Sep 03, 2019 08:33 AM

CX Daily: European Businesses Sound IP Alarm Over China's Social Credit System

Photo: VCG
Photo: VCG

Economy /

China’s manufacturing starts expanding again: Caixin PMI

China’s manufacturing activity expanded in August after shrinking for two months as factory output grew at its fastest clip in five months, a Caixin survey showed Monday. The PMI increased to 50.4 in August from 49.9 in the previous month. Readings above 50 signal expansion.


“China’s manufacturing sector showed a recovery in August, mainly due to improved production activity,” said Zhong Zhengsheng, director of macroeconomic analysis with consultancy CEBM Group, a subsidiary of Caixin Insight Group. “However, overall demand didn’t improve, and foreign demand declined notably, leading product inventories to grow.”



In depth /

Is the next global recession in sight?

On Aug. 14, the yield on the 10-year Treasury temporarily fell below the yield on the 2-year Treasury for the first time since 2007, a phenomenon known as an “inverted yield curve.” Since 1955, the yield curve has inverted before every U.S. recession. Analysts say the question is not whether there will be another recession, but when.

Worrying signs for the U.S. economy underscore the troubles facing the world. Several key economic indicators tracked by Morgan Stanley have touched multi-year lows recently. The global PMI, a key indicator of economic health, touched a three-year low in June, while the PMI focusing on manufacturing slid to a seven-year low in July. Global trade volume slumped to a seven-year low in June, and global real GDP growth is forecast to slow to a six-year-low in the third quarter.

Check out our deep dive.

U.S.-China /

Re-exporting goods to U.S. through Southeast Asia likely unsustainable, economists say

The practice of some Chinese exporters to avoid U.S. import tariffs by shipping their goods to Southeast Asian or European Union (EU) countries and then re-exporting them to the U.S. is unlikely to last long, because some countries have stepped up scrutiny of such re-exports under U.S. pressure, economists say.

In the first five months of this year, the value of Vietnamese exports to the U.S. grew 28% from a year earlier, with the increased value almost the same as that of imports from China, according to one economist. Meanwhile, its exports to, and imports from, other countries recorded only small changes during the same period, he said.

Misconduct /

Auditing firm sues securities regulator for alleged wrongful punishment

Ruihua Certified Public Accountants LLP, one of the country’s largest accounting firms, demanded Tuesday that the China Securities Regulatory Commission (CSRC) return the 3.9 million yuan ($543,819) that it fined the company for allegedly failing to perform due diligence properly on the audit of a now-delisted metals company. Beijing No.1 Intermediate People’s Court did not immediately announce a verdict.

The firm also demanded that the CSRC repay it the 1.3 million yuan in auditing fees that the regulator had seized as part of the penalty. In addition, Ruihua also asked for the regulator to roll back three 100,000 yuan fines against three of its accountants.

Shadow banking /

Former securities czar calls asset management cleanup deadline ‘unrealistic’

Speaking at a financial industry event in Beijing earlier this month, Xiao Gang, the former chairman of the China Securities Regulatory Commission (CSRC), said it was “unrealistic and infeasible” to clean up banks’ “overlarge” off-balance-sheet wealth management products before Dec. 31, 2020.

Xiao said authorities should scrap the deadline and instead pursue a “steady replacement” of the products. At the end of last year, Chinese banks were managing around 22 trillion yuan ($3.2 trillion) of outstanding off-balance-sheet wealth management products, according to industry data. Much of the money was poured into the opaque shadow banking sector, circumventing regulatory oversight.

Quick hits /

Opinion: Warning signs point to a looming U.S. recession

China turns to Argentina for soybeans

Hong Kong property market shaken amid social unrest

Founder of P2P lender confesses to illegal fundraising, police say

Accounting shenanigans derail network security firm’s tech board IPO

Hedge fund investors in China revolt over performance fees

Evergrande owes $53 billion in next 10 months as property market toughens

Andrew Sheng: Theorizing the U.S.-China trade war

Boyu investment guru dies at 66



Social security /

European businesses fret over future social credit system data requirements

A European business group in China is raising concerns over China’s social credit system as it applies to businesses, namely over its onerous data transfer requirements that the group worries could lead to IP theft.

In some cases, such as when registering new products for the Chinese market, an “enormous” amount of information, including technological details, must be submitted, according to consultancy Sinolytics, which partnered with the European chamber to produce a joint position paper. Such sensitive data is making European businesses "reconsider being a market player here,” Joerg Wuttke, president of the chamber, said.

Huawei / U.K.

U.K. trade minister says policy on Huawei not changed

The British International Trade Minister said the new U.K. government under Prime Minister Boris Johnson has not changed its policy on Chinese telecom equipment giant Huawei from that of the previous administration, but stressed that the country continues to both be open to Chinese investment and seek to protect its critical national interests.

The U.K. government sticks to an evidence-based policy toward Huawei, making sure that it has the right technical understanding but is also taking into account broader considerations, including the U.S. government’s recent move to blacklist the Chinese company, British International Trade Minister Graham Stuart said during a visit to Beijing.

Tesla /

Musk's China charm offensive nets Tesla tax break amid trade war

Elon Musk won a tax exemption for Tesla Inc., got to promote his ground-digging Boring Co. passion project and even drew praise on social media for his frugal food and accommodation choices -- he was spotted eating dumplings and staying at a Holiday Inn.

After going viral on social media over a wide-ranging -- and at times bizarre -- conversation with Alibaba Group Holding Ltd. Chairman Jack Ma, Musk toured the factory Tesla is building in Shanghai, its first outside of the U.S., and reportedly met China’s Transport Minister Li Xiaopeng on Friday. Later that day, China announced that Tesla cars will be exempted from a 10% purchase tax, something typically reserved for domestic makers of electric vehicles.

Aviation /

Chinese regional jet gets boost from big three state airlines

China’s three largest state-owned airlines simultaneously announced orders for 105 regional jets from leading plane builder COMAC, providing a major boost for a model that has delivered only 14 jets since it was first conceived 17 years ago.

Air China Ltd., China Eastern Airlines Corp. Ltd. and China Southern Airlines Co. Ltd. said separately that they would each buy 35 of the ARJ21-700 jets, according to individual announcements issued late Friday. Each of those orders would be worth $1.33 billion based on the plane’s list price, though big discounts are typically given. In total, the deals would provide Commercial Aircraft Corp. of China, or COMAC, with orders for 105 new ARJ21-700 jets with a combined list price worth $4 billion.

Quick hits /

China’s AI chip market grew 50% in 2018: Report

‘Deepfake’ app that puts your face in the movies sparks privacy concerns

Didi challenger Dida announces ‘overall’ profitability

Tech entrepreneur JP Gan raises $163 million for new fund

CNOOC head moves to SinoChem to smooth state-owned energy merger

Thanks for reading. If you haven't already, click here to subscribe.

Share this article
Open WeChat and scan the QR code