China relaxes flight restrictions after U.S. threat—but U.S. airlines say it’s not enough

The U.S. said on Thursday it would continue to let some Chinese airlines operate flights to the U.S., pulling back a Wednesday order that would have banned Chinese airline service to the country.

The announcement came a day after China’s aviation authority, the Civil Aviation Administration of China (CAAC), rolled back restrictions on foreign airlines, including U.S. carriers, that were in place to prevent imported coronavirus cases to China, where the virus outbreak is largely under control.

That rollback itself happened a day after the Trump administration said it would ban seven major Chinese airlines from the U.S. to retaliate against China’s foreign airline restrictions, which applied to U.S. carriers Delta Air Lines, United Airlines, and American Airlines. (Delta and United had asked to resume flights to China this month; American plans to restart its service at the end of October.)

The CAAC did not name specific airlines or the U.S. in particular, but the timing of the announcement appeared to be a concession from China that may ease rising tensions between the two countries.

Yet a trade group representing U.S. carriers said the change was not enough, and the airlines wanted a higher flight frequency than the promised once-a-week. “While the Chinese response to the Department of Transportation is a step toward parity for U.S. carriers, more is needed to achieve the goals of the agreement,” the group Airlines for America said Thursday, referring to the U.S.-China Civil Air Transport Agreement of 1980.

Four Chinese airlines—Air China, China Eastern, China Southern, and Xiamen Airlines—were granted flights to the U.S. for June. If the Wednesday order were to have gone through, those four carriers’ flights—each carrier was scheduled for one flight a week—would have been suspended.

“[W]e will allow Chinese carriers to operate the same number of scheduled passenger flights as the Chinese government allows ours[,]” the U.S. DOT statement said.

According to the DOT, the 1980 deal says China must allow one U.S. carrier one flight to China for every flight to the U.S. by a Chinese carrier.

China’s relaxed flight arrangements will allow Delta and United to fly to a city of their choice in China starting June 8. China’s aviation regulator, the CAAC also said that foreign airlines will be able to fly to China twice a week instead of once if all their passengers t

Read more: https://fortune.com/2020/06/05/china-relaxes-flight-restrictions-after-u-s-threat-but-u-s-airlines-say-its-not-enough/

Trump seeks new ways to crack down on Chinese stock listings in the U.S.

The CEO of Hong Kong Exchanges and Clearing, which owns the Hong Kong stock exchange, believes more U.S.-listed Chinese companies will seek to re-list in China this year as tension between the two super-powers seeps into the stock markets.

“This is going to be a big year for IPOs, including both huge IPOs from China, but very substantial returnees, what we call them, from the United States,” Charles Li said during a conference hosted by investment bank Piper Sandler on Thursday.

Li’s comments came the same day President Donald Trump ordered his advisers to recommend executive action he could take against U.S.-listed Chinese firms, accusing China of posing a “significant risk for investors.”

But, according to Li, it’s a combination of increased scrutiny from the U.S. and the Hong Kong exchange’s recently relaxed restrictions that will drive Chinese companies to list closer to home.

Second home

“Today the atmosphere in the U.S. is becoming less friendly and we obviously have fundamentally changed many aspects of our listing regime so that we are becoming more accommodating,” Li said, referring to a 2018 policy change that permitted companies to list dual class shares.

Dual class listings are preferred by tech companies. The structure allows executives to raise funds without diluting ownership of their company by issuing two share options that confer different levels of ownership.

In 2014, Alibaba chose to list in New York over Hong Kong because the latter wouldn’t accommodate dual class shares. The e-commerce juggernaut’s massive $25 billion IPO that year was record-breaking—a win for New York and a major loss for the Hong Kong exchange. Since revising its rules, the Hong Kong exchange has lured a number of high-profile Chinese tech firms to list.

The first was smartphone maker Xiaomi, which launched a $4.72 billion IPO in June 2018, earning a $54 billion valuation. Importantly, last year Alibaba raised $11 billion through a secondary listing in Hong Kong. Li said the listing was “like a family member coming home.”

On Friday, Alibaba’s Nasdaq-listed rival JD.com revealed it is also planning a secondary listing in Hong Kong. The e-commerce platform filed a prospectus with the Hong Kong exchange. The document doesn’t offer any details about the sale, but Bloomberg reports JD.com aims to raise at least $2 billion as soon as next week.

Read more: https://fortune.com/2020/06/05/trump-chinese-stock-listings-delist-us/

What does Hong Kong’s security law mean for global businesses?

A new security law for Hong Kong, approved by China’s parliament last Thursday, “will only punish a small minority” of criminals and poses no threat to foreign businesses or Hong Kong’s stature as a global financial hub.

That was the message from Hong Kong chief executive Carrie Lam following her whirlwind trip to Beijing on Wednesday to meet with Chinese vice premier Han Zheng and other senior Chinese officials with oversight responsibility for Hong Kong.

The claim that the security law will have no impact on commerce in the territory has been repeated this past week in China’s state-controlled media, and by a chorus of Chinese diplomats, mainland legal scholars, and global companies with business operations in China.

“We reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems,'” British banking giant HSBC affirmed in a carefully-worded post on a Chinese social media platform Wednesday. London-based Standard Chartered, as well as British colonial-era trading houses Swire and Jardine Matheson, have offered similar public assurances.

And yet, the new law has sent a chill through Hong Kong’s foreign business community. In private, many expatriate bankers, investors, and business executives in the city profess deep misgivings about the vagueness of the legislation, and how it will be interpreted and enforced.

Of 180 U.S. companies surveyed recently by the American Chamber of Commerce in Hong Kong, more than 80% said they are concerned about China’s plan to foist new security measures upon Hong Kong. Fifty-three percent said they were “very concerned,” while 30% said they were “moderately concerned.” About 60% predicted the new law would harm their business.

Notably, though, 71% said that, for now, their companies have no plans to move capital, assets, or business operations out of Hong Kong.

Details of the new law remain unclear because the precise language of the bill is still being drafted in Beijing by members of a small committee of senior leaders from China’s ruling Communist Party. It was previously expected that work on the measure wouldn’t be complete until August. Hong Kong representatives to China’s National People’s Congress said Wednesday that fellow delegates are pushing for the new law to take effect before July 1, which marks the 2

Read more: https://fortune.com/2020/06/04/what-does-hong-kongs-security-law-mean-for-global-businesses/

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