of publicly listed Chinese companies developing innovative drugs rose from $1 billion to $217 billion, according to McKinsey. In 2019, the first China-developed cancer treatment was approved in the U.S.​The main area in which China has struggled is chipmaking, with its top companies still at least five years behind global rivals. China’s five-year plan will include measures to boost financing for semiconductors, treating the sector with the same kind of priority it once accorded to building its atomic capability, Bloomberg News reported in September.But there’s no guarantee it will work -- and the avalanche of state-directed investment risks spawning bad debt that destabilizes China’s economy. A taste of such a possibility came last year, when state-owned Tsinghua Unigroup Co., whose investments in chip production failed to pay off, roiled financial markets by defaulting on $2.5 billion of debt.‘Dark Storm Clouds’To reduce waste, Beijing has signaled that it would continue to rely predominately on private companies to meet its technology goals through tax breaks, direct investment in startups and minority stakes in promising but financially troubled companies. Beijing also wants more investment from foreign companies such as Tesla Inc., as long as they help meet the goal of upgrading China’s technology.While the West sees Xi’s ambitions as a threat, Beijing’s push to achieve self-sufficiency is mainly a defensive move by the Chinese Communist Party, according to Meg Rithmire, an associate professor at Harvard Business School.“If the CCP thought there were no dark storm clouds on the horizon,” she said, “I don’t think they would be taking such a heavy hand. It’s a risk-management mindset.”(Adds tout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Data Shows Black Mortgage Applicants Are More Likely to Be Rejected

    Specifically, in a survey home buyers took in 2019 and 2020, 10% of Black mortgage applicants were rejected. By contrast, only 4% of white applicants faced a similar fate, which means the rejection rate for Black buyers was 2.5 times higher. What's more, 41% of Black mortgage applicants felt they faced stricter borrowing requirements because of their race.

  • RBNZ Says It Can Increase Weekly Bond Purchases If Needed

    (Bloomberg) -- New Zealand’s central bank said it’s watching financial markets closely for signs of dysfunction and warned it has the ability to increase its weekly bond purchases to put more downward pressure on yields.The Reserve Bank “observed pockets of dysfunction” last week and has the operational flexibility to adjust its Large Scale Asset Purchase program up or down, Assistant Governor Christian Hawkesby said in an interview Tuesday in Wellington. Under the NZ$100 billion ($73 billion) program, the bank is currently buying NZ$570 million of government bonds a week.“We are watching markets very closely, we’re very aware of what’s going on and we do have that ability to adjust the size of our LSAP operations from week to week,” Hawkesby said. “We absolutely have the flexibility to adjust those purchases down or up.”Central banks are fighting back against runaway bets on inflation that have seen global bond yields surge, undermining monetary stimulus. The Reserve Bank of Australia yesterday bought twice as many longer-dated government bonds as it usually does, spurring the biggest drop in yields there in a year.Hawkesby noted the RBA’s recent purchases and reiterated that the RBNZ remains committed to a prolonged period of stimulus. The bank could cut its official cash rate -- currently at 0.25% -- further if needed, even into negative territory, he said.“The message that we’re giving along with other central banks is that stimulus is going to be in place for a long time, that we need to have a very high degree of confidence that we’re going to achieve our mandate and that will take time and patience to occur,” Hawkesby said. “We have to ability to lower the official cash rate, and we need to keep reminding markets that we have that ability.”While the economic recovery in New Zealand has been stronger than elsewhere, “it has been very uneven, it is very fragile” and “there is a material probability that we may have to lower the official cash rate” to achieve the RBNZ’s mandate, Hawkesby said.He cited the current Auckland lockdown due to a Covid-19 outbreak as a reminder of the risks. “There’s still a long way to go. These periods can erode confidence,” he said.New Zealand Central Bank Told to Include Housing in Rate PolicyAsked about the government’s move last week to make the RBNZ take soaring house prices into consideration when setting both monetary and financial policy, Hawkesby said the directive on financial policy was “the first and most important part of the changes.”He said the RBNZ’s financial policy is now required to “have regard” to housing, while the bank has only been asked to “assess the implications” of its monetary policy decisions on the property market. He drew a distinction between the two, saying the former was a “higher threshold” than the latter, which amounted to “a point around transparency and communication.”“The key message is that the appropriate tool to use if we’re going to influence sustainable house prices is our macroprudential tools,” Hawkesby said. “When we make our monetary policy decisions we need to make them with a clear understanding of the broader context we’re operating in. The remit helps articulate that more fully.”It would take time for markets to understand these announcements “and the primacy of the macroprudential tools in that space.”The RBNZ would like to see mortgage rates fall further, Hawkesby said.(Updates with Hawkesby comments throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Six months and counting: Where is India’s farmer protest headed?

    Nearly six months since protests first erupted across Punjab, the demonstration seems to be showing no signs of abating. It continues to rage like wildfire.

  • Texas power crisis deepens as more companies skip payments due to grid operator

    Texas energy companies failed to pay another $345 million for electricity and other services incurred during last month's cold snap, the operator of the state's grid said on Monday. The state's deregulated electricity market was thrown into turmoil last month as 48% of its generating plants went offline, fueling up to $9,000 per megawatt hour (mwh) spot rates and $25,000 per mwh service fees. In all, electricity prices on the state's wholesale market soared by $47 billion for the about five-day period when cold weather drove up demand and generating plants failed, estimated Carrie Bivens, a vice president at Potomac Economics, which monitors the Texas power market.