Several pacts announced on the first day of Chinese President Xi’s visit were just agreements to agree, while elsewhere there was news of local China deals in trouble.
Visits by major world leaders are often accompanied by news of major business deals, and Chinese President Xi Jinping’s stopover in Seattle may prove to be no exception.
But the pacts unveiled Monday were mostly agreements to agree, and they were overshadowed by news of deals undone.
A deal to sell Russell Investments to China’s Citic Securities is on the ropes because of that nation’s rocky economy and a campaign by regulators against the company, Bloomberg News reported Tuesday. Separately, REC Silicon warned that failure to reach a deal in a long-running U.S.-China trade dispute over solar panels will bring the layoff of 400 employees and closure of its Moses Lake plant.
More solid deal news may emerge when Xi visits Boeing and Microsoft on Wednesday. Boeing CEO Dennis Muilenburg advised a conference of engineers Tuesday to “stand by” for announcements.
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Of the business agreements that were announced Monday, the most intriguing may be one touted by Microsoft co-founder Bill Gates, who is also the chairman and a major investor in Bellevue-based TerraPower.
Gates stole the spotlight at a gathering of Chinese and U.S. business people and officials Tuesday after TerraPower and the China National Nuclear Corporation (CNNC) formally agreed to jointly pursue next-generation nuclear power.
Gates told the audience the agreement “is something I think exemplifies the U.S. and China working together well.”
TerraPower is trying to develop a small-scale nuclear reactor that produces energy from spent uranium much more efficiently and safely than traditional reactors, but the technology still faces serious technical challenges.
Gates, who has been in talks with CNNC for years, called the memorandum of understanding they signed “a milestone,” although it’s unclear how specifically it will advance TerraPower’s schedule. It builds on the deal reached in late 2013, when the U.S. and Chinese governments had signed a technical-cooperation agreement to allow collaboration on TerraPower’s technology.
In another technology pact, local firms Intellectual Ventures and Stratos Group met Tuesday in Seattle with the investment arm of the Chinese Academy of Sciences and announced they’ve agreed to explore ways to share resources to study renewable energy.
The state Department of Commerce and the tech companies said they are considering setting up a clean-technology incubator as a sister organization to one being developed in Shenzhen, China.
Stratos Group CEO Allan Stephan talked with two Chinese investment groups about development in life sciences and renewable energy. Stratos is a 28-year-old Seattle company that invests in and develops products for high-tech companies, especially in the life sciences.
It’s still the early stages of working together, Stephan said, so he’s not ready to predict what the partnership could look like or what specifically it may tackle.
“We’re trying to figure out how to assist each other,” said Stephan. “ … It could address everything from climate change to reducing the costs of energy consumption in manufacturing technologies.”
One item the organizations will discuss is whether to set up the sister incubator for clean-tech research in Seattle. If that happens, it would likely have space for large machinery to create advanced manufacturing, said Brian Young, the clean-technology industry sector lead in Gov. Jay Inslee’s office.
Separately, an affiliate of the Chinese Academy of Sciences also firmed up its plans to invest in a $3.4 billion project in a natural gas to methanol project in Tacoma, with a companion plant in Kalama, Cowlitz County.
The sale of Russell’s fund business to Citic, China’s biggest brokerage, has been pursued for months by London Stock Exchange Group, which acquired Russell Investments for its well-known indexes.
Citic had been in advanced talks to buy the fund-management business for about $1.8 billion, a person with knowledge of the matter said in July.
But Citic Securities has become a focal point of a campaign by the Chinese authorities to root out financial wrongdoing and assign blame for the nation’s $5 trillion stock rout. The state-run Xinhua news agency reported that seven top Citic Securities executives face probes for offenses including alleged insider trading.
“Citic is acting cautiously because they are handling various problems after the market rout, even though they’re in a solid financial position,” Edmond Law, a Hong Kong-based analyst with UOB-Kay Hian Holdings, said by phone Tuesday. “This kind of strategic move needs to be delayed at the moment. Companies may want to keep a low profile.”
Norway-based REC Silicon warned that it will shutter its plant in Moses Lake and lay off roughly 400 employees if the U.S. and China don’t soon resolve a dispute that now is stretching into its fourth year.
The REC plant produces polysilicon — the main material in solar panels. Earlier this summer the company reduced production capacity in Moses Lake by 50 percent. It said Tuesday that if the trade dispute continues, “a complete shutdown of its remaining production capacity” will be required.
The issue came to a head in 2013 when China slapped hefty duties on U.S.-made polysilicon in a move widely seen as retaliation for U.S. tariffs imposed the previous year on imports of Chinese solar panels.
China’s solar-panel producers were left facing a 57 percent tariff on polysilicon bought from REC, raising the likelihood that they’d get the raw material elsewhere. For 18 months, however, there was loophole, said REC general counsel Francine Sullivan.
That loophole closed earlier this month, putting the Moses Lake plant at risk because 80 percent of the plant’s polysilicon goes to customers in China, Sullivan said.
“We are at a critical juncture,” she said. “We are looking at this every day. If we can’t get a resolution in the short term, we will be faced with this tough decision.
Inslee said Tuesday he is troubled by REC’s situation and is pushing for a quick resolution.
He said he and his staff members have been involved in dozens of conversations with the U.S. and Chinese governments and domestic stakeholders since 2013 to reach a resolution on this issue and allow fair access to the Chinese market for American polysilicon manufacturers.
Important progress had been made over the summer, “but the situation now demands urgent resolution,” he said.
“While we in Washington look forward to hosting Chinese leaders this week and exploring economic and cultural opportunities that will benefit our state and both nations,” he said, “there remain outstanding issues that must be resolved in the spirit of economic collaboration.”