USD entrepreneurship flagship: BAT technology giants (Grand Era: Baidu, Alibaba and Tecent hi-tech innovators)

China's troika of digital champions collectively known as BAT further underlined their hold on the world's biggest market of internet users when Alibaba - the ecommerce group - snapped up UCWeb, a Chinese internet browser company, last week.

Search engine Baidu, Alibaba and Tecent, a gaming and social media conglomerate based in the southern city of Shenzhen, have risen far past their peers and are buying almost any and everything - from app stores, to travel websites and virtual taxi services, as they rush to steal a march over each other.

Their targets, including UCWeb, are receptive to these offers which provide a quick way to cash out without a time-consuming and complex listing.

UCWeb, which began laying the groundwork for an initial public offering two years ago, instead sold the remaining 34 percent stake to Alibaba. "If it were a matter of wielding more control [over the company], then it would make sense to list at a later stage," chairman Yu Yongfu told employees in an internal memo.

"But as the leader of this team I face immense pressure to bring greater economic benefits and possibilities for personal development for everyone." UCWeb will be paid mainly in shares of Alibaba, which will list later this year in one the biggest IPOs of all time.

Competition in China's internet market is fierce, and market share increasingly belongs to companies with pockets deep enough to tough out price wars.

Youku Tudou, China's most popular video hosting site, sold an 18 percent share to Alibaba and affiliated investors in April, after competition from Tencent's QQ and Baidu's Iqiyi drove the price of content to exorbitant levels. The second most popular video site - Sohu TV, which belongs to Sohu Group, an internet portal, is persistently rumoured to be in negotiations to sell a stake to a BAT company.

Another example of a strong internet player which nonetheless sought an alliance with on of the big three is JD.com, Amazon-like ecomerce site which competes head-to-head with Alibaba. It sold a 15 percent stake to Tencent, alongside its May IPO which valued the company at nearly $26bn.

#Renminbi slide could be symptom of deeper issues
After a five-month slide, the renmini seems to be getting its mojo back. Last week, the Chinese currency rose 0.5 percent against the US dollar over five days. the most since 2011.

Economic optimism my have played some part in the rebound. Rising inflation and improving exports both augur well for a country that has been struggling with falling factory gate prices and tepid external demand for many months. A pickup in orders from the rest of the world could offer a timely counterweight to the rumbling problems in the domestic economy, such as a troubled housing market.

While some analysts have trimmed forecasts for both growth and currency appreciation this year, the majority remain confident the renmibi will be stronger at the end of the year, and that the economy will grow at a minimum annual rate of 7 percent, if not meet Beijing's target of 7.5 percent. Most have also taken the view that the renmibi's recent fall was an engineered move designed to scare off speculators, and as such will prove temporary.

However, there are some murmurings in the market that currency weakness is a symptom of deeper problems, and could yet snowball into something more lasting. The argument is that the renmibi's decline is the result of a shift in the world's second largest economy that will see capital leave and the currency fall.

Diana Choyleva of Lombard Street Research first predicted a weaker renmibi in November 2013, saying then that the currency was 15-25 percent overvalued against the dollar - a view she continues to hold. The fall since, when coupled with producers price deflation, has resulted in only a 5 percent adjustment so far.

Her renmibi view is based on the belief that with China simultaneously slowing and opening up, capital will increasingly flow outward rather than in as domestic investors diversify away from a stumbling economy. That in turn would put downward pressure on the exchange rate as those investors sell renmibi to buy foreign currency.

In the first quarter of the year capital continued to flow in, boosting China's foreign exchange reserves and pushing the renmibi up to a 19-year high against the dollar in January.

However, data for April suggest the switch forecast by Ms Choyleva may be under way. Barclays estimates that more than $8bn flowed out during the month. Figures released on Monday - showing a sharp fall in FX purchases in China - suggest far greater outflows in May.

Outflows have occurred before, but China's capital account is becoming more open and its exchange rate freer to move, making financial borders increasingly porous. A link-up between the Hong Kong and Shanghai stock exchange will, once up and running later this year, provide a fresh avenue for Chinese investors to take cash abroad, even if only as far as Hong Kong.

China's vast pot of national savings - larger than those of the US and Japan combined - is likely to seek overseas opportunities as soon as allowed, says Ms Choyleva. Billions of renminbi have already made their way out and around the world, often through illicit channels. As more legally sanctioned routes open, more capital could flow out, and more quickly.

There are some benefits to a weaker currency, such as more competitive exports. But with China's current account surplus having shrunk from 10 percent of gross domestic product in 2007 to just 2 percent now, net outflows have a bigger impact on currency markets.

"Need the renminbi to go down, but that then unlocks Padora's box", says Ms Choyleva. "If you exclude the exchange rate gains there's nothing much left to invest in China."

Kevin Lai, head of Asian economic research at Daiwa, believes the moves to guide the renminbi higher last week by the People's Bank of China are a sing that authorities are "deeply concerned" the recent trickle of capital outflow could become a damaging flood - especially if the US Federal Reserve's unwinding of asset purchases entices capital out emerging markets including China.

The PBoC has for years expanded its balance sheet as foreign capital flowed in, he explains. Now, with capital beginning to flow out China's central bank is being forced to add cash to the economy without the underpinning of US dollar inflows. That, in turn, is contributing to renminbi weakness.

His forecast is for a further 8 percent fall in the Chinese currency against the dollar by the end of 2015, to RMB 6.83 from RMB 6.21 now, pushing back down through the 18-month lows plumbed in recent weeks.

"If the renminbi keeps going down, the market will demand a real answer and start pulling money out. That is the worst fear of the PBoC," says Mr Lai.