Caixin
May 04, 2019 01:17 PM
CX DAILY

CX Daily: Weaker Foreign Demand Slows China's Manufacturing Expansion

Manufacturing expansion slows amid weaker foreign demand: Caixin survey

China’s manufacturing activity expanded for the second straight month in April, though at a slower pace, contrasting with the sluggish situation seen at the turn of the year, a Caixin survey showed Tuesday.

The Caixin China General Manufacturing PMI, which gives a snapshot of operating conditions in the manufacturing sector, dropped to 50.2 in April from 50.8 in the month before. From December to February, the index remained below 50, signaling contraction. Manufacturing accounts for nearly 30% of China’s GDP.

FINANCE & ECONOMICS

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Photo: PBOC

Currency /

China’s central bank is releasing new banknotes and coins in August

After more than a decade, China is finally releasing newly patterned banknotes and coins, the central bank said Monday in a statement.

Starting Aug. 30, new banknotes of 50 yuan ($7.43), 20 yuan, 10 yuan, and 1 yuan, as well as coins of 1 yuan, 0.5 yuan, and 0.1 yuan, will be released and in circulation, the PBOC said. The new patterns, though not very different from existing ones, are designed to be harder for counterfeiters to copy.

In depth /

Private placements set for comeback as need for cash trumps abuse

China’s stock market watchdog plans to roll back controversial curbs on the use of private placements by listed companies, reviving a key financing channel as part of government efforts to help businesses overcome funding difficulties without increasing their borrowings, sources close to the regulator told us.

The China Securities Regulatory Commission is working on amendments to private placement rules that were tightened starting in February 2017 after evidence emerged of widespread abuse by companies and investors. But policymakers have been forced into a rethink after the changes were criticized by market participants and contributed to a destabilizing cash crunch among listed companies in 2017 and 2018 that fueled a stock market slump.

Lending /

Bad loans at China banks grow at fastest pace since at least 2017

China’s biggest banks are seeing bad loans grow at the fastest pace since at least 2017, with the nation’s four largest lenders saying in recent days that nonperforming loans (NPLs) hit fresh multi-year highs in the latest quarter. It reflects risks to China’s banks as the government pushes them to lend more.

The increase in delinquent debt may give policymakers pause even though bad loans as a share of total lending fell slightly, thanks to expanded balance sheets. While China’s banks are seen as key to reinvigorating the economy, especially by lending to traditionally riskier smaller and private companies, some have expressed concerns that soured loans could continue to rise.

Coming up /

Mon. May 6: Caixin will release the Caixin Services PMI for April

SuperReturn China, an annual private equity event, will be held in Beijing. Caixin is an official media partner of this event.

Tue. May 7: PBOC may release foreign exchange reserves figures for April.

Wed. May 8: The customs authority may release import and export data for April.

China and U.S. trade representatives are expected to meet in Washington to continue trade talks.

Caixin will hold an insight session themed "Capital for China's brave new economy" at the annual St. Gallen Symposium in St. Gallen, Switzerland, also known as "Little Davos."

Thu. May 9: NBS will release CPI and PPI for April.

Fri. May 10: The PBOC will release the April data of M2, M1, M0 growth, new yuan-denominated loans and newly added social financing.

Quick hits /

Chairman of embattled brokerage resigns

Chart of the day: Stock investors borrow more in the bull market

Singapore, China ink deals on trade, Belt and Road projects

Tianjin commodities trader downgraded for continued debt risk

Regulator vows flexibility in state sector revamp

Editorial: Anti-corruption in finance goes hand-in-hand with market development

Falsified annual report comes back to haunt financial data firm’s boss

Yu Yongding: China can afford to target higher growth, if it doesn't hurt structural reform

 

BUSINESS & TECH

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Knockoffs /

Alibaba is paying $250 million to settle U.S. lawsuit over counterfeit products

E-commerce giant Alibaba Group said Monday that it will pay $250 million to settle a U.S. lawsuit against it for not disclosing a regulatory warning in China regarding sales of counterfeit products that it received shortly before its 2014 IPO.

The lawsuit, which has been pending since January 2015, came after China’s State Administration of Industry and Commerce released a white paper alleging the company allowed trademark-infringing products to be sold on its platform. The document was withdrawn by the administration within the day but sparked market concerns and led to many investors dumping the company's American depositary shares.

In depth /

Never-ending competition leaves online video pioneer Youku in search of direction

Four years ago, many expected that with Alibaba's help, Youku Tudou Inc. would fulfill its destiny to become the YouTube of China. Fast forward to the present, Youku has been folded into Alibaba’s entertainment business while scaling back spending, leadership may be implicated in corruption, and rumors emerged as far back as December that Alibaba may be preparing to sell it to Beijing ByteDance Technology Co. Ltd.

Both Alibaba and ByteDance denied the idea at the time, but industry watchers said such rumors may have gained traction considering Youku's lackluster performance. Despite Alibaba’s efforts, the unit is believed to still be losing money as rivals are spending aggressively to build up their content libraries. Where did it all go wrong for such a promising company?

Company law /

Supreme Court moves to protect minority holder rights

China’s Supreme Court issued a judicial interpretation of company law Sunday, signaling efforts to increase protection of the rights of small and medium-sized shareholders after China scored zero in a World Bank rating on safeguards for minority investors.

The new interpretation aims to create a better legal environment for the nation’s economic development by clarifying certain problems in the application of the company law, which was last revised more than a decade ago, an official of the Supreme People’s Court said. The ruling also is intended to improve related systems for the protection of the rights of small and medium-sized investors, the official said.

Energy /

China is wasting less solar and wind power

China is wasting less electricity generated by renewables because of rising demand, falling costs and greater grid connectivity.

The drop in wasted electricity, which industry-types call “curtailment,” suggests that the government is coming to grips with an issue that has kept cleaner energy off the grid even as policymakers try to make renewable power a greater part of the country’s energy mix. According to its latest five-year plan, the government aims to increase the mix of nonfossil power consumption to 15% by the end of the decade.

Quick hits /

Foxconn’s Gou knows how to play local governments off one another

Fugitive tycoon Jia Yueting and Leshi under probe

Wanda to spend $300 million on Chinese soccer after Europe exit

Amazon China site collapses as shoppers rush for discounts

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