Highlights from the last week of China business news.
The world has three big mining companies, so when one of them tries to buy out another, serious consequences abound. Australia’s BHP Billiton has been trying to buy rival Rio Tinto, which caused alarm in China, because that would mean two companies (BHP and Companhia Vale do Rio Doce) controlling the supply of iron ore – not a situation a large iron ore buyer like China likes to find itself in. China Investment Corp, China’s new sovereign investment fund was rumored to be ready to swoop in with a counter-bid for Rio Tinto, reportedly rallying local steelmakers like Baosteel to put up a US$200 billion offer. The bid was quickly denied by both CIC and Rio Tinto on November 27. Nevertheless, a top Baosteel officer remarked to the Economic Observer after CIC’s denial that Baosteel would only join a Rio Tinto bid at the behest of the central government.
New ways to curb carbon?
Amid the chorus of calls for a stronger yuan this week from EU officials visiting Beijing, French President Nicolas Sarkozy added a threat about possible carbon tariffs for Chinese imports. He said he would defend the idea of a carbon compensation mechanism for imports to EU countries, before an important international meeting in Bali next week that will help decide a successor to the Kyoto Protocol. Earlier, the United Nations Development Program released a report that will set the agenda at the Bali summit that recommended cutting China and India some slack when it came to emissions limits. The report says that rich industrialized nations must bear the brunt of emissions caps. It also hinted that the cap-and-trade system implemented by the Kyoto Protocol may be outmoded and that a Sarkozy-style carbon tax may be a better option. China and the UK also announced this week a new clean-energy project that will work on carbon sequestration technology to create so-called clean coal.
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