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Homeowners reject Beijing’s candidates for powerful local associations

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Beijing is facing growing resistance over a flagship project intended to improve governance, after city residents balked at backing its preferred candidates in local elections.

Authorities want to expand homeowners’ associations, self-governing bodies that decide on everything from maintenance fees to the selection of property managers, in a bid to boost social stability.

Beijing plans to introduce the bodies in at least 30 per cent of the city’s neighbourhoods by the end of this year and 90 per cent by 2022.

But efforts to force residents to back official candidates have backfired.

David Li, a resident of the Jinmaoyue neighbourhood in Beijing, decided not to vote after the local government asked him to back its nominees. “I have never met with or spoken to any of these candidates,” he said, after facing pressure from local officials and complaints to his employer. “How do I know they will act in my interest?”

The policy initiative was introduced as China’s urban homeowners, the nation’s wealthiest demographic, have grown increasingly unhappy with local services.

“Clashes between homeowners and property managers break out almost everywhere and have become one of the biggest threats to China’s social stability,” said a Beijing-based academic and government adviser, who did not want to be named.

The central government traditionally had limited tools to solve local problems. Community residents’ committees, one of the few neighbourhood-focused government departments, pay more attention to enforcing social control policies such as birth planning than handling public service concerns. This combination has hurt homeowners.

“Property managers have an incentive to cut corners when checks and balances do not exist,” said Chen Fengshan, a Beijing-based consultant on community governance.

The government’s approach, however, has met with deep-seated scepticism.

“The Chinese government wants to develop self-governing community groups because it has realised it does not have the capacity to address every social problem on its own,” the adviser said. “But how could an HOA make independent decisions when all of its members are chosen by the authority rather than the public?”

The Beijing city government’s solution was to ostensibly empower the public. But residents in more than a dozen neighbourhoods chose HOA members based on government recommendation, even though the law encourages homeowners to run for the position.

A community governance scholar in Beijing said local governments would not allow a free HOA election to happen as that could have political implications.

“If you allow people to vote for HOA president out of their own will, they may one day expect to do the same for national leaders,” the person, who spoke on condition of anonymity, said.

Residents in the Beijing neighbourhood of Shiyuyuan have spent more than a year trying to set up an HOA after their property manager raised maintenance fees by two-fifths.

“While individual residents have little say in the decision to hike prices, HOAs do,” said Jack Lu, owner of a two-bedroom apartment. “Too bad the government doesn’t want people to be organised.”



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Emerging Markets

NYSE to suspend trading of China’s Cnooc next month

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The New York Stock Exchange is to start delisting proceedings against China National Offshore Oil Corporation to comply with an executive order from Donald Trump that bans Americans from investing in companies with ties to the Chinese military.

The NYSE on Friday said it would suspend trading in Cnooc’s American depository shares on March 9, after determining that the company was “no longer suitable for listing” following the order that the former US president signed in November.

The order banned investing in several dozen Chinese groups that were last year put on a Pentagon blacklist of companies that are accused of working with the People’s Liberation Army and threatening US security. Trump set a January 28 deadline for the ban to take effect, but President Joe Biden pushed the deadline back to May 27.

The NYSE move comes as Biden evaluates a number of assertive actions that Trump took against China during his last year in office. The commerce department last year put Cnooc on a separate blacklist — called the “entity list” — that makes it hard for US companies to sell products and technology to the Chinese oil group.

The Biden administration has not made clear whether it intends to keep Trump’s executive order in place. But the new president and his officials have so far adopted a tough stance towards China over everything from its economic “coercion” to concerns about its clampdown on the pro-democracy movement in Hong Kong to the repression of more than 1m Uighur Muslims in the northwestern Chinese province of Xinjiang.

Earlier this month, Biden used his first conversation with Chinese president Xi Jinping since assuming office to raise concerns about Hong Kong and Xinjiang, and aggressive Chinese actions towards Taiwan. Antony Blinken, secretary of state, also described the detention of Uighurs in labour camps as “genocide”.

Jen Psaki, White House press secretary, has said the administration was conducting a number of “complex reviews” of the China actions that Trump took. The former president put dozens of other Chinese companies on the Pentagon and commerce department blacklists, including Huawei, the Chinese telecoms equipment group.



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Bond sell-off roils markets, ex-Petrobras chief hits back, Ghana’s first Covax vaccines

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The yield on the benchmark 10-year Treasury exceeded 1.5 per cent for the first time in a year and the outgoing head of Petrobras warns Brazil’s President Jair Bolsonaro against state controlled fuel prices. Plus, the FT’s Africa editor, David Pilling, discusses the Covax vaccine rollout in low-income countries. 

Wall Street stocks sell off as government bond rout accelerates

https://www.ft.com/content/ea46ee81-89a2-4f23-aeff-2a099c02432c

Ousted Petrobras chief hits back at Bolsonaro 

https://www.ft.com/content/1cd6c9fb-3201-4815-9f4f-61a4f0881856?

Africa will pay more for Russian Covid vaccine than ‘western’ jabs

https://www.ft.com/content/ffe40c7d-c418-4a93-a202-5ee996434de7


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Petrobras/Bolsonaro: bossa boots | Financial Times

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“Brazil is not for beginners.” Composer Tom Jobim’s remark about his homeland stands as a warning to gung-ho foreign investors. Shares in Petrobras have fallen almost a fifth since President Jair Bolsonaro said he would replace the widely respected chief executive of the oil giant.

Firebrand Bolsonaro campaigned on a free-market platform. Now he is reverting to the interventionism of leftist predecessors. It is the latest reminder that a country with huge potential has big political and social problems.

Bolsonaro reacted to fuel protests by pushing for a retired army general to supplant chief executive Roberto Castello Branco, who had refused to lower prices. This is politically advantageous but economically short-sighted.

Fourth-quarter ebitda beat expectations at R$60bn (US$11bn), announced late on Wednesday, a 47 per cent increase on the previous quarter. This partly reflected the reversal of a R$13bn charge for healthcare costs. Investors now have to factor the cost of possible fuel subsidies into forecasts. The last time Petrobras was leaned on, it set the company back about R$60bn (US$24bn at the time). That equates to 40 per cent of forecast ebitda for 2021.

At just over 8 times forward earnings, shares trade at a sharp discount to global peers. Forcing Petrobras to cut fuel prices will make sales of underperforming assets harder to pull off and debt reduction less certain. Bidders may fear the obligation to cap prices will apply to them too.

A booming local stock market, rock bottom interest rates and low levels of foreign debt are giving Bolsonaro scope to spend his way out of the Covid-19 crisis. But the economy remains precarious. Public debt stands at 90 per cent of gross domestic product. The real — at R$5.40 per US dollar — remains near record lows. Brazil’s credit is rated junk by big agencies.

Rising developed market yields will make financings costlier for developing nations such as Brazil. So will high-handed treatment of minority investors. It sends a dire signal when a government with an economic stake of just over a third uses its voting majority to deliver a boardroom coup.

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