TheChek News Flow

Industry executives report change of approach as Beijing bears brunt of Trump’s tariffs

Chinese state-backed funds are cutting off new investment in US private equity, according to several people familiar with the situation, in the latest salvo against President Donald Trump’s trade war.

State-backed funds have been pulling back from investing in the funds of US-headquartered private capital firms in recent weeks, according to seven private equity executives with knowledge of the matter. 

The moves come in response to pressure from the Chinese government, three of the people said. 

Some of the Chinese funds are also seeking to be excluded from private equity investments in US companies, even if those investments are made by buyout groups based elsewhere, some of the executives added.

The change in approach to the US comes as China has borne the brunt of US tariffs announced in the past three weeks that threaten to significantly curtail trade between the world’s two biggest economies. 

Trump has imposed new tariffs of up to 145 per cent on Chinese exports and Beijing has retaliated with 125 per cent tariffs.

Multiple buyout executives said Chinese investors have changed their approach to US private equity since the trade war began. They will no longer make new fund commitments to US firms, the people said.

One added that some are backing out of allocations they had been planning to make, in cases where they had not yet made a final commitment. 

China Investment Corporation is among the state-backed funds that are pulling back, according to two people familiar with the details. Other Chinese funds had also retreated, the people said.

In recent decades, Chinese sovereign wealth funds have poured billions of dollars into many of the largest US private capital groups including Blackstone, TPG and Carlyle Group. 

There had already been a slowdown in CIC’s private equity investments in the US in recent years, according to industry executives. The Chinese group has set up investment partnerships through which it deploys cash in countries such as the UK, Saudi Arabia, France, Japan and Italy, as it seeks to diversify its portfolio.

Other investors that have historically been big backers of US private equity, including pension funds in Canada and Europe, are also rethinking their commitments, the Financial Times reported this month.

Top industry executives told the FT that the geopolitical environment, particularly the fallout from Trump’s trade war, is prompting some evaluation of where to invest.

“There definitely are questions from global investors and clients about what’s happening here,” Blackstone president Jonathan Gray said on an earnings call on Thursday. 

In the past three decades, Chinese state-backed investors such as CIC and the State Administration of Foreign Exchange have poured money into US private equity funds, helping to propel the sector from a niche corner of financial services to a dominant industry managing $4.7tn. CIC used to own a stake in Blackstone, which it sold in 2018.

These Chinese funds are among the world’s biggest investors in alternative assets. In 2023, CIC and Safe each had about a quarter of their respective $1.35tn and $1tn of assets invested in alternatives, according to data provider and consultancy firm Global SWF. 

As western governments and regulators have taken steps to stop Chinese state funds from investing directly in companies and infrastructure, indirect investments via private equity funds have allowed Beijing to deploy hundreds of billions of dollars into western companies and economies. 

According to people familiar with the details, and an analysis of regulatory filings, US firms that have received backing from Chinese state-backed investors include many of the biggest names in the buyout industry: Global Infrastructure Partners, which was bought by BlackRock last year, Thoma Bravo, Vista Equity Partners, Carlyle and Blackstone. 

During Trump’s first term as president, CIC set up a private equity “partnership fund” with Goldman Sachs, which bought stakes in companies in the US and UK.

China’s sovereign wealth funds, specifically CIC, have also invested directly in companies alongside private equity managers, including Blackstone.

CIC and Vista did not respond to a request for comment. Blackstone, Carlyle, TPG, GIP, and Bravo declined to comment.

Trump sees tariffs as a way to boost U.S. manufacturing, but Nike’s struggle to move production from Asia is a cautionary tale

President Trump is betting that the threat of stiff tariffs on low-cost countries in Asia and elsewhere will pressure American companies to bring manufacturing—and jobs—back to the U.S.

But high U.S. labor costs mean companies would have to find ways to replace human workers with machines. For some industries, that has proved surprisingly difficult.

Indeed, a yearslong effort by Nike to shift part of its manufacturing from China, Indonesia and Vietnam to North America illustrates how tough it is for U.S. brands to wean themselves off the flexible, low-cost contract manufacturers that use armies of laborers to churn out an array of products for American consumers.

Starting in 2015, Nike poured millions into an ambitious effort to partly automate what has always been a highly labor-intensive industry. At the time, rising labor costs in China and advances in manufacturing techniques such as 3-D printing opened the possibility of finding a new way to make shoes that would rely on fewer workers.

The shoe giant turned to Flex, an American manufacturer that had helped Apple set up a complex factory in Texas to make Mac Pros. The goal: Make tens of millions of Nike sneakers at a new high-tech manufacturing site in Guadalajara, Mexico, by 2023.

The plant would still include thousands of workers, but far fewer than are needed in Asia to make the same number of sneakers. If successful, the project could be a model for production in the U.S., according to some involved in the effort.

Nike’s competitors also sensed an opportunity to rethink a manufacturing model built around massive Asian factories where armies of cheap, skilled laborers stitch fabrics and glue soles to shoes by hand.

“It feels less modern and more like a Ford Model T production line combined with a Middle Ages cobbler’s bench,” said Kevin Haley, then the executive vice president of innovation at clothing maker Under Armour, in 2015. He pledged to use automation to make shoes in Baltimore, a project he called “Project Glory.”

Around the same time, Adidas launched “speedfactories” in Atlanta and Ansbach, Germany, with high-tech machinery that quickly spit out shoes, heralding “a new era in footwear creation.”

“If they want to move out of China and Vietnam, they have to have technology to do that differently,” said Mike Dennison, Flex’s then president, in 2016.

Nike’s effort was the boldest. The company aimed for large-scale automated production in under a decade, which it said would save on labor costs and allow it to deliver new models of shoes to Americans faster.

Tom Fletcher, who oversaw the project for Flex, came into the effort feeling confident, having just built a highly complex Mac Pro factory for Apple in Austin, Texas. At the time, Apple had been looking to bring some manufacturing home. Flex pushed to rejigger production lines and use automation, trying to find as many ways as possible to minimize human interaction. That experience came in handy.

Nike and Flex established new production lines that used machines commonly seen in electronics manufacturing—but rarely shoemaking—such as a “pick and place” machine that is known for mounting components onto circuit boards. The machines were supposed to build the upper part of a shoe, knit fabric, add logos and glue the sole.

The effort quickly ran into trouble.

The robots struggled to handle the soft, squishy and stretchy parts that are integral to shoemaking. Shoe fabrics also expand and contract depending on the temperature, while in shoemaking no two soles are exactly alike.

Human workers can adapt to such challenges, but it proved difficult for machines.

“You’re trying to do something very precise and then it gets a little colder or warmer, and the material changes on you,” said Fletcher. “We did not anticipate that.”

As a result, factory production never became as automated as envisioned. As shoe production increased, the factory personnel swelled to 5,000, about twice as many as originally planned and costing more than a similar workforce in Vietnam. Task after task proved challenging to automate, like the delicate work of gluing soles to the upper part of the shoe.

“If you didn’t lay it the right way, there would be a noticeable twisting of the shoe, a misalignment that aesthetically means it would fail quality tests,” said Fletcher.

A central problem was also the huge variety of shoes Nike produces. For decades, American consumer companies have given designers nearly unlimited freedom to dream up the coolest products and relied on Asian manufacturers to deliver them. And unlike cars or iPhones, shoe models are changing all the time.

But automating manufacturing means designing simple products that machines can undertake over and over again. Electronics manufacturing uses hard, standardized materials, allowing machines to replicate the same step millions of times.

“You have to make sacrifices from how to design to the complexity of the materials and models you’ll work with,” said Michael Newton, the former Nike executive who oversaw the project. “That goes against what the consumer wants. They want incredible diversity of product.”

At one point, it took the Flex team eight months to figure out how to automate a way to put the Nike swish on a shoe, only for Nike to move onto a new shoe line for which the method Flex developed no longer worked.

Newton said it would have been easier to mass-produce uncomplicated shoes, such as ones with a machine-knit upper part and matched with simple molded bottoms. But Nike was unwilling to put limits on its designs and expected manufacturers to produce whatever new shoes their teams dreamed up. “Manufacturing, in a lot of ways, did not have an equal seat at the table,” Fletcher said.

By 2017, Flex’s investors were balking at rising costs at the company, with some questioning why an outfit that makes electronics was involved in shoe production.

Flex and Nike wound up the project by early 2019. By then, Under Armour had stopped mentioning to investors its “Project Glory” mission to make shoes in the U.S. That year Adidas, which had also faced challenges producing complex shoes with robots, said it would close down production in Atlanta and Germany. It shipped its “speedfactory” technology to suppliers in Asia.

The three shoemakers stuck with their original offshore locations—Vietnam, China, and Indonesia—even after pandemic-era factory shutdowns showed the risk of having such a concentrated node of production.

Adidas, Under Armour and Nike declined to comment on their past reshoring efforts. Representatives for Nike and Under Armour said the companies are working out responses to tariffs.

Now, China, Vietnam and Indonesia are in Trump’s sights. Earlier this month, he placed tariffs of 46% and 32% on Vietnam and Indonesia, respectively, before lowering them to 10% and granting them a 90-day reprieve. The U.S. raised tariffs on imports from China to 145%.

Commerce Secretary Howard Lutnick has said the administration wants labor-intensive industries to return to the U.S.

There will be an “army of millions and millions of people screwing in little, little screws to make iPhones,” he said in a recent interview with CBS.

Apple makes virtually all of its iPhones in low-cost countries such as China and India.

The threat of new tariffs is pushing some to ask whether Nike and others will ultimately have to reconsider efforts to automate manufacturing and bring shoe production back to the U.S. Newton and Fletcher think it still could be done, although it wouldn’t be easy.

“You need to have some deep pockets and some patience because it’s not going to happen fast,” said Fletcher. The previous experience “was humbling, for sure.”

Hegseth Faces Heat After New Signal Chat Emerges and Claim of Pentagon ‘Chaos’

A former top Hegseth adviser suggested Sunday night that Trump should consider replacing the embattled defense chief

WASHINGTON—Defense Secretary Pete Hegseth created a Signal chat with his wife, his personal lawyer and others, and posted sensitive military information into it, people familiar with the matter said Sunday, a revelation that has added to the increasing scrutiny of the novice leader.

Hegseth was already facing questions for writing flight plans and other details about a military operation ahead of U.S. strikes on Houthi rebels in Yemen into a Signal chat with senior Trump administration officials. Hegseth posted nearly the same information into another chat featuring his wife and other aides that don’t require real-time knowledge of the mission, a person familiar with the chat said.

The disclosure of the Signal chat comes after an unusual number of top political appointees have either been removed from the Pentagon or resigned just in the past few weeks, some with little explanation. President Trump’s national-security team, meanwhile, is attempting to broker sensitive deals with Russia, Ukraine and Iran, putting enormous pressure on a group that is largely inexperienced in sensitive foreign-policy diplomacy.

The latest Signal chat group, a defense “Team Huddle,” included 13 people, one person familiar with it said. The chat included Hegseth’s brother, a Department of Homeland Security liaison who has traveled with the defense chief. The chat also included Hegseth’s personal lawyer. Hegseth began the chat around the time of his confirmation hearing and it was used, in part, to craft strategies ahead of his appearance on Capitol Hill, the person said.

Shortly after the New York Times earlier reported on the new Signal chat, John Ullyot, a former top Pentagon spokesman working under Hegseth, wrote in Politico that the Pentagon is in “total chaos” and “disarray” under the secretary’s leadership. Ullyot alleged that three fired Pentagon officials—all loyal to Hegseth—were wrongly smeared by anonymous officials as leakers who failed polygraph tests.

“While the department said that it would conduct polygraph tests as part of the probe, not one of the three has been given a lie detector test,” Ullyot wrote. “Unfortunately, Hegseth’s team has developed a habit of spreading flat-out, easily debunked falsehoods anonymously about their colleagues on their way out the door.”

“From leaks of sensitive operational plans to mass firings, the dysfunction is now a major distraction for the president—who deserves better from his senior leadership,” Ullyot wrote. “President Donald Trump has a strong record of holding his top officials to account. Given that, it’s hard to see Defense Secretary Pete Hegseth remaining in his role for much longer.”

Asked for further clarification about his claims, Ullyot, who resigned from the Pentagon last week, pointed the Journal to his piece.

“There was no classified information in any Signal chat, no matter how many ways they try to write the story. What is true is that the Office of the Secretary of Defense is continuing to become stronger and more efficient in executing President Trump’s agenda,” Sean Parnell, Pentagon spokesman, posted on X Sunday night.

In March, Director of National Intelligence Tulsi Gabbard said “any unauthorized release of classified information is a violation of the law and will be treated as such.”

Among some Pentagon officials, the latest Signal chat revelation was more evidence of a Pentagon mired in unpredictability under Hegseth’s leadership. He has fired at least 10 admirals and generals, changed longstanding practices, attacked diversity initiatives and called for bringing back standards.

“The details keep coming out. We keep learning how Pete Hegseth put lives at risk. But Trump is still too weak to fire him,” Senate Minority leader Chuck Schumer said on X. “Pete Hegseth must be fired.”

Some Republicans have defended Hegseth’s leadership, however.

“Secretary Hegseth is working hard to implement the president’s agenda,” Sen. Tom Cotton (R, Ark.) wrote on X Sunday night.

“No matter how many times the legacy media tries to resurrect the same non-story, they can’t change the fact that no classified information was shared,” White House spokeswoman Anna Kelly said Sunday night.

So far, he has often been quick to defend his secretary, praising his look in the job and his loyalty to the president’s America First agenda. Trump also backed Hegseth and other top aides, namely national security adviser Mike Waltz, after the media firestorm kicked off by news of the first Signal chat. And he stood by Hegseth, and expended plenty of political capital, pushing for his confirmation as the Pentagon chief despite allegations of excessive drinking, infidelity and financial mismanagement.

But Hegseth has featured in many early public-relations problems for the Pentagon—and broader Trump administration—in his first three months.

Hegseth has brought his wife, who isn’t a government employee, to some sensitive meetings at the Defense Department. He authorized a top-secret military briefing for Elon Musk about China strategy, only to downgrade the sensitivity of the meeting after intense White House blowback. And videos of the Tuskegee Airmen and images of the Enola Gay, the warplane that dropped the first atomic bomb on Japan, were temporarily removed from Defense Department websites as part of what some saw as Hegseth’s purge of anything resembling “diversity, equity, and inclusion”—or DEI. Some Pentagon officials blamed Ullyot for the website changes.

Last week, the Pentagon said it put three Hegseth staffers, Dan Caldwell, Colin Carroll and Darin Selnick, on administrative leave, escorting them out of the building. In a post on X, the three said in a joint statement that “we still haven’t been told what exactly we were investigated for, if there is still an active investigation, or if there was even a real investigation of ‘leaks’ to begin with.”

The Defense Department inspector general, at the request of the chairman and ranking member of the Senate Armed Services Committee, launched an investigation earlier this month into Hegseth’s handling of the first revealed Signal chat. It is unclear if the inspector general was aware of the second Signal chat—and whether it would be part of his investigation.

Beijing warns countries not to act against China in trade deals with US

Response to concerns that Washington will push trade partners to isolate Chinese goods and businesses

Beijing has warned it will retaliate against countries that negotiate trade deals with the US “at the expense of China’s interests”, fuelling global tensions as the world’s two economic superpowers face off over tariffs.

The statement by the commerce ministry, which was responding to reports that US President Donald Trump’s administration planned to use trade talks with multiple countries to try to isolate China, called on them to instead join Beijing to “resist unilateral bullying”.

“China firmly opposes any party reaching a deal at the expense of China’s interests,” the ministry said on Monday. “If this happens, China will never accept it and will resolutely take countermeasures in a reciprocal manner.”

China has become the focus of Trump’s trade war after the US president paused a wave of unilateral “reciprocal” tariffs on most countries but left levies on Chinese goods as high as 145 per cent in place. Beijing has retaliated, imposing its own tariffs of 125 per cent on US goods.

Trump has called several times for Beijing to open negotiations to avert a trade war, and China has said it is open to talks, but neither side has signalled that high-level contacts are under way.

The Wall Street Journal reported last week that Trump’s administration wanted to use talks on reciprocal tariffs with more than 70 countries to push for help isolating Beijing in exchange for reductions in US levies and trade barriers.

While the report said the US strategy is intended to pressure Beijing to come to the negotiating table and abandon its defiant stance, China has shown little sign of backing down.

China’s leader Xi Jinping visited Vietnam, Malaysia and Cambodia last week, where he sought to shore up relations with Beijing’s trading partners.

South-east Asian exporters face steep tariffs under the Trump administration, which has also accused them of serving as a transshipment conduit for Chinese goods.

China has sought to portray itself as a pillar of the international trading system. But it is struggling with weak domestic demand following a deep property slowdown, forcing policymakers to lean on manufacturing and exports for economic growth and leaving the economy vulnerable to the trade war with the US.

Beijing has promised various initiatives to spur consumption but has held back from launching a “bazooka” fiscal stimulus, instead investing heavily in industry to shake off its reliance on western technology.

“China respects the right of all parties to resolve their economic and trade differences with the United States through equal consultations,” the commerce ministry said.

But if countries encroached on Beijing’s interests, it was “determined and capable of safeguarding its own rights”.

The ministry added that said “all parties should stand on the side of fairness and justice and should defend international economic and trade rules and the multilateral trading system”.

“Once international trade returns to the ‘law of the jungle’ where the strong prey on the weak, all countries will become victims,” the ministry said.

The Swiss Alps ski village that is luring nervous Americans

Andermatt has seen a surge in property demand from US buyers

US President Donald Trump seems to be having a big impact on a small ski village in the Swiss Alps. 

In the first few months of this year newly built apartments in the village of Andermatt attracted more than 1,260 enquiries from US investors, with the project’s developer suggesting the demand was fuelled by “a flight to safety” by nervous Americans.

They bought or put down deposits for SFr14.2mn ($17.4mn) worth of apartments by April 10 — nearly double the SFr7.7mn of transactions for the whole of last year. Back in 2023, Andermatt did not have a single American buyer for its new apartments.

More than a third of this year’s sales and deposits were made in the week before Easter as trade tariffs imposed by the Trump administration wreaked havoc in markets. 

Russell Collins, chief commercial officer of Andermatt Swiss Alps, which manages and develops the project and which has sold 546 apartments already built and off-plan, said there had been more US tourism interest since American company Vail Resorts bought a majority stake in the ski resort infrastructure in 2022.

Even so, this year’s surge in US demand was a “clear outlier”, he said. “Since the beginning of the year and in the past six weeks it has been like a hockey stick in terms of sales volume and enquiries,” he said.

Andermatt Swiss Alps, 51 per cent owned by Egyptian-Montenegrin businessman Samih Sawiris and 49 per cent by his company Orascom, is unique in Switzerland because it has been exempted from restrictions on foreign buyers buying property, making it a barometer of foreign demand. 

The SFr1.8bn project in Andermatt, a garrison town known as a training centre for the Swiss army, includes hotels, restaurants and a golf course. It is just a couple of hours by car or train from Zurich.

Buyers say they are looking for safe, Swiss franc-denominated real estate investments because of the uncertainty generated by the new US administration, according to Collins. The Swiss franc has risen 11 per cent since January against the dollar and is up nearly 12 per cent over the past year. 

The boom in Andermatt comes as wealthy Americans both in the US and abroad are drawing up contingency plans to move assets to Switzerland amid uncertainty caused by the Trump administration, the Financial Times reported last month. 

Other European cities such as Madrid are experiencing a rush of “Trump regime refugees” attempting to put down roots. 

Philipp Zünd, a partner at KPMG in Zurich who serves global wealthy clients wanting to move to Switzerland, said the number of Americans who had contacted the firm wanting to take up residency in the country had more than doubled this year compared with previous years’ totals. 

“In the past few months we have seen more Americans wanting to move here and to Europe more broadly,” he said.

In Switzerland, most property purchases by foreign nationals are heavily restricted under the Lex Koller rules. However, the government has exempted Andermatt Swiss Alps due to its size, allowing international buyers to purchase and sell apartments and houses freely, without approval or holding periods.

Additionally, the country’s second-home legislation, which limits the construction of second homes to 20 per cent of a village’s housing stock, does not apply to Andermatt Swiss Alps until 2040. 

Most of Andermatt’s buyers come from the east coast of the US, but are based as far afield as Nebraska and Miami, the company said. 

One Andermatt buyer, a New York-based tech entrepreneur in his early 50s who asked to remain anonymous, said Trump was one of the “main factors” in his decision to buy.

He and his partner purchased a two-bedroom unit for SFr2.2mn in November. Switzerland, he said, was stable and secure at a time when the US was less so under Trump.

“It is not only financial uncertainty — it is not liking what [the US] is turning into and what it has become,” he said. He added that he also moved some funds into a Swiss bank and that he and his partner have taken EU citizenship so that they can live in Switzerland. 

Jeremy Rollason, head of Alpine sales at Savills in London, said Andermatt was “a unique project in Switzerland” and there had been an uptick in its sales, “though I would say the trend of Americans being more interested in foreign real estate started before Trump [was re-elected]”.

He added: “The majority of our buyers in Switzerland are still Europeans but we have seen a threefold increase in the number of US buyer registrations in Europe generally since 2020.”

Saudi businesses turn to solar power as kingdom cuts energy subsidies

Cost savings and sustainability targets drive demand for renewables in world’s biggest oil exporter

Saudi Arabia’s big businesses are embracing solar power as they seek to save on energy costs after the government eliminated electricity subsidies in the world’s largest oil exporter.

Encouraged by decreasing photovoltaic panel costs and the state’s sustainability targets, several large companies, in sectors ranging from logistics to retail, have installed rooftop solar panels in recent months.

The Saudi government wants half of the kingdom’s power generation to come from renewable sources by 2030 and to achieve net zero by 2060.

But experts say the critical factor driving recent solar take-up may be the phasing out of energy subsidies that began in 2018 as part of wider economic reforms, which included the rollout of large-scale renewable projects.

“We invested in solar and actually it’s paying back,” said Mazen Fakeeh, president of Fakeeh Care Group. “We have managed to reduce our carbon footprint, we have managed to reduce cost, albeit marginally because still solar is not cheap and the capital investment is big.”

The PV panels, installed on the roof of the company’s multistorey car park near a cluster of hospital buildings on Jeddah’s Palestine Street, helped the group save more than SR170,000 ($45,000) on electricity bills in 2024.

“It’s a long-term investment, so to see the full return on investment, you need two or three decades, actually. But we’re encouraged by the initial results,” he said.

Faris al-Sulayman, co-founder of Haala Energy, a local start-up that helps companies build solar power systems, said there was a clear difference in demand between commercial and industrial clients.

“Commercial clients, malls, warehouses et cetera, who pay the highest electricity tariff at SR0.30 per kilowatt-hour, are significantly more receptive to the business case for rooftop solar,” he said. “Industrial clients, who pay a lower tariff of SR0.18, are less responsive.”

Saudi companies that are part of multinational groups such as Ikea and GSK have deployed solar power at the encouragement of their parent companies, which have sustainability goals. Meeting such expectations has also been a factor for other Saudi groups, including logistics and transport businesses, that have links to western markets.

“The primary objective is to contribute to supply chain sustainability in a positive way because, at the end of the day, this is also recognised by our vendors, our suppliers and our partners,” said Amr Elmansoury, chief supply chain officer at Tamer Group, which was founded in 1922.

“We partner with more than 200 suppliers across the globe from different industries, and they also have their own goals when it comes to going green.”

Still, the company saved more than SR440,000 through energy efficiency and reduced utility costs last year after installing rooftop solar panels on its logistics hubs in Jeddah and Riyadh. Its aim is now to extend this to all its major distribution centres within two years, said Elmansoury.

The shift has been helped by the supply of cheaper Chinese-made PV modules. Greenfield foreign direct investment from China into the kingdom from 2021 to October last year totalled $21.6bn. About a third was directed towards clean technologies such as batteries, solar and wind, according to investments tracked by fDi Markets.

But experts said the most important driver may be Crown Prince Mohammed bin Salman’s reforms to cut subsidies and diversify the economy, which drove up diesel prices by 44 per cent last year.

“Although the declining cost of renewable energy has also played a role, the direction of the Saudi government’s fiscal reform — including the energy subsidy changes — has been a highly significant factor in encouraging companies to actively consider power generation options beyond fossil fuels,” said Shigeto Kondo, senior researcher at the Japan-based Institute of Energy Economics.