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Ningxia strives to be France’s Bordeaux amid tariffs on Australia

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A worker pours wine at a winery in Yinchuan, Ningxia Hui Autonomous Region in 2015.

GOH CHAI HIN | AFP | Getty Images

BEIJING — Fresh off a surge in wine exports and a visit from President Xi Jinping last year, China wants to turn its primary wine-producing region of Ningxia into one that rivals France’s Bordeaux.

By 2035, Ningxia’s Helan Mountains area aims to produce 600 million bottles worth 20 billion yuan ($3.12 billion), according to a plan the central government approved in late May. The region along the Yellow River is about a two hours’ flight west from Beijing and lies in a latitude similar to that of France’s famed wine country.

“If this goal can be achieved, Helan Mountains’ eastern foothills will become an internationally important and influential production area, with a scale matching that of Bordeaux,” Sui Pengfei, director of international cooperation at China’s agriculture ministry told reporters last week in Mandarin, according to a CNBC translation.

Ningxia is just one of several wine-producing areas in China, but its Helan Mountains’ eastern foothills has a diverse variety of grapes on par with that of Bordeaux or Napa Valley in the U.S., and accounts for the majority of domestic wine production, Sui said.

Even if the 15-year target is more than quadruple Ningxia’s annual wine production, the numbers roughly match up to those of France’s wine capital.

Bordeaux produced 522 million bottles worth 3.5 billion euros ($4.16 billion) last year, according to a French industry group.

Like many high-level Chinese plans, the one for wine is vague on implementation details. Instead, it lays out a framework for development that ranges from improving local winemaking knowledge and ecological conservation to “a window” for China’s wine to “integrate with the world,” according to a CNBC translation of the Chinese text.

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Last year, during the coronavirus pandemic, Ningxia’s wine exports rose 46.4% to 2.65 million yuan (about $414,100), according to the local customs agency. Primary destinations included the U.S., the European Union, Australia and Japan.

Ningxia-based winery Xige Estate exported some wine to Canada last year, founder Zhang Yanzhi told CNBC.

His company started exporting to Switzerland, Japan, Hong Kong and France in small amounts this year, he said, adding that there are plans to enter the U.S. market as well.

However, he said he plans to focus on the Chinese market, with exports accounting for just 10% to 20% of production in the long term.

China ranks sixth in global wine consumption and tenth in production by liters, according to an annual report released in April by the International Organisation of Vine and Wine.

The report noted that China’s wine consumption and production have declined over the last few years, potentially due to difficult climate conditions and low productivity. These issues “are making the Chinese wine industry less competitive compared to imported wines,” the authors wrote.

Imports of Australian wine plunge

While Australian producers have found new buyers in the U.K., U.S. and Southeast Asia, it will probably take three or four years to recover losses — and not all the roughly 1,000 China-focused wine exporters will survive, said Tony Battaglene, chief executive of Australian Grape and Wine, an industry interest group.

He said Australian businesses still hope to re-enter the Chinese market when the tariffs are set to expire in five years, and that Australian wine experts can help Chinese producers navigate climate-related problems that both face.

Rivals at home for Chinese wine

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Elon Musk says he plans to hold bitcoin long-term on The B-Word panel

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Despite his recent criticism of bitcoin mining and its environmental impact, billionaire Elon Musk confirmed that he personally owns the cryptocurrency and has held it long-term.

Though he didn’t specify exact amounts, Musk shared that bitcoin is his largest cryptocurrency holding, above ethereum and dogecoin, on Wednesday during “The B-Word” conference.

The Tesla and SpaceX CEO also said he has no plans to sell any of his bitcoin anytime soon.

“If the price of bitcoin goes down, I lose money. I might pump, but I don’t dump. I definitely do not believe in getting the price high and selling or anything like that,” Musk said. “I would like to see bitcoin succeed.”

Though experts warn that cryptocurrency is a risky, speculative investment, if you own or are going to buy bitcoin, other experts agree that Musk’s long-term holding strategy may be the best practice.

Understand the risks

Before deciding to invest in bitcoin, or any other cryptocurrency, you should first learn about and understand the risks involved.

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“For someone new, it’s important for them to still understand that it’s a very volatile asset class,” Anjali Jariwala, certified financial planner, certified public accountant and founder of Fit Advisors, tells CNBC Make It. “You have to be comfortable with the swings and you have to be comfortable also losing your money.”

The crypto space is still widely unregulated and not entirely mainstream, so when investing, “you have to make sure that it’s money that you can really afford to lose,” she says.

Invest for the long-term

Then, if you ultimately decide to invest in bitcoin, experts recommend sticking with a long-term strategy rather than attempting to trade in the short-term.

“That is definitely the best strategy if you are going to own bitcoin,” Amy Arnott, a portfolio strategist at Morningstar, tells CNBC Make It. “The problem with trying to trade based on daily or weekly price moves is it’s so volatile that you could easily get whipsawed.” She recommends planning to hold for at least 10 years.

Transaction costs for cryptocurrency can be relatively high, so buying and holding can be beneficial in that regard as well, Arnott says.

Jariwala agrees. “In order to take away some of the stress and anxiety around the huge price fluctuations, a better approach is to view [bitcoin] as something that you’re gonna hold on to for a while,” she says.

Though it may be tempting to trade alongside social media buzz, experts warn against it. “You want to have an approach that you can stick with consistently and an approach where you don’t have to constantly be watching the market or watching your Coinbase account to make your investment decisions,” Jariwala explains.

Keep your crypto investment small

It’s also important to diversify beyond cryptocurrency and limit it to a relatively small portion of your portfolio.

When her clients express interest in investing in cryptocurrency, Jariwala first assesses how much “extra money” they have available. “My rule of thumb is no more than 3% of your overall allocation in this asset class,” she says.

“I would be less worried about diversification in that [crypto] portfolio, because to me, the crypto account is essentially their play account,” Jariwala says. “We’ve allocated a portion of their portfolio that even if that account goes to zero, it’s not going to impact the other financial goals that they set because we’re appropriately saving and investing for those buckets elsewhere.”

Like Jariwala, Arnott also recommends keeping bitcoin to a relatively small percentage of your portfolio. “It’s such a volatile asset that even if you add a very small percentage to your portfolio, it can dramatically increase your portfolio’s risk profile and potential drawdowns,” she says.

Start off slow

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What it’s like to live on a big boat

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Even with boat sales and charters booming, yachting remains an enigma for most people.

CNBC spoke with several yacht owners who agreed to answer all questions — with no topics off limits — about the yachting lifestyle and perhaps more importantly, how much it costs.   

The owners

Nim and Fabiola Hirschhorn are in the U.S. Virgin Islands aboard Luna, their 45-foot, 2019 Lagoon 450S catamaran. The couple operates all-inclusive crewed charters in the Caribbean.

Sophie Darsy and Ryan Ellison are in the Azores on Polar Seal, a 2007 Beneteau Oceanis 40 outfitted for ocean sailing. Several years ago, the couple learned to sail, quit their corporate jobs and now chronicle their life at sea.

How much does a decent yacht cost?

N. Hirschhorn: It depends on a few basic parameters. Is the boat secondhand or new, what year was it built, is it a monohull or catamaran, is it an ex-charter yacht or has it always been privately owned … do you want to simply coastal cruise or do you want to cross oceans?

The Hirschhorns operate charters in the Caribbean, with four-night trips for two guests starting around $12,000.

Courtesy of Sail Luna

Luna was purchased new for $650,000; however, we know plenty of people who live on boats that were purchased for $30,000-$80,000.

On average, you can purchase a seaworthy mid-range 45-foot monohull that can sail around the world for $100,000 to $150,000 and a catamaran of the same size for around $250,000 to $500,000. Of course, there are boats at both ends of the spectrum and at every price point in between.

A rough guide to entry-level boat purchases

Cost Size Year built What to know
$5,000-$20,000 20-30 feet 1960s to 1980s Will likely need maintenance that could easily cost as much as the boat
$30,000-$60,000 30-40 feet 1970s to 1980s Unlikely boat will be ready for cruising; budget at least 25% of the boat’s value for post-purchase repairs and upgrades
$70,000-$110,000 40-50 feet 1990s to 2000s An entry-level modern boat or an older larger boat; here cost is a balance of age, size and equipment
Source: Sophie Darsy

Are there other costs to know about?

Darsy: The purchase price is only a portion of the budget you need to acquire a yacht. Once we took delivery of our boat, costs came faster than we knew! 

American Ryan Ellison and Frenchwoman Sophie Darsy, who are now both Swedish nationals, bought their boat for $90,000 in 2016.

Courtesy of Ryan and Sophie Sailing

In the first three years that we owned Polar Seal, we spent at least $40,000 to equip her for cruising and ocean sailing, including:

  • A cockpit enclosure to keep the cockpit dry: $7,000 
  • New sails: $8,000 
  • A dinghy and an electric outboard [engine for the dinghy]: $5,000
  • A water maker to make freshwater from seawater: $2,000
  • Lithium batteries and parts to power appliances: $6,000
  • A new autopilot: $2,000
  • A life raft: $2,500
  • Safety and communication equipment: $3,000

If you want to buy a boat, keep at least 30% of your budget for maintenance, repairs and upgrades.

We also have annual costs for boat insurance (between $1,000 and $4,000, depending on location) and travel and health-care insurance when we are out of Europe ($1,500) as well as plane tickets to visit our families (around $2,000 per year).

How much do you need to make — or save — to live on a yacht for a few years?

N. Hirschhorn: Think about what it costs to live on land — what kind of lifestyle do you live? Do you like to eat out at fancy restaurants and buy nice things? Chances are you will do the same when living on a boat, which means that your lifestyle will often cost the same. Will you anchor — which is free — or stay in marinas? Will you be on a sabbatical living off savings or do you work along the way? Are you a family or a couple?

Nim Hirschhorn said he pays $90-$300 per night to dock his boat in marinas in the Caribbean.

Courtesy of Sail Luna

How much does location affect costs?  

Darsy: In 2019, we spent the winter at a marina in Spain where we could benefit from an advantageous rate ($300 a month). But food was very inexpensive ($300 a month). We took advantage of our time at the dock to undertake some major boat projects and our maintenance budget went way up — $15,000 of upgrades over six months.

But we rented a car at virtually no cost thanks to a local deal, and our “fun activities” budget went almost down to zero, as we enjoyed inexpensive restaurants and bars with friends all over southern Spain.

Yacht owners have budgets too, said Sophie Darsy who along with Ryan Ellison, spend about $3,500 a month for boat maintenance, data plans, groceries, the occasional marina stay and activities such as diving, windsurfing and car rentals.

Courtesy of Ryan and Sophie Sailing

In comparison, when we made a three-week detour to Bermuda, groceries and restaurants were very expensive. But, we spent those weeks on anchor and did not have to pay for a marina. We spent nothing on maintenance or repair. We spent the remaining weeks of that month at sea, and since we spent no money during those two weeks, we made our budget.

How has the pandemic affected yachting?  

N. Hirschhorn: It is more complicated … some countries have their seaports closed for visiting yachts, and some ask for entry protocol that might include preapproval and quarantine for up to two weeks on board.

Some countries do not accept all nationalities and travelers from specific origins, which makes it difficult when we may have three to four nationalities on board. Other countries are welcoming only vaccinated travelers.

Covid test requirements mean “we can no longer island hop,” said Nim, adding that frequent rule changes and test result delays have made yachting logistically complicated.

Courtesy of Sail Luna

Darsy: The pandemic has made sailing between countries a little more difficult, but while our options were extremely limited in 2020, we have had much better luck in 2021.

Like the housing market, the boat market exploded in 2020 and 2021. It seems like everyone and their neighbor wants to buy a yacht … the prices have also increased in a way never seen before. Our boat has increased in value to the point that if we sold it today, we would not lose any of the capital we put in it.

Is having young children compatible with living full time on a yacht? 

F. Hirschhorn: There is no reason why children of all ages can’t live on a yacht. There are many families living on boats on the water and they are usually very confident, intelligent and worldly kids who thrive in this lifestyle. In the Caribbean especially, there are hundreds of “kid boats” [boats with families living on them].

Is there Wi-Fi out at sea? 

N. Hirschhorn: Yes, we have a few layers of service. We have cellular data service that can pick up a signal up to 20 nautical miles offshore. Since we usually sail between the Caribbean islands, we are usually always connected. We also have two other satellite-based systems with limited Wi-Fi, but coverage all over the globe.

Darsy: Nope! We only have Wi-Fi at port or on anchor, when we have a data plan for the country that we are currently sailing in. Out on the open sea, we have satellite internet that enables us to download weather forecasts and basic emails, but definitely not watch Netflix or listen to Spotify! 

Is seasickness common?

Darsy: A lot of sailors suffer from seasickness, and I am particularly prone to it. The trick is to prevent it. Once the nausea settles, you can’t get rid of it. 

We know many boat owners who are not wealthy at all. It’s just a different lifestyle…

Nim Hirschhorn

Captain of Sail Luna

My top tips are:

  • Take medication the night before departure and get a good night of sleep.
  • Drink a lot of water and eat a lot more than you normally would; low blood sugar accelerates seasickness.
  • Keep yourself warm; invest in sailing clothes and gear that will protect you from the elements, as being cold will send you to a nauseous hell in no time.

Is skinny-dipping allowed?  

N. Hirschhorn: No, we need to abide by local laws and customs; however, in the Mediterranean nudity is far more common.

Darsy: It isn’t rare for us to be alone on anchor, off a desert island. No one is watching, so … 

What is the most common question you’re asked?

N. Hirschhorn: Many ask us if we have a home on land. We love seeing the surprise on their faces when we explain that Luna is our home.

European countries are “easy” to travel between, but the Caribbean can have “archaic” and costly processes for yachts, said Darsy.

Courtesy of Ryan and Sophie Sailing

Darsy: All my friends have asked me if I am ever scared of encountering a storm or big seas that would capsize our boat, and honestly before we left, I was! 

But now I know we always leave port when we have a good weather window. In three years, 13,000 nautical miles and two ocean crossings, we’ve only sailed through gale-force winds once, and we did perfectly well.

What is the biggest misconception people have about the yachting lifestyle? 

N. Hirschhorn: Some people think that a yacht owner is a millionaire. We know many boat owners who are not wealthy at all. It’s just a different lifestyle that comes with many bonuses, but also many sacrifices.

Darsy: People believe that we are very rich, that we come from wealthy families or that we make a lot of money. None of this is true. We saved a lot of money, made some sacrifices, and continue to do so … and we stay on budget. 

When we were employed full-time, Ryan and I brought home comfortable salaries, and we lived the “two income, no kids” dream. We now make less than half of what we earned then and live with half our old budget … but our lives are a lot richer.

Editor’s Note: This interview has been edited for length and clarity.

 

 

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‘I think people are underestimating how bad this is going to get’: Dr. Ashish Jha

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The dean of Brown University’s School of Public Health warned about the tough months ahead across the U.S. due to Covid, as new data shows people infected with the delta strain can carry up to 1,000 times more virus in their nasal passages than those infected with the original strain.

“I think people are underestimating how bad this is going to get,” said Dr. Ashish Jha. “We are in for a very tough August, probably a very tough September before this really turns around.”

Dr. Rochelle Walensky, director of the Centers for Disease Control and Prevention, told reporters at a briefing Thursday that the delta variant “is one of the most infectious respiratory viruses we know of, and that I have seen in my 20 year career.”

Jha told CNBC’s “The News with Shepard Smith,” that the infection rate could be worse if it were winter, and predicted the delta spike could peak within two months. 

“It might peak in September, but we are far away from the peak, right now we are doing 40,000 cases a day, it’s going to go substantially higher before it peaks,” Jha said. 

The delta variant has spread rapidly through the U.S., accounting for more than 83% of sequenced cases in the U.S. right now, up from 50% the week of July 3, according to the CDC.

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