China and the Global South
An action-packed start to the year for Chinese portfolio holding CATL. Along with Tencent (also a portfolio holding), CATL was placed on the US Department of Defences' (DoD) refreshed Section 1260H list of Chinese military firms.
The blacklist now includes 134 Chinese companies, four of which happen to be in China's top 20 by market capitalisation, collectively valued at nearly $1tn. Tencent responded to the news in the most appropriate way by announcing its biggest ever share buyback.
As Donald Trump signs off from the Paris Agreement (the legally binding international treaty on climate change) and encourages traditional oil and gas E&P much of the rest of the world continues to embrace green energy.
Last Friday Masdar, the United Arab Emirates' clean energy powerhouse, announced a partnership with CATL to construct the world's first large-scale 'round the clock' (RTC) giga-scale project, combining solar power and battery storage in Abu Dhabi. With a total investment of over $6bn, the project includes 5.2GW of solar capacity and 19GWh of energy storage, making it the largest solar and Battery Energy Storage System (BESS) project in the world.
Upon completion, it will be the first large-scale, 24/7 clean energy power generation project globally and will provide 1GW of uninterrupted renewable energy. A new global benchmark for green energy development.
While China/US relations appear to have settled down somewhat post the Trump/Xi phone call, the omens are not promising. The Masdar/CATL partnership is just further evidence of the booming trade that China is developing with other BRICs and, more generally, what is now termed ‘The Global South’.
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