New Zealand halts funding for Cook Islands over China deals
New Zealand has paused millions of dollars in funding to the Cook Islands over wide-ranging deals that its smaller Pacific neighbour had made with China.Wellington, the Cook Islands' biggest funder, said it was blindsided by the deals that were struck in February, covering infrastructure, tourism, technology and perhaps crucially, deep-sea mineral exploration.Fresh funding will not be considered until the Cook Islands "takes concrete steps to repair the relationship and restore trust", said a spokesman for New Zealand Foreign Minister Winston Peters.The NZ$18.2m ($11m; £8m) funding halt comes as concerns grow among US allies, including New Zealand and Australia, over China's rise in the Pacific.
"Funding relies on a high trust bilateral relationship," Peters' spokesman said on Thursday."New Zealand hopes that steps will be taken swiftly to address New Zealand's concerns so that this support can be resumed as soon as possible," the spokesperson added.The Cook Islands responded by saying it was "determined to address [the issue] as a matter of urgency", adding that it "highly values" New Zealand's development assistance over the years."Constructive dialogue is ongoing, and the Cook Islands remain committed to engaging closely with New Zealand to understand where their concerns lie and how they can be addressed," its foreign minsitry said in a statement. New Zealand's latest move also comes as Prime Minister Christopher Luxon is on an official visit to China, where he will meet with Chinese President Xi Jinping on Friday.Peters' spokesman said he was not worried that Beijing might view the move negatively, noting Wellington's "special relationship" with the Cook Islands. The deals with the Cook Islands are part of China's broader campaign to woo small but strategic Pacific nations. Beijing had earlier signed a security deal it signed with the Solomon Islands in 2022 which alarmed Western nations. Cook Islands Prime Minister Mark Brown said in February that its deals with China were based on his country's "long-term interests" and tried to reassure its neighbours Australia and New Zealand that they do not replace their "longstanding relationships". China also said the deals were not meant to antagonise anyone in the regionThe deals sparked protests on Rarotonga - the largest of the Cook Islands - and a vote of no confidence against Brown in parliament, which he eventually survived.New Zealand has what is known as a "free association" relationship with the Cook Islands, and helps the latter with defence and foreign affairs. In the last three years, Wellington provided NZ$194m in funding to the Cook Islands, according to government figures.Cook Islanders also hold New Zealand passports. There are around 15,000 Cook Islanders living in their own nation, but as many as 100,000 live in New Zealand and Australia.Culturally, Cook Islands Māori - who make up the majority of the population - are also closely related to, but distinct from, New Zealand Māori.These close ties explain why the Cooks' first-of-their-kind deals with China led to such strong reactions.Even before that, however, the Cook Islands had already shown signs of wanting to pull away. Late last year, it abandoned a proposal to introduce its own passport following a public outcry.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
44 minutes ago
- Reuters
Insurer FWD Group could launch $500 million Hong Kong IPO next week, sources say
SYDNEY, June 19 (Reuters) - Insurer FWD Group plans to launch its Hong Kong initial public offering (IPO) to raise about $500 million as early as next week, said two sources with direct knowledge of the matter. FWD declined to comment on the deal and the sources could not be named as they were discussing confidential information. The insurance group, controlled by Hong Kong billionaire Richard Li, was given approval by the Hong Kong Stock Exchange to proceed with the listing, according to the exchange's website. The deal would be FWD's third attempt to go public after it initially aimed for a New York IPO in 2021 to raise $2 to $3 billion. The insurance group shelved the plan due to lengthy delays in obtaining U.S. regulatory approval. FWD faced questions from the U.S. regulators on its mainland China ties, Reuters reported citing sources, and had been treated by authorities as a Chinese business rather than a Hong Kong entity. It then targetted a Hong Kong IPO in 2022 but put those plans on hold due to volatile global financial markets at the time. Li, the son of Hong Kong's richest person Li Ka-shing, founded FWD in 2013 and controls it via investment arm Pacific Century Group, which has interests in the technology, media, telecoms and property as well as financial sectors. FWD operates in ten markets across Asia, according to its website. It counts Apollo, Swiss RE and GIC, among others as shareholders, according to its regulatory filings.
Reuters
44 minutes ago
- Reuters
Breakingviews - China's new currency order faces same old problems
HONG KONG, June 19 (Reuters Breakingviews) - It's a good time to pitch alternatives to the U.S. dollar , but it pays to be specific. On Wednesday, People's Bank of China Governor Pan Gongsheng told attendees of a financial forum in Shanghai that he expected the largely greenback-based global monetary system to become multipolar, ultimately helping to 'better safeguard global financial stability'. Pan had clearly read the room: just a day prior, European Central Bank President Christine Lagarde wrote, opens new tab in the Financial Times that a 'global euro' moment had arrived as the dollar's dominance is called into question, pointing to 'protectionism, zero-sum thinking and bilateral power plays'. It's not difficult to imagine a scenario in which the dollar retreats as the euro increasingly dominates European finance and the yuan comes to dominate Asian finance. In reality, though, getting there is much harder. Figures, opens new tab from the Bank for International Settlements show outstanding U.S. government debt securities at roughly $31 trillion, while those of China and the euro area are both at about $11 trillion each. Combined, the latter two come closer to the dollar total, lending some credence to Pan's scenario. But size alone is not enough. China, for instance, offers a large, single pool of government debt denominated in its own currency with a common credit rating — key prerequisites for reserve currency status. However, its capital account is largely closed, currency hedging options are restricted and domestic banks controlled by the state buy up the lion's share of government bonds issued and hold them to maturity. That saps market liquidity. Meanwhile the euro area has an open capital account and proper hedging tools, but is comprised of 20 member states with individual credit ratings and differing appetites for bond issuance. For both the euro and yuan to pose a serious challenge to the dollar, then, requires two major changes: China needs to open its capital account and substantially change the investment behaviour of its banks; and the eurozone needs most of its member states to sufficiently improve their credit ratings while also spurring enough issuance. From this perspective, a multi-pronged assault on U.S. dollar hegemony looks like a long shot - especially given that the new measures Pan flagged this week to boost yuan internationalisation were marginal at best, in line with President Xi Jinping's stated desire for a firm exchange rate. The ECB may well take a crack at dethroning the greenback, which Beijing will cheer. But for as long as it keeps its capital account cloister-tight, China won't be ramping up its own efforts. Follow Hudson Lockett on Bluesky, opens new tab and X, opens new tab.
Reuters
44 minutes ago
- Reuters
Breakingviews - Biotech nears cure for Chinese corporate epidemic
NEW YORK, June 19 (Reuters Breakingviews) - Just as Covid lingers, so too does a protracted corporate battle over more than $10 billion earned trying to protect people from the deadly virus. A ruthless clash for control of Sinovac Bioscience, whose vaccine became one of the world's biggest sellers, has left its stock untradeable on Nasdaq for more than six years. A fresh fight for the board may determine whether the heap of money is distributed to shareholders or, like so many others in U.S.-listed Chinese companies, they wind up getting stiffed. Although Sinovac's plight is an extreme example, it's emblematic of the often-underappreciated investment risks created by ubiquitous labyrinthine Chinese business structures. The company is based in Beijing, incorporated in Antigua and Barbuda, with shares quoted on an American bourse, and a pivotal subsidiary that may be governed by arbitration in Hong Kong. As U.S. lawmakers renew a push, opens new tab to delist all Chinese companies from U.S. exchanges, there's a danger that more shareholders will get short-changed. Sinovac's saga started long before the infectious coronavirus began its deadly, opens new tab spread across the planet. A failed takeover tussle led to a legal brawl to control the boardroom, ultimately prompting Nasdaq officials in February 2019 to stop, opens new tab open buying or selling of shares. The drama at turns involved violence and corporate espionage. The pandemic significantly raised the financial stakes. Because of the trading halt, shareholders were unable to capitalize on the windfall that resulted from Sinovac producing, opens new tab at least 2.9 billion doses of its CoronaVac jab. While rival vaccine maker Moderna's (MRNA.O), opens new tab market value soared to $180 billion, Sinovac shares remained frozen at $6.47, imputing a $460 million market capitalization. The Covid bonanza has left more than $10 billion in cash and short-term investments sitting idle on the company's balance sheet. The stockpile alone is worth more than $140 a share, or 22 times the suspended price. For long-suffering equity owners, a potential resolution is getting tantalizingly closer. A special shareholder meeting next month tees up the culmination of a corporate war that has been raging for nearly a decade, costing millions of dollars for armies of lawyers, accountants, investigators and spin doctors. Two broadly delineated camps lead the campaigns. On one side is Sinovac founder and Chief Executive Weidong Yin, whose 2018 plan to take the company private failed, as did his subsequent attempt to retain oversight of the board. He is backed by Asian buyout firm SAIF Partners, a longtime 15% shareholder, and two other investors, Vivo Capital and Advantech Capital, which hold a combined, but disputed, 16% stake. The rival group is led by Chairman Jiaqiang 'Chiang' Li, whose 1Globe Capital family office owns a big slug of the company and is supported by various related parties, healthcare investment giant OrbiMed, and Boston-based Heng Ren Partners, which has been fighting, opens new tab for years to extract payments to Sinovac shareholders. Although multiple legal hurdles to a resolution remain, a significant one was cleared in January. Following seven years of court appeals, opens new tab, the UK Privy Council, Antigua's top tribunal, deemed the 1Globe-supported slate of directors to be Sinovac's legitimate board, duly elected in 2018 but prevented from taking office by Yin's incumbent crew. The group, only now led by Li, declared a $55-a-share special dividend, opens new tab worth nearly $4 billion, one of the biggest ever paid by a U.S.-listed Chinese company. Fresh conflicts hang in the balance, however. SAIF, the shareholder supporting Yin, has called, opens new tab for a special meeting, opens new tab and nominated, opens new tab 10 directors, including both Yin and Li, representatives from other big shareholders, and ones ousted by the Privy Council's decision. The meeting is scheduled for July 9, originally the same day the dividend, opens new tab was due to be distributed. On Tuesday, Sinovac's board brought forward, opens new tab the payment to July 7, declared a second payout of $19 a share and intentions for a third one as high as $50 per share, taking the total potential outlay to almost $9 billion. Further muddling matters, Sinovac has lost its auditor. Following the January court ruling, opens new tab, Grant Thornton Zhitong told the company, opens new tab it could no longer stand behind years of financial statements and internal controls. As a result, Sinovac missed a deadline to disclose certified 2024 annual results and is scrambling to find a new accountant to comply, opens new tab with Nasdaq listing requirements by July 15. No wonder Sinovac shareholders are anxious. The controversy stretches back to February 2016, when the company accepted Yin's management buyout proposal, opens new tab over a higher bid, opens new tab from a joint venture partner, Shandong Sinobioway Biomedicine, which was backed by Li's 1Global. Before the deal closed, Sinovac held what would turn out to be its last annual general meeting, in February 2018. Sinobioway helped orchestrate a rebellion, encouraging, opens new tab shareholders to attend in person and vote against Yin's board, while a proxy for Li-supporting OrbiMed nominated a new slate of directors at the eleventh hour. When the insurgents won more votes, Sinovac said the ambush was invalid and that its sitting directors had been reelected, opens new tab. As a defensive maneuver, the company also triggered a dilutive poison pill, which was later invalidated by courts. With the election contested, the fight intensified. In April 2018, Sinovac co-founder and Sinobioway Chairman Aihua Pan, and dozens of others, forcibly entered, opens new tab a Beijing facility to steal the company's official seals and seize control, according to court documents, opens new tab and company statements, opens new tab. Sinovac said the intruders left behind incriminating evidence on laptops of the earlier plan to replace the board. The U.S. Securities and Exchange Commission found, opens new tab that investors had banded together without making the requisite disclosures. 1Globe and Li agreed to pay $290,000 in fines. These feuds, and others involving, opens new tab former Sinovac director and 1Globe executive Pengfei Li, set the scene for the upcoming showdown. Anticipating that Yin's takeover bid lacked the necessary shareholder support, Sinovac terminated it, opens new tab in July 2018. Soon after, it raised $87 million by selling shares to Vivo and Advantech, in a private placement known as a PIPE. The money was supposedly meant to help fund new vaccines, but the company said years later that it had 'not yet been utilized, opens new tab.' A subsequent transaction amplified concerns about Sinovac's relationship with the two investors. In May 2020, as researchers around the world raced to develop a Covid vaccine, the company arranged for its R&D division, Sinovac Life Sciences, to borrow, opens new tab $15 million from the pair as a loan convertible into 7.5% of the unit's equity. The investment, whose necessity and valuation were dubious, would turn out to be extremely rewarding. Sinovac distributed about $2.7 billion in dividends from the start of 2021 through the middle of 2024, most of it to minority backers of its R&D unit. The company says Vivo and Advantech were paid, opens new tab more than $800 million, a return of 50 times their initial investment. All this was prelude to the brutal fight for the remaining cash. The Li clan, which now controls the company, considers the shares sold to Vivo and Advantech void. Cancelling the deal would prevent the two investors from receiving a cut of the dividend and negate their votes at the upcoming shareholder meeting, although Sinovac says it has set aside funds for the duo's portion of the payout, pending litigation. Advantech has asked a federal court in New York to 'preserve the status quo,' while it pursues arbitration rulings in Hong Kong and Beijing. Vivo is suing, opens new tab in Antigua and the United States, alleging that the board and 1Globe are acting illegally. In one of the lawsuits, Vivo accuses Li and his allies of trying to 'loot' Sinovac and says it supports, opens new tab dividends for all. It's a tough case to make, as the investor for years did not publicly press the board to disburse its excess cash more widely. In fact, under Yin's leadership, Sinovac told the SEC two years ago that it had no intention, opens new tab of paying any dividends 'in the near future.' There are reasonable questions to pose about the Li clan's motives and tactics, but the case against Yin's team looks stronger. The ousted chairman and his board selectively paid a fortune to the R&D unit's investors, two of which became significant shareholders after they had backed his ill-fated acquisition of Sinovac, but no one else. If Yin and his supporters regain control on July 9, Sinovac could end up delisted by Nasdaq, leaving shareholders to start another painstaking attempt to get their hands on the cash. It's not the first time that investors in U.S.-listed Chinese companies have been short-changed. In 2016, the chairman of Qihoo 360 led a deal to take the antivirus software developer private by squeezing out minority shareholders at a roughly $9 billion valuation. Two years later, the company relisted, opens new tab in Shanghai at more than $60 billion. In another disputed episode, the chairman of SoftBank-backed RenRen, China's doomed answer to Facebook, unsuccessfully tried to buy, opens new tab the company in 2015 at a 70% discount to its initial public offering price. He later spun off RenRen's valuable investments, including one in online lender SoFi Technologies, into a new outfit he controlled. Minority shareholders sued and ultimately secured a landmark $300 million settlement, opens new tab. As with Sinovac's cross-border jurisdictional mess, a major obstacle for RenRen investors was convincing a judge that New York was the right venue for their lawsuit against a Cayman Islands company with its main operations in China. Sinovac's response to the Advantech lawsuit in New York sums up the sentiment: 'This is an action commenced by a foreign entity, to enjoin a foreign proceeding, in favor of a different foreign proceeding, involving a foreign company, foreign conduct, and the application of foreign law that does not belong in this Court,' it argued this week. Ultimately, this is what gives the Sinovac soap opera broader relevance. A U.S. congressional committee in March identified, opens new tab 286 Chinese companies trading on American exchanges with a total market value of $1.1 trillion. Nearly 50 of them have listed since January 2024. Sinovac's vaccines may have helped prevent millions of deaths, but its cautionary financial tale, if properly absorbed, stands a chance at saving millions of dollars for investors, too. Follow Jeffrey Goldfarb on X, opens new tab and LinkedIn, opens new tab.
