• Sun
  • Apr 20, 2014
  • Updated: 2:41am

Hu's meeting with tycoon positive for foreign firms

PUBLISHED : Monday, 13 September, 2010, 12:00am
UPDATED : Monday, 13 September, 2010, 12:00am

Tycoon Li Ka-shing's stature and influence in Hong Kong can be vividly captured in a long-running pun on his name, which sounds like the words 'Li Family's City'. That perception was further enhanced a week ago when President Hu Jintao shook hands with Li in a one-on-one meeting in front of television cameras while attending the elaborate ceremony marking Shenzhen's 30th anniversary as a special economic zone.

The six-minute meeting caused more than murmurs in the local business community and the media over the way Hu honoured Li and what sort of message the meeting was trying to convey.

The media made a big fuss of Hu's opening remarks in the meeting with Li, telling him that after learning that Li had come to Shenzhen, he said: 'No matter how long the time would be, I hope to have a chat with Mr Li.'

A week on, and the debate to decipher the implications of the handshake is continuing. Analysts have looked at it from all angles - why Li alone and not a group meeting, as there are other Hong Kong tycoons who have made a bigger contribution to Shenzhen? Is there a hidden political message in asking Li to support Hong Kong's government.

People across the political spectrum expressed dismay that the meeting sent a terrible message that the central government wanted to be chummy with Hong Kong's richest tycoon at a time of a growing wealth gap and social divisions in Hong Kong, leaving a bad taste in the mouths of the local business community.

Hu may be equally dismayed to read these comments as his meeting with Li was intended to send a bigger message about Beijing's attitude towards overseas investment. As one mainland official recently said, Hu's meeting with Li should have taken place years ago.

Since Hu came to power more than seven years ago he had not met any overseas businessman publicly in a one-on-one meeting. Occasionally he attended one or two international business conferences, giving a keynote speech - one of the few opportunities for overseas businessmen to get close to him.

This is in sharp contrast to his predecessor, Jiang Zemin, who regularly entertained visiting businessmen and sometimes had one-on-one meetings with tycoons such as Bill Gates of Microsoft. When in a happy mood, Jiang could burst into a spontaneous rendition of an Italian song, karaoke-style. Those meetings were generally read as the mainland leadership attaching great importance to foreign direct investment.

Since coming to power, Hu has trumpeted his mantra of putting the people first and creating a harmonious society by bridging the income gap. The general impression is that he has shunned meeting foreign businessmen.

It is interesting to note that Hu's high-profile meeting with Li came after growing complaints by overseas businessmen about a deteriorating investment climate on the mainland as its economy overtook Japan to become the world's second largest. Vice-President Xi Jinping tried to reassure foreign investors last week by telling an investment forum that the mainland would stay an open and fair place. In that context, Hu's meeting with Li should be read as positive for foreign business, although he may have made a tactical error meeting him alone.

Sinochem, the state-owned chemical giant, is on the verge of announcing the formation of a consortium to pursue a counter bid for PotashCorp. Sinochem has lined up the Industrial and Commercial Bank of China, the world's largest bank, as a financial adviser and has already approached several investment banks, including HSBC, to advise on the counter bid.

Ever since BHP Billiton announced its US$38.6 billion hostile offer for Potash, the world's biggest fertiliser producer, more than two weeks ago, the bid has received a high level of attention from mainland leaders. It is easy to understand why, as it regards food safety as a top domestic priority. The mainland is already the world's largest importer of potash, a key ingredient to nourish crops.

Ironically, the mainland has already stopped importing potash because of its soaring prices but is afraid of more price rises if BHP Billiton's bid succeeds.

Analysts warn that a mainland-led counter bid will trigger a political backlash in Canada, making it difficult for an outright takeover or to take a controlling stake.

A better option would be to encourage the formation of a consortium, to be led by prominent foreign funds or companies, in which Sinochem would take a minority stake. This would be more appealing to Canadian politicians and shareholders of Potash. The immediate end game should be to thwart BHP Billiton's plan.

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