Rebecca Fung
Appearances
The Journal.
The Billionaire Caught Between Trump and China
Yeah, it's surprising. It's kind of, it's very harsh, actually.
The Journal.
The Billionaire Caught Between Trump and China
Betraying and selling off all Chinese people.
The Journal.
The Billionaire Caught Between Trump and China
So yeah, like, these editorials were quite scathing.
The Journal.
The Billionaire Caught Between Trump and China
So it all goes back to this one deal that kind of angered this one person in China who is more powerful and sort of has more sway than Li Ka-shing. And that person is the president, Xi Jinping.
The Journal.
The Billionaire Caught Between Trump and China
And then his kind of rise to fame was in 1979 when he took over this massive trading group called Hutchinson One Power. It was considered a very, like a landmark deal because, you know, in 1979, when he took it over, Hong Kong was still under British control.
The Journal.
The Billionaire Caught Between Trump and China
So that deal was the first that put a local Hong Kong person in charge of the kind of business that had always been run by British nationals.
The Journal.
The Billionaire Caught Between Trump and China
So Li Ka-shing's C.K. Hutchinson has a bunch of different ports around the world. And among those ports, there were two ports at either end of the Panama Canal.
The Journal.
The Billionaire Caught Between Trump and China
It seems clear that he was referring, when he said China, he was referring to C.K. Hutchinson, so... Li Ka-shing's firm. So Trump says that China is operating the Panama Canal, but this is not technically true.
The Journal.
The Billionaire Caught Between Trump and China
In early March, the group C.K. Hutchinson announced that it signed an agreement with a consortium of investors led by BlackRock, the world's largest asset manager, which is an American company. And in this case, the BlackRock consortium agreed to buy majority stakes in the ports on either end of the Panama Canal and a bunch of other ports around the world.
The Journal.
The Billionaire Caught Between Trump and China
Actually, in Hong Kong, people kind of gave him the nickname of Superman just because he's just so good at doing deals over the years and always at perfect timing. So he's Superman. That's our colleague, Rebecca Fung. He's kind of like the Warren Buffett of Asia. You know, Buffett is 94, he's 96.
The Journal.
The Billionaire Caught Between Trump and China
So, yeah, for like a business person, it makes sense to de-risk, as they would say.
The Journal.
The Billionaire Caught Between Trump and China
President Trump kind of bragged about it as a victory. He said that we're taking it back.
The Journal.
The Billionaire Caught Between Trump and China
It changed pretty dramatically. You know, Xi was infuriated by it. And that's according to people familiar with the matter, because they were caught off guard that they suddenly lost this very important bargaining chip.
The Journal.
The Billionaire Caught Between Trump and China
Our reporting basically showed that before CK and BlackRock signed the deal, Chinese officials were trying to include the ports in the massive negotiation deal with the U.S. And suddenly the deal itself became geopolitically sensitive. Yeah.
The Journal.
The Billionaire Caught Between Trump and China
Basically, the biggest question is like, is the deal going to get done or not?
The Journal.
The Billionaire Caught Between Trump and China
When Li Ka-shing does anything, everyone stops to try to figure out what's happening and what's the meaning behind it.
The Journal.
The Billionaire Caught Between Trump and China
It'll be a really, really risky move if he does that because... China right now is in the middle of courting foreign investors and hoping for foreign direct investment into China.
The Journal.
The Billionaire Caught Between Trump and China
And if he actually forcefully pulled the deal, it sends quite a bad signal, I think, to global investors, especially because the ports are not actually in mainland China or Hong Kong.
The Journal.
The Billionaire Caught Between Trump and China
So there's like a three-part response to this, basically. Okay. First, that there's, you know, that series of attacks on newspapers. And then, secondly, officials were telling some of the Chinese state-owned businesses to not do new business with Li Ka-shing. And the state-owned firms, you know, were told to hold off on any new collaboration.
The Journal.
The Billionaire Caught Between Trump and China
With businesses linked to Li Ka-shing and his family, that's already sort of an escalation. Yeah. And then there's like a third tool that Beijing can do, and it has done, basically, that they can throw in an antitrust review.
The Journal.
The Billionaire Caught Between Trump and China
We had reporting that basically shows that the officials in Beijing are hoping that by sending signals about potential regulatory challenges, the two sides, Hutchinson and BlackRock, would just pull back by themselves voluntarily.
The Journal.
The Billionaire Caught Between Trump and China
all sorts of questions about Hong Kong economy, global economy, and he's just giving his take. How does he feel about mainland Chinese investors investing in Hong Kong? Is the U.S. Federal Reserve going to cut interest rate? The analysts and journalists were just asking his take on anything.
The Journal.
The Billionaire Caught Between Trump and China
This is the most serious hurdle yet that this deal is facing. China and Panama are... close and the Chinese corporations invested a lot in Panama. This audit began after the deal was announced. And now that the auditor is looking into it, it could potentially drag on for months and that could definitely scuttle the deal.
The Journal.
The Billionaire Caught Between Trump and China
We really don't know. It kind of depends on what else at the moment that Beijing can do to make Li Ka-shing and his son care. People kept saying and investors kept saying that Li Ka-shing only has 12% of revenue from Hong Kong and mainland China. So it's not that much in the grander scheme of things. Maybe he just doesn't care. However, 12% is still 12%.
The Journal.
The Billionaire Caught Between Trump and China
It's not nothing. Yeah. So I think right now the decision kind of rests within Li Ka-shing and his son and, you know, his close advisors to basically weigh going through with the deal. How much would that anger Beijing? And what's sort of the tradeoff here?
The Journal.
The Billionaire Caught Between Trump and China
I mean, he's 96. It does seem to be a bit of an unfortunate final act of his decades of business career. But I think what it says more is just that the company that Li Ka-shing built many decades ago is now in a different environment.
The Journal.
The Billionaire Caught Between Trump and China
It sends a very chilling signal to other Hong Kong tycoons and their kids, second generation, basically. And these tycoons will be watching very closely because many of these tycoons are the people and the families who made Hong Kong Hong Kong over the years. And it basically says that, you know, doing business is... is no longer just business. There's political risk involved in that.
The Journal.
The Billionaire Caught Between Trump and China
I think they're going to ask themselves which side they want to be on, whether it's US or China. And I'm not sure which side they will end up choosing, but that's a question that they would definitely ask themselves because it seems now that you can't just do like a commercial deal. You do need to choose a side.