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Interserve to go in administration after rescue deal blocked

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Interserve employs 68,000 people worldwide, with around 45,000 of them in Britain. It ran into difficulty after a string of ill-advised acquisitions and loss-making contracts weighed on its finances and piled on debt, raising fears it could collapse into insolvency like rival outsourcer Carillion.

The GMB union, which represents Interserve workers, said the company’s turmoil showed outsourcing public sector contracts to private companies had been a “disastrous experiment”.

“Ministers have learnt absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public sector contracts.

“Shambolic mismanagement is putting jobs on the line and services in jeopardy. Our public services can’t go on like this.”

The rejected rescue plan would have handed Interserve’s lenders, which include banks and hedge funds, 95 percent ownership of the company in exchange for cancelling 485 million pounds ($641.95 million) of its debts, with existing investors’ holdings diluted to 5 percent.

A representative for Coltrane at the general meeting declined to comment on the situation, other than saing “I voted for Donald Trump” when asked how the firm had voted.

The pre-pack administration will wipe out all shareholder value.

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Treasury Secretary Mnuchin says no plans to go to Beijing for trade talks yet

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Treasury Secretary Steven Mnuchin said a resumption of trade talks with China is not on the calendar yet.

Mnuchin told CNBC’s Ylan Mui on Wednesday that a trip to Beijing has not been scheduled. Mnuchin made the comments on his way into a hearing in front of the House Financial Services Committee.

China has invited the U.S. delegation to Beijing after the two countries failed to reach a trade agreement in Washington DC this month.

“I’m still hopeful that we can get back to the table. The two presidents will most likely see each other at the end of June,” Mnuchin said during the hearing. The two leaders are set to meet at the G-20 summit in Japan next month.

President Donald Trump followed through with his threat to increase tariffs on $200 billion in Chinese goods from 10% to 25%. China immediately responded by upping the tariffs on $60 billion of U.S. goods to as high as 25%.

The trade tensions further intensified this week as the U.S. blacklisted Huawei and effectively halted its ability to buy American-made parts and components. China on Wednesday threatened to cut more economic ties with the U.S. in wake of the new tariffs and Huawei ban.

The talks between the U.S. and China appeared to have stalled as it is unclear what the two sides would negotiate, CNBC previously reported. Trump said recently he has not “made that decision yet” on whether to put tariffs on another $325 billion in Chinese goods.

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Trade war forcing China to ‘rethink economic ties’ with the US

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China is exploring more drastic action as a result of its trade fight with the U.S., according to the South China Morning Post.

While China is open to resuming trade talks, “government advisers are now highlighting the risk of sourcing critical supplies from an increasingly hostile US…and are exploring ways for the country to cut its exposure to the US,” the paper said, citing Chinese researchers. The article was titled, “Donald Trump’s trade war and Huawei ban push China to rethink economic ties with US.”

And China is considering cutting natural gas purchases from the U.S. as part of this movement, the paper said.

“The idea that China should buy large amounts of natural gas from the U.S. must be revisited,” Wang Yongzhong, a senior fellow with the Chinese Academy of Social Sciences, a governmental think tank, told the Hong Kong-based newspaper on Monday.

The move came after President Donald Trump’s latest action to choke Huawei, effectively halting its ability to buy American-made parts and components. China is now threatening to stop funding an industry that the two countries have done sizable deals in. In 2017, China agreed to fund a natural gas project in Alaska worth US$43 billion, the South China Morning Post said.

“China may have to cap U.S. supplies at 10 or 15 percent of its overseas purchases for the sake of supply chain security,” said Wang, who specializes in China’s energy supply security. “What if the [energy] supply [including both liquefied natural gas and crude oil] is cut off suddenly, as we have seen in the Huawei case?”

China bought US$6.3 billion worth of American crude oil and liquefied natural gas in 2017, 3.6% of the country’s purchases of foreign energy products, the newspaper said, adding that China’s reliance on U.S. energy products is “limited.”

U.S. restrictions on Huawei had forced tech companies and chipmakers including Google and Qualcomm to cut ties with the Chinese telecom giant until the U.S. granted a 90-day license to keep existing networks online. The ban sparked a big sell-off in the semiconductor stocks on Monday.

Chinese President Xi Jinping ramped up his rhetoric on the trade war on Monday by saying China is embarking on a “new Long March, and we must start all over again!”

The trade negotiations between the world’s two largest countries have hit a roadblock after Trump followed through with his threat to increase tariffs on $200 billion in Chinese goods from 10% to 25%. China immediately responded by upping the tariffs on $60 billion of U.S. goods to as high as 25%.

— Click here to read the original story .

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Apple’s earnings would drop by nearly 30% if China bans its products

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CEO of Apple Tim Cook attends China Development Forum 2019 at the Diaoyutai State Guesthouse on March 23, 2019 in Beijing, China.

VCG | Getty Images

The U.S.-China trade war could take a big chunk out of Apple‘s bottom line if China retaliates by banning its products, according to an analyst at Goldman Sachs.

Analyst Rod Hall said in a note to clients that Apple’s earnings could drop by 29% if the company’s products were banned in mainland China.

Apple’s China business accounted for more than 17% of its sales in its fiscal second quarter, coming in at $10.22 billion. The company also sells billions of dollar worth in iPhones every year in China.

“Should China restrict iPhone production in any way we do not believe the company would be able to shift much iPhone volume outside of China on short notice,” Hall said. “We believe that Apple is near its annual rapid ramp of new iPhone production to prepare for new device launches in the Fall so even a short term action affecting production could have longer term consequences for the company.”

Hall also noted that China’s “tech ecosystem” and local employment could take a hit if Apple products are banned. Most of Apple’s supply chain rests in mainland China, including the iPhone’s final assembly, which is executed at Foxconn.

Apple shares are down 7% for the month through Tuesday’s close as China and the U.S. ratchet up trade fears. The U.S. hiked tariffs on $200 billions worth of Chinese goods earlier in May. China retaliated by raising levies on $60 billion worth of U.S. imports.

Hall is not the only analyst raising concern over Apple’s exposure to China. On Monday, HSBC analyst Erwan Rambourg cut his price target on the tech giant to $174 per share from $180. Meanwhile, Credit Suisse analyst Matthew Cabral said Tuesday that Apple’s earnings per share would fall by about 15 cents a share for every 5% drop in Greater China sales.

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