Caixin
Aug 17, 2019 09:27 AM
CX DAILY

CX Daily: Japan Dethrones China as Largest Holder of U.S. Treasurys

Treasurys /

Japan replaces China as largest holder of U.S. government debt

Japan replaced China as the largest holder of U.S. government debt in June amid an escalating Sino-U.S. trade war. Although China’s store of Treasury bonds rebounded by $2.3 billion to $1.11 trillion — up from a two-year low in May — Japan’s holdings grew by $21.9 billion to $1.12 trillion, reaching their highest point since October 2016, according to data released Thursday by the U.S. Department of the Treasury.

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The figures represent the first time since May 2017 that China is not the largest holder of Treasury bonds. Previous data from the U.S. Census Bureau also showed that China is no longer the U.S.’s largest trade partner, falling to third place during the first six months of the year behind Mexico and Canada.

FINANCE & ECONOMICS

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The Daya Bay Nuclear Power Station, operated by China General Nuclear Power Corp. and CLP Holdings Ltd., Dec. 13. Photo: Bloomberg

U.S.-China /

U.S. blacklists China nuclear firms accused of aiding military

The U.S. has accused four Chinese nuclear entities of helping to acquire advanced U.S. technology for military use in China. The accused, China General Nuclear Power Group and its subsidiaries China General Nuclear Power Corp., or CGNPC, China Nuclear Power Technology Research Institute Co. Ltd., and Suzhou Nuclear Power Research Institute Co. Ltd., were added to the so-called Entity List, according to a Federal Register notice.

In October last year, the Trump administration also announced that it was imposing further restrictions on exports of nuclear-related U.S. technology to China to “prevent China’s illegal diversion of U.S. civil nuclear technology for military or other unauthorized purposes.”

Personal debt /

Regulator tightens oversight of consumer lending as household debt booms

Since the end of June, local bureaus of the China Banking and Insurance Regulatory Commission (CBIRC) in cities including Shanghai, Shenzhen and Ningbo, and provinces including Yunnan have found at last 13 cases where banks violated rules on the approval of personal loans, including credit card borrowing, according to our calculation based on public records.

The Bank of Communications Co. Ltd. and the Agricultural Bank of China Co. Ltd. were fined 400,000 yuan ($57,000) and 200,000 yuan, respectively, in July for failing to follow regulations on managing limits on credit cards, according to two releases by the Shanghai Office of the CBIRC last week. The office also fined five more banks in mid-July for the same transgression.

Manufacturing /

WTO to arbitrate China’s complaints about U.S. solar-cell tariffs

The World Trade Organization (WTO) has established a dispute panel to resolve a row over U.S. safeguard duties on imports of Chinese solar cells, Reuters reported Thursday.

China claims that the U.S. is violating WTO rules by imposing a tariff-rate quota on imports of Chinese solar cells and increased duties on imported solar modules. After imposing 30% “safeguard tariffs” on solar panels produced outside the U.S., Washington then specifically targeted China in August last year, charging an additional 25% in duties as part of broader U.S. complaints that China unfairly subsidizes manufacturing to outcompete companies from other countries, a charge China denies.

Graft /

Former Inner Mongolia legislator sets record with $64 million in alleged bribes

Xing Yun, former vice chairman of the Standing Committee of the People's Congress of Inner Mongolia, faces charges of accepting bribes worth 449 million yuan ($64 million), a record sum for a provincial-level official caught up in China’s sweeping anti-graft campaign.

Prosecutors accused Xing, 67, of taking the bribes during his 20-year bureaucratic career in Inner Mongolia, using his power to help others get promotions or secure government investment deals, according to the state broadcaster China Central Television. Xing pleaded guilty at a court hearing Thursday in Dalian, Liaoning. The court said the sentence would be announced at a later date.

BUSINESS & TECH

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Launched in 2015, NetEase Kaola carries more than 9,000 brands from 80 countries. Photo: VCG

M&A /

Exclusive: Alibaba to buy Kaola unit from NetEase for $2 billion

Alibaba Group Holding Ltd. has agreed to pay $2 billion in cash to acquire NetEase Inc.’s cross-border e-commerce platform, according to people familiar with the matter, who added that the two companies will also partner on other forms of deals. Alibaba and NetEase declined to comment.

The transaction will represent further consolidation in China’s e-commerce sector. NetEase Kaola, the biggest import retail e-commerce platform in China, is an archrival of Alibaba’s Tmall Global. Launched in 2015, NetEase Kaola held a 27.5% market share in cross-border e-commerce in 2018 versus Tmall Global's 25%.

Retail /

As rivals flee China, Walmart rings up 4.7% sales growth

Retail behemoth Walmart Inc.’s China sales rose 4.7% in its latest reporting quarter, far outpacing its global average, as its Sam’s Club supermarkets performed well and it catered to the local e-commerce craze by expanding its home delivery services.

Walmart’s sales gains in China come amid a broader retreat from the market by other major global retailers in the face of stiff competition from e-commerce. Responding to that challenge, Walmart has formed strategic alliances with China’s No. 2 e-commerce company JD.com, as well as social networking giant Tencent.

Earnings /

Baidu’s $66 billion dive knocks it out of China’s internet top 5

Baidu Inc. has dropped off the list of China’s five most valuable internet companies, underscoring the challenges facing the search giant from a weakening economy to intensifying competition. NetEase Inc., China’s second-largest gaming house, overtook it in market value after posting better-than-expected quarterly earnings last week.

Shares of NetEase gained 11% this year while Baidu’s plunged 40%. Baidu, once touted as a member of China’s internet triumvirate alongside Alibaba Group Holding Ltd. and Tencent Holdings Ltd., has bled $66 billion of market value since its peak in May 2018 — the equivalent of one Morgan Stanley.

Cross-border shopping /

Tougher China regulations sap sales of Australian vitamin company

Vitamins group Blackmores Ltd. estimates that about 40% of its “daigou” trade, which fueled a golden period of booming sales to China from 2015 to 2016, has now vanished.

An army of small entrepreneurs who previously bought up large volumes of vitamins from Australian retailers such as Chemist Warehouse have exited the industry because of tougher regulations in China that came into force in January, Blackmores executives said Thursday. Larger, better-established daigou traders had picked up some of that business, but the paperwork for smaller players had become too onerous.

Quick hits /

Huawei’s first 5G commercial phone gets warm response despite limited networks

Head of China’s largest private shipbuilder assists in corruption probe

Syngenta is said to start work on world's biggest chemical IPO

Alibaba Q2 revenue jumps 42%, beating estimates but slower than year earlier

Beijing grants foreign investors wider access to entertainment industry

Record-smashing Chinese animation to get overseas releases

AI startup plans IPO at value of at least $1 billion — in China

Infant milk-maker’s shares recover on short-seller retort

Tencent-backed Maoyan turns profit on strong ad growth

Vipshop stock soars after Q2 results beat expectations

Saving Yunnan’s rare snub-nosed monkey

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