CX Daily: Welcome to Caixin Global's New Daily Briefing
A container terminal at Lianyungang Port, in East China's Jiangsu province, on Feb. 14, 2019. Photo: VCG
Don't blame the trade war for China’s slumping current account surplus
China’s current account surplus, the net total of imports, exports and investment inflows, hit an all-time low in 2018, though not only because of the trade war with the U.S., analysts said.
The trade war hasn't affected China’s economy enough to show much in the 2018 figures, at least not yet. The slump was more due to a growing deficit in goods trade with countries such as Japan and South Korea and a long-running deficit in the services trade.
China’s current account surplus last year plunged 70% to $49.1 billion. It was widely speculated that China might book its first full-year current account deficit in 25 years after it ran a $28.8 billion deficit in the first half.
FINANCE & ECONOMICS
Heating up /
Stock trading spikes to 11-month high
The combined daily trading volume on the Shanghai Stock Exchange and the Shenzhen Stock Exchange hit an 11-month high of 607.13 billion yuan ($89.7 billion) Tuesday, suggesting the country’s bumpy stock markets seems to be recovering or even overheating.
So, what's the deal? Chinese equities really took off only after another set of weak economic data made monetary policy easing almost a certainty. Gains intensified when the securities watchdog eased restrictions on trading, encouraging an increase in leveraged bets. Ample liquidity and a streak of foreign buying have fueled volumes.
Lending support /
More help for bank borrowings is on its way
China’s central bank is looking to go beyond the issuance of perpetual bonds to support banks’ borrowing, including expanding the investor base for such bonds as the next measure to help commercial banks replenish their capital and expand lending, a senior PBOC official said Tuesday.
The bank is also studying ways to broaden the venues where investors can buy bank bonds to include bank counters. Qualified banks could issue capital replenishment bonds abroad, and regulators could allow qualified long-term investors such as mutual funds as well as high net-worth individual investors to invest in such bonds, the PBOC said.
Rural revival /
More soybeans, less poverty: China’s 2019 rural priorities
The annual agricultural policy-setting “No. 1 central document” released by the State Council emphasized the need to eradicate poverty and to diversify imports — especially soybeans, for which China is reliant on the U.S.
Although China wants to develop its own soybean production, imports will continue to be the mainstay of the country’s supply, the agriculture minister said. An analyst said China may be hoping that Belt and Road nations will also begin to grow more soybeans.
Graft probe rumors swirl around key bond market player
The Bank of Nanjing confirmed that three of its executives are "unable to perform their duties" after sources told us that the trio is under investigation by the Communist Party’s anti-corruption watchdog.
Some observers suspect Dai Juan, general manager of the lender’s asset management business center; Dong Wenzhao, vice general manager of its capital operation center; and Li Yan, vice general manager of its investment arm Xinyuan Asset Management Co. Ltd. were involved in illegally funneling lucrative benefits to government officials or other people through the sales of structured financial products.
Quick hits /
• U.S. senator sees China trade deal by March 1
• China delays coal imports from Australia as tensions simmer (Bloomberg)
• HK slaps record fine on mainland broker Guosen Securities
• Embattled Anbang dismantles stakes in leasing unit
• U.S. push for stable yuan may unwind China's move toward markets (Bloomberg)
• Opinion: Hong Kong’s economic outlook is not promising
• Former Citic executive director under investigation
• Poverty fight doesn’t stop in 2020: U.N. official
BUSINESS & TECH
China completely halts new game licence applications
Yesterday we said that there was most likely a one-year wait for games submitted now for approval. We may have spoken too soon.
China’s top media regulator has completely stopped taking new applications for commercial video game licences, at least for now, official news outlets report. Authorities have yet to judge some 5,000 titles following a nine-month freeze on approvals. The latest development, apparently due to "adjustments" to the process, could deal another blow to the industry.
Didi bit off more than it could chew
When China’s dominant ride-hailing firm Didi Chuxing launched its food delivery business last April, it was in response to online-to-offline services provider Meituan Dianping, which had announced plans to challenge Didi in ride-hailing.
But these days, Didi is laying off around 15% of its total corporate workforce; reports have emerged suggesting the company lost 10.9 billion yuan ($1.6 billion) in 2018; and Meituan has long since scaled back its ride-hailing push. Looking back, it was, perhaps, one big knee-jerk.
WHO appoints panel to advise on gene-editing governance
Following the gene-editing controversy sparked by the claimed birth of the world’s first gene-edited babies in China, the World Health Organization has named the members of a new committee created to monitor and oversee global human genome editing.
The WHO Expert Advisory Committee on Developing Global Standards for Governance and Oversight of Human Genome Editing will convene in Geneva next month and will aim to “advise and make recommendations on appropriate governance mechanisms for human genome editing.”
NetEase shopping platform wants to acquire Amazon China program
Chinese internet company NetEase’s shopping platform Kaola is looking to acquire Amazon China’s global shopping program – a service that allows China-based users to purchase items from Amazon sites abroad – according to finance news outlet Caijing.
NetEase proposed the idea and negotiations kicked off in late 2018, according to the report, and they might go on for quite some time. Sources close to the matter said Amazon’s position as a major multinational corporation brought “all difficulties one could ever imagine in business negotiations” to the table.
Culture clash /
K-Pop may be returning to China again
Chinese concert promoters are seeking permission for South Korean bands to perform in the country, according to people familiar with the matter, a sign of growing optimism that relations between the two countries are thawing.
Ties between Beijing and Seoul have been strained since South Korea agreed in 2016 to host a U.S. missile defense system strongly opposed by China. Promoters haven’t bothered to invite Korean acts since, expecting the government would reject such visa applications. It’s unclear whether authorities are inclined to approve them now.
Quick hits /
• China’s national railway struggles to revitalize cargo business
• Solar firms told that big subsidies won’t return
• U.K. cybersecurity chief says no decision made on Huawei ban
• Huawei involvement in U.K. 5G ‘irresponsible,’ report warns
• Manchester City owner buys Chinese club
• Beijing supermarkets ditch dumplings in swine fever scare
• Tencent Music invests in Douban’s audio streaming platform
• Fosun eyes takeover of another European fashion brand
• Chinese biotech stock soars after tipping profit doubled in 2018
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