Survey

A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York
FILE PHOTO: A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., March 7, 2019. REUTERS/Brendan McDermid

March 19, 2019

NEW YORK (Reuters) – Investors remained bullish on longer-dated U.S. Treasuries for a sixth consecutive week on worries about a slowing economy and expectations inflation will stay muted despite a tight domestic labor market, a J.P. Morgan survey showed on Tuesday.

The margin of investors who said they were “long,” or holding more Treasuries than their portfolio benchmarks, over those who said they were “short,” or holding fewer Treasuries than their benchmarks, increased to nine percentage points from 7 points the prior week, according to the survey.

Three weeks ago, the gap between longs and shorts rose to 11 percentage points, the highest since September 2016.

The survey results come the same day Fed policymakers begin a two-day meeting at which they are expected to leave interest rates unchanged.Twenty-eight percent of the investors surveyed said on Monday for a third straight week they were long on U.S. government bonds, the J.P. Morgan survey showed.

The share of investors who said they were short Treasuries fell to 19 percent from 21 percent a week ago.

The percentage of investors who said they were “neutral,” or holding Treasuries equal to their portfolio benchmarks, edged up to 53 percent from 51 percent the week before, J.P. Morgan said.

Positions among active clients, which include market makers and hedge funds, showed no bearish bets on longer-dated Treasuries. Active net longs rose to 30 percent, the highest since May 2018, while the share of these clients who said they were neutral increased to 70 percent from 60 percent.

In early Tuesday trading, the yield on the benchmark 10-year Treasury was 2.6267 percent, up from 2.6050 percent a week ago.

(GRAPHIC: Investors positions in longer-dated U.S. Treasuries – https://tmsnrt.rs/2V9OjHR)

(Reporting by Richard Leong; Editing by Steve Orlofsky)

Source: OANN

FILE PHOTO: Protesters wearing yellow vests walk down the Champs Elysees during a demonstration by the
FILE PHOTO: Protesters wearing yellow vests walk down the Champs Elysees during a demonstration by the “yellow vests” movement in Paris, France, March 9, 2019. REUTERS/Philippe Wojazer/File Photo

March 19, 2019

By Leigh Thomas

PARIS (Reuters) – A strong majority of people in wealthy countries want to tax the rich more and there is broad support for building up the welfare state in most countries, a survey conducted for the OECD showed on Tuesday.

In all of the 21 countries surveyed, more than half of those people polled said they were in favor when asked: “Should the government tax the rich more than they currently do in order to support the poor?” The OECD gave no definition of rich.

Higher taxation of the rich has emerged as a political lightning rod in many wealthy countries, with U.S Democrats proposing hikes and “yellow vest” protesters in France demanding the wealthy bear a bigger tax burden.

Support was highest in Portugal and Greece, both emerging from years of economic crisis, at nearly 80 percent compared with an average of 68 percent, the Organisation for Economic Cooperation and Development said.

The Paris-based forum’s survey of 22,000 people about perceived social and economic risks also found deep discontent with governments’ social welfare polices, which many people said were insufficient, the OECD said.

On average, only 20 percent said they could easily receive public benefits if needed while 56 percent thought it would be difficult to get benefits, the survey found.

People were on average particularly concerned about access to good quality, affordable long-term care for the elderly, housing and health services.

Not only did people say they were not getting their fair share given what they paid into the system, people in all countries except Canada, Denmark, Norway and the Netherlands did not think that their governments were heeding their views.

“These feelings spread across most social groups, and are not limited just to those deemed ‘left behind’,” the OECD said in an analysis of the survey’s results.

The feeling of injustice was even higher among the highly educated and high-income households, it added.

In light of the high level of discontent, a majority of people wanted their government to do more in all countries except France and Denmark, whose welfare systems are among the most generous in the world.

Most people said the top priority should be better pensions with 54 percent saying that would make them feel more economically secure.

Healthcare followed in second place at 48 percent while nearly 37 percent were in favor of a guaranteed basic income benefit, which has attracted international interest from policymakers but has yet to be tried at the national level.

(Reporting by Leigh Thomas; Editing by Richard Lough and Janet Lawrence)

Source: OANN

Thirty-eight percent of New York voters say Rep. Alexandria Ocasio-Cortez, D-N.Y., was a “villain” in Amazon’s decision to pull out of plans to build a headquarters in Queens, a new Siena College poll reveals.

Only 12 percent call her a “hero” in the collapse of the deal with Amazon. Twenty-four percent classified her as a “role player.”

Ocasio-Cortez and other critics of the Amazon deal said the state went too far in offering the online retail giant tax incentives.

“Local Queens activists” were the second biggest “villain” with 34 percent, the poll noted.

Here is how the New York survey breaks down:

  • 31 percent have a favorable view of Ocasio-Cortez, compared to 44 percent who have an unfavorable opinion of her.
  • 34 percent have a favorable opinion of New York Mayor Bill de Blasio, while 50 do not.
  • 51 percent have a favorable view of Sen. Chuck Schumer, D-N.Y., compared to 41 percent who have an unfavorable opinion of him.
  • 43 percent have a favorable opinion of Sen. Kirsten Gillibrand, D-N.Y., while 33 percent do not.
  • 46 percent have a favorable view of Gov. Andrew Cuomo, compared to 48 percent who have an unfavorable opinion of him.
  • 36 percent have a favorable opinion of President Donald Trump, while 60 percent do not.

The poll, conducted March 10-14, surveyed 700 New York registered voters. The margin of error is plus or minus 4.2 percentage points.

Source: NewsMax America

The German share price index DAX graph at the stock exchange in Frankfurt
FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 12, 2019. REUTERS/Staff

March 19, 2019

LONDON (Reuters) – Fund managers have named bearish bets in European equities as the “most crowded” trade for the first time, replacing emerging markets, according to Bank of America Merrill Lynch’s March survey released on Tuesday.

Investors have shunned European stocks for some time, betting the market would be weaker compared with the United States and other regions as euro-zone economic growth slows and Britain’s chaotic exit from the European Union raises worries about disruption to its economy.

A slowdown in China, the world’s No. 2 economy, topped the list of biggest tail risks, ousting the trade war, which had been at the forefront of investor concerns for the previous nine months, the survey showed.

BAML’s March survey – conducted between March 8-14, with 239 panelists managing $664 billion in total – also showed investor risk appetite continued to fall, with global equity allocations remaining at September 2016 lows.

(Reporting by Josephine Mason, Editing by Helen Reid)

Source: OANN

Vietnamese who live in Japan celebrate Vietnamese New Year at a Catholic Church in Kawaguchi, near Tokyo
Vietnamese who live in Japan celebrate Vietnamese New Year at a Catholic Church in Kawaguchi, near Tokyo, Japan February 10, 2019. REUTERS/Issei Kato

March 18, 2019

By Linda Sieg and Ami Miyazaki

TOKYO (Reuters) – When a young Vietnamese woman found out late last year that she was pregnant after arriving in Japan on a “technical trainee” visa, she was given a stark choice: “Have an abortion or go back to Vietnam.”

But returning home would leave her unable to pay back the $10,000 she borrowed to pay recruiters there.

“She needs to stay to pay back her debts,” said Shiro Sasaki, secretary general of the Zentoitsu (All United) Workers Union, who has advocated on her behalf and said such threats were common.

Buoyed by hopes of higher wages but burdened by loans, Vietnamese youth – the fastest-growing group of foreign workers in Japan – will be among those most affected by a new scheme to let in more blue-collar workers that kicks off in April.

“Trainees from China have been declining as wages there rise with economic growth, while in Vietnam, unemployment is high for youth with high education levels, so many young people want to go abroad to work,” said Futaba Ishizuka, a research fellow at the Institute of Developing Economies, a think tank.

The technical trainee program is widely known as a back door for blue-collar labor in immigration-shy Japan. Reported abuses in Japan include low and unpaid wages, excessive hours, violence and sexual harassment. In Vietnam, unscrupulous recruiters and brokers often charge trainees exorbitant fees.

Such problems will persist and could worsen under the new system, aimed at easing a historic labor shortage, according to interviews with activists, academics, unionists and trainees.

Prime Minister Shinzo Abe, whose conservative base fears a rise in crime and a threat to the country’s social fabric, has insisted that the new law, enacted in December, does not constitute an “immigration policy.”

That worries critics.

“In fact, Japan is already a country of immigrants. But because they say it is not an ‘immigration policy’ and the premise is that people will not stay, they only take temporary steps,” said Japan Civil Liberties Union director Akira Hatate. “The needs of society are not met, and the needs of the workers are not met.”

GROWING NUMBERS

The trainees system began in 1993 with the aim of transferring skills to workers from developing countries. But persistent abuses developed early on, experts say.

Those issues were spotlighted last year during debate over the new law.

Among the high-profile cases was that of four companies’ using trainees for decontamination work in areas affected by radiation after the March 2011 Fukushima nuclear disaster. Two firms, also accused of not paying appropriate wages, were banned from employing trainees for five years; the others got warnings from the justice ministry.

A labor ministry survey published in June showed more than 70 percent of trainee employers had violated labor rules, with excessive hours and safety problems most common. That compared to 66 percent for employers overall.

The Organization for Technical Intern Training (OTIT), a watchdog group, was set up in 2017. This month, it issued a reminder to employers that trainees are covered by Japanese labor law. It specifically banned unfair treatment of pregnant workers.

Harsh conditions led more than 7,000 trainees to quit in 2017, experts say, many lured by shady brokers promising fake documentation and higher-paying jobs. Almost half were from Vietnam.

Because trainees are not permitted to switch employers, leaving their jobs usually means losing legal visa status. A few go to shelters run by non-profit groups or get help from unionists; many disappear into a labor black market.

“The situation is completely different from what they were told back home,” said Shigeru Yamashita, managing director of the Vietnam Mutual Aid Association in Japan. “They have debts they cannot repay with their salaries at home, so the only option is to flee into the black market for labor.”

ADDRESSING SHORTAGES

The new law will allow about 345,000 blue-collar workers to enter Japan over five years in 14 sectors such as construction and nursing care, which face acute labor shortages. One category of “specified skilled workers” can stay up to five years but cannot bring families.

A second category of visas – currently limited to the construction and shipbuilding industries – allows workers to bring families and be eligible to stay longer.

Nguyen Thi Thuy Phuong, 29, left her husband and elementary-school-age child home in Vietnam to work as a trainee in a knitwear factory in Mitsuke City in northern Japan.

The textile industry was not included in the new visa program after coming under fire for the high number of labor violations in its trainee programs.

Now she wishes she could bring her family and stay longer than three years.

“Life in Japan is convenient, and the air is clean,” she told Reuters in careful Japanese during a break from work.

For-profit employment agencies and individuals can register as liaisons between recruiters and employers. These “registered support organizations” will not need licenses.

Immigration authorities will provide oversight of the new foreign workers; the labor ministry’s immigration bureau will become an agency on April 1, a bureaucratic distinction that gives it more clout.

On Friday, the justice ministry issued fresh rules for the new system, including a requirement that foreign workers be paid at least as much as Japanese employees.

But Sasaki said the agency’s focus would be residence status, not labor conditions.

Some companies have woken up to the risk of losing investors if they or their suppliers violate workers’ rights, said Japan Civil Liberties Union’s Hatate.

But the rush to implement the new law has left local authorities worried that too little has been done to support and integrate more foreigners.

“If there is not a proper framework to accept them and they are thought of as purely a way to fill the labor shortage, for certain there will be major problems,” Yuji Kuroiwa, governor of Kanagawa Prefecture near Tokyo, told Reuters.

Takashi Takayama, whose Vietnamese name is Cao Son Quy, fled Vietnam as a refugee in 1979. He recalled how foreigners were laid off in droves after the 2008 global financial crisis and fears a similar scenario when demand for labor eases after the 2020 Tokyo Olympics.

“When the Olympics are over, I think a tragic event will occur,” Takayama said at a Vietnamese New Year celebration at a Catholic church outside Tokyo. “I don’t want to see that.”

(Editing by Gerry Doyle)

Source: OANN

A new survey found that the majority of Americans trust Congressional Democrats and special counsel Robert Mueller investigating President Donald Trump and his administration.

Key figures in the poll from The Hill and HarrisX:

  • 19 percent trust Mueller, who is leading the Department of Justice probe into Russian collusion.
  • 10 percent trust Congressional Democrats, who have launched a wide-ranging investigation into Trump's background.
  • 28 percent trust both.
  • A combined 57 percent trust either Mueller, Democrats, or both.
  • 43 percent trust neither of the aforementioned parties, including 67 percent of Republicans and 15 percent of Democrats surveyed.

"I think that a lot of Americans out there just don't care that much about these investigations," Cato Institute director of polling Emily Ekins told Hill.TV. "Now, if the investigation uncovered something real and concrete and clear, that would absolutely make a difference, including for a certain set of pivotal voters in Trump's coalition."

The findings are in contrast to another poll from USA Today and Suffolk University, which found that 50.3 percent of those polled agreed with Trump that Mueller's investigation is a "witch hunt."

Source: NewsMax Politics

Phillip Stucky | Contributor

President Donald Trump may be in danger of losing North Carolina in 2020, according to an Elon University poll released Monday.

The poll found that 48 percent of registered North Carolina voters would vote for any Democrat to survive the primary process over Trump, compared to just 36 percent who said they would support the president no matter who ran against him.

Trump defeated former Secretary of State Hillary Clinton in the state in 2016, earning 49.8 percent compared to the Democrat’s 46.2 percent. North Carolina has 15 electoral votes.

President Donald Trump and First Lady Melania Trump participates in the Easter Egg Roll on the South Lawn of the White House, Monday, April 17, 2017, in Washington, D.C. This is the first Easter Egg Roll of the Trump Administration. Official White House Photo by Joyce N. Boghosian

President Donald Trump and First Lady Melania Trump participates in the Easter Egg Roll on the South Lawn of the White House, Monday, April 17, 2017, in Washington, D.C. This is the first Easter Egg Roll of the Trump Administration. Official White House Photo by Joyce N. Boghosian

When limited to Democratic voters, former Vice President Joe Biden led the pack in the primary with 55 percent of the vote. Independent Sen. Bernie Sanders took second with a respectable 44 percent. (RELATED: Trump 2020 Team Has Massive Plan That Relies On 2016 Victory)

“Consistent with many others polls, we find President Trump maintains strong loyalty among registered Republicans in North Carolina,” said Jason Husser, poll director and associate professor of political science at Elon University.

“However, unaffiliated voters are currently breaking toward a hypothetical Democratic candidate by a margin that could portend serious trouble for the president’s 2020 coalition,” he continued. “That said, I expect many of those voters will change their minds as the Democratic nominee moves from hypothetical to actual; the extent of this change will largely shape what we see in North Carolina over the next 20 months.”

It should be noted that on election day in 2016, only one poll claimed that Trump would take the state. The New York Times, Quinnipiac, and left-leaning Public Policy Polling all showed Clinton winning the race by a significant margin.

North Carolina has voted Republican in every election since 1980 with the exception of President Barack Obama’s first term during the 2008 election. Elon University surveyed 914 registered voters. Researchers contacted 423 by phone or email randomly, and 491 were interviewed online through an opt-in survey. Elon reports a “credibility interval” of 3.5 percentage points in either direction. The survey ran from Feb. 20 through March 7.

Source: The Daily Caller

Sawang Boonmee, deputy secretary-general of Election Commission talks as he works in a social media war room in Bangkok
FILE PHOTO: Sawang Boonmee, deputy secretary-general of Election Commission talks as he works in a social media war room in Bangkok, Thailand March 8, 2019. REUTERS/Soe Zeya Tun

March 18, 2019

By Patpicha Tanakasempipat

BANGKOK (Reuters) – In Thailand’s election “war room”, authorities scroll through thousands of social media posts, looking for violations of laws restricting political parties’ campaigning on social media that activists say are among the most prohibitive in the world.

The monitors are on the look-out for posts that “spread lies, slander candidates, or use rude language”, all violations of the new electoral law, said Sawang Boonmee, deputy secretary-general of the Election Commission, who gave a Reuters team an exclusive tour of the facility.

When they find an offending post, on, for example, Facebook, they print it out, date-stamp it, and file it in a clear plastic folder, to be handed over to the Election Commission and submitted to Facebook for removal.

“When we order content to be removed, we’ll reach out to the platforms, and they are happy to cooperate with us and make these orders efficient,” Sawang said.

Sawang said the tough electoral laws governing social media for the March 24 election, the first since a 2014 military coup, are a necessary innovation aimed at preventing manipulation that has plagued other countries’ elections in recent years.

“Other countries don’t do this. Thailand is ahead of the curve with regulating social media to ensure orderly campaigning and to protect candidates,” Sawang said.

A Facebook representative said it reviewed requests from governments on a case-by-case basis.

“We have a government request process, which is no different in Thailand than the rest of the world,” the representative said.

Twitter did not respond to a request for comment.

Democracy advocates, worry the social media restrictions laid out by the military government may be impeding parties from freely campaigning.

The rules require that candidates and parties register social media handles and submit a post to the commission, stating what platform it will appear on and for how long.

Parties and candidates are only allowed to discuss policies, and posts that are judged to be misleading voters or that portray others negatively could see the party disqualified, or a candidate jailed for up to 10 years and banned from politics for 20.

Pongsak Chan-on, coordinator of the Bangkok-based Asia Network for Free and Fair Election (ANFREL), said the rules go far beyond combating “fake news” and raise questions about how free and fair the election will be.

“The rules are stricter than in any recent elections anywhere. They’re so detailed and strict that parties are obstructed,” he told Reuters.

‘DOESN’T BODE WELL FOR DEMOCRACY’

The monitoring center, with a signboard reading “E-War Room”, has three rows of computers and stacks of printouts, with half a dozen workers spending eight hours a day searching for violations of the law.

Sawang said another intelligence center scanned for violations 24 hours a day but it was “off-limits” to media.

The election is broadly seen as a race between the military-backed prime minister, Prayuth Chan-ocha, and parties that want the military out of politics.

But the stringent rules have left anti-junta parties fretting about how to campaign online, nervous that they could inadvertently break a rule that triggers disqualification.

Up to now, the new rules have not been used to disqualify any candidates though the very threat has had a dampening effect and encouraged self-censorship.

“They create complications for parties,” said Pannika Wanich, spokeswoman for the new Future Forward Party, which has attracted support among young urban folk who have come of age on social media.

She said her party had to consult a legal team before making posts.

Some candidates have deactivated their Facebook pages while others have removed posts that might cause trouble.

Last month, Future Forward leader Thanathorn Juangroonruangkit faced disqualification over an allegation that he misled voters in his biography on the party’s website. The commission dismissed the case last week.

In another petition, the commission was asked to ban the party’s secretary-general for slandering the junta in a Facebook post.

“It’s very restrictive and doesn’t bode well for democracy,” said Tom Villarin, a Philippine congressman and member of ASEAN Parliamentarians for Human Rights (APHR).

“Putting more restrictions on social media during a campaign season defeats the purpose of holding elections in the first place.”

FIGHTING FAKE NEWS

About 74 percent of Thailand’s population of 69 million are active social media users, putting Thais among the world’s top 10 users, according to a 2018 survey by Hootsuite and We Are Social.

Thailand is Facebook’s eighth biggest market with 51 million users, the survey showed.

Facebook said it has teams with Thai-language speakers to monitor posts and restricts electoral advertisements from outside the country.

“Combating false news is crucial to the integrity and safety of the Thailand elections,” said Katie Harbath, Facebook’s Global Politics and Government director, during a Bangkok visit in January.

Sawang said the election commission has also gained cooperation from Twitter and Japanese messaging app Line, used by 45 million Thais.

Line Thailand told Reuters it did not monitor chats for the election commission but helped limit fake news by showing only articles from “trusted publishers” on its news feature.

(Reporting by Patpicha Tanakasempipat; Editing by Kay Johnson, Robert Birsel)

Source: OANN

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WASHINGTON — Those of us who have always thought that Brexit — Britain’s withdrawal from the European Union — was a bad idea should be feeling self-satisfied and vindicated now. Well, we’re not; at least this observer isn’t. The reason is obvious. Many of the things that we feared would happen have happened, or might still. Worse, the consequences aren’t confined to the United Kingdom.

If you take a crude and unscientific survey of some of Washington’s major think tanks, you discover (no surprise) that they’re generally agreed that the economic outlook for Britain is grim. Here’s a commentary by economist Desmond Lachman of the right-of-center American Enterprise Institute:

“Since the Brexit referendum, the U.K.’s economic performance has deteriorated. It has done so as the U.K.’s future access to the European single market, which buys around 50 percent of the U.K.’s exports, has come into serious question. … At a time that the European economy is already stuttering, with Italy in recession and the German economy on the cusp of recession, the last thing that Europe now needs is a sclerotic UK economy.”

A new study from the Peterson Institute for International Economics reviewed the forecasts of 12 economic models and found that only two of them predicted gains from Brexit. Other studies forecast losses up to 8 percent of gross domestic product (GDP). The study also warns that “a no-deal ‘crash out'” — a reversion to higher tariffs rather than a “soft Brexit” of continuing the present no-tariff situation — “would have serious negative short-run impacts on the U.K., which are essentially impossible to model.”

Although EU countries would also lose some exports to the U.K., these are much smaller than the U.K.’s export losses to the EU. Thus, they’re more easily made up by boosting exports to other countries, the report contends.

The U.K.’s losses are not just theoretical. Already, some companies are announcing closures of U.K. manufacturing operations, a good example being Honda. Similarly, some banks are moving financial assets (stocks, bonds, other securities) from their London offices to locations on the continent. There is much fear that London will lose its traditional position as Europe’s pre-eminent financial center.

Meanwhile, the chaos, confusion and contradictions of Parliament’s efforts to find a tenable Brexit policy must seriously undermine confidence in Britain’s political system and its ability to attract future investors, domestic and foreign.

The prevailing political anarchy was on public display last week. On March 12, Parliament rejected Prime Minister Theresa May’s proposed agreement with the EU for the second time. Then on March 13, it voted down a proposal for the U.K. to leave the EU without an agreement, failing to acknowledge “that this is precisely what will happen unless they reconcile themselves to the very deal they rejected the day before,” as Douglas Rediker of The Brookings Institution noted in a blog post. The deadline for deciding is March 29, though that could be extended.

The larger and more significant issue floating over this controversy involves the future of the world trading system. There has been a loss of authority among the corporate executives, governmental officials and economists whose support is crucial if the system is to survive and flourish.

It’s not that they have changed their minds about the value of open trade so much as the public has turned more skeptical and hostile to trade expansion. A less supportive public in turn alters the political climate, making governments more nationalistic and leading to more, not fewer, trade barriers. Multinational firms become more cautious in making new investments, because they can’t know how much open trade will be tolerated.

Brexit is one example of this break from the past. Others are well-known: the Trump administration’s renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico; its bargaining with China over trade practices; and the imposition of U.S. tariffs on steel and aluminum imports.

The fate of Brexit is just a small part of this much larger story. Is the post-World War II global trading system, constructed gradually over the past half-century or so, breaking down? Or is it just in a state of temporary hiatus? History awaits an answer.

(c) 2019, The Washington Post Writers Group

A room is seen at UCommune coworking space in Shanghai
A room is seen at UCommune coworking space in Shanghai, China March 7, 2019. Picture taken March 7, 2019. REUTERS/Aly Song

March 18, 2019

By Clare Jim and Brenda Goh

HONG KONG/SHANGHAI (Reuters) – Co-working space operators in China are shifting their focus from ambitious expansion plans to services such as customizing offices for clients, as rising vacancy rates and tighter financing slow their exponential growth of the past two years.

The strategy shift marks a turn of fortunes for the Chinese co-working industry, whose rapid expansion has helped operators such as Ucommune, MyDreamPlus and Kr Space raise hundreds of millions of dollars.

The combined area of co-working space in four first-tier cities in China surged by almost 60 percent between the end of 2017 and October last year, according to industry association China Real Estate Chamber of Commerce.

However, 40 percent of the co-working centers were more than half empty as of October and 40 co-working brands had shut in the first 10 months of 2018, it added.

“There’s a shake-out in the flexible office space,” said Paul Salnikow, global CEO of The Executive Center, which entered China in 2001 and currently operates 45 premium flexible working centers in nine Chinese cities.

“Since November, we’ve seen operators in China walking away from centers, trying to give it back to the landlord. We’ve been offered furniture from some of these people, saying they’re trying to raise money.”

A common solution for firms appears to be diversification into services that require less capital investment, such as office design and management.

“Our focus this year is ‘management output’,” Mao Daqing, founder of Ucommune, one of the largest co-working space operators in China, told Reuters.

The company expected to partner with enterprise clients and open another 30 flexible working centers for them this year, providing design and management services, from 15 currently, he said. Ucommune’s own branded centers would add five to 10 more to the over 200 already in place.

U.S.-based WeWork started providing such services in China last year and also plans to grow the business.

One industry executive who declined to be identified told Reuters the asset-light model helped to shift rental costs to clients, boosting income.

LANDLORDS AT RISK

A survey of Chinese flexible working space operators by real estate consultancy CBRE in January found that around 68 percent planned to slow or halt expansion this year.

But the rise in vacancy rates and operators dropping out of the business could also spell trouble for Chinese office landlords, especially in major cities like Shanghai where co-working is more common than the rest of Asia-Pacific.

“Co-working operators need to go further asset-light and slow one-off CAPEX investment to stay in operation,” said Virginia Huang, CBRE Greater China managing director of advisory and transaction services.

“What this means is landlords also share some risks of this industry, not only the operators.”

Terms of underwriting co-operating operators are also changing, with landlords bearing more costs and risks.

Stanley Ching, Citic Capital’s head of property, said operators were increasingly seeking fit-out subsidies and leasing on profit-sharing models with landlords, as they become more reluctant to pay high rents to secure space.

LaSalle Investment Management, which rents space to co-working operators in China, said picking the right operators and limiting exposure was crucial.

“They’re not recession-proof yet; they haven’t gone through a recession, we don’t know who’s going to survive or who’s not,” said Elysia Tse, LaSalle IM Asia Pacific head of research and strategy.

“So we’ll make sure our portfolio of co-working tenants is a small minority portion.”

One positive trend for co-working operators is the growth in demand from larger corporates amid China’s broader economic slowdown.

“As companies’ outlook on the economy turns conservative and they want to save office costs, they turn to co-working space which provides flexibility,” said Ucommune’s Mao.

“Our clients for office design service also increased for this reason.”

(Reporting by Clare Jim and Brenda Goh; Additional reporting by Shanghai newsroom; Editing by Stephen Coates)

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