In the trade agreement between China and the US, the door opened for US banking institutions to expand operations in China. A couple of days later, JP MorganChase announced expansion in China.
In an article by Yilei Sun, Chenge Leng, and Brenda Goh of Reuters, Tesla the US electric vehicle maker agreed to a new $10 billion yuan or $1.9 billion 5 year loan with a group of Chinese banks. The banks are China Construction Bank (CCB) Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China (ICBC) and Shanghai Pudong Development Bank (SPDB). The loan is a rollover of a earlier loan and is being used to build the factory in Shanghai. The loan is at 90% of China’s one year benchmark interest rate or the rate offered to its best clients.
Tesla has started to produce vehicles from the plant, and aims to to build at least 1,000 Model 3 cars a week by the end of 2020.
China which has burnt billions of tons of coals for electricity needs to find methods to reduce greenhouse emissions and believes electric cars are part of the solution.
Linking to dividend paying stocks, in North America we look to American financial institutions as the bedrock of the economy, but in the world there are options. All companies have banks, that can finance the government wishes and companies turn to them for alternatives. Remember in all sectors there are alternatives and options outside of your backyard.
There are more questions than answers, till the next time – to raising questions.