Apr 05, 2020 09:31 PM

China Business Digest: Central Bank Cuts Reserve Requirements for Regional Lenders



Starting this week, Caixin Global will run a daily news digest to give readers a quick rundown of the top China business and finance stories, plus whatever is driving markets for the day. Please let us know if you have any feedback.

China’s central bank cuts reserve requirements for regional banks to help businesses tide over the coronavirus outbreak. The Caixin China services PMI for March rebounded from a record low, but remained in contractionary territory. Luckin shares tanked.

By Tang Ziyi (


Global coronavirus cases surpass 1 million

The novel coronavirus has now infected more than 1 million people worldwide just four months after first emerging in the Central China city of Wuhan.

The pandemic has killed more than 54,000 people globally as of Friday evening, according to data compiled by Johns Hopkins University.

China reports 60 new symptomless cases

China’s top health body reported (link in Chinese) an additional 60 asymptomatic coronavirus cases on the Chinese mainland on Thursday. There were 1,027 asymptomatic cases under medical observation on the mainland as of Thursday, including 221 imported cases, the authority said.

Asymptomatic cases have become one of the biggest risks to China’s battle against the pandemic, as fears have grown that they may be spreading the virus unknowingly.

U.S. weekly unemployment claims hit record high

Over 6.6 million people in the U.S. filed for unemployment benefits in the week ending March 28 amid the ongoing pandemic, according to a Thursday statement from the U.S. Department of Labor.

That means nearly 10 million Americans have filed claims over the past two weeks.

China to hold a national mourning day for virus victims

The State Council, China’s cabinet, has declared (link in Chinese) Saturday a national day of mourning for citizens who died in the fight against the coronavirus and patients who died from the disease. Chinese flags will fly at half-mast across the country and in overseas Chinese embassies and consulates. The country will halt all public entertainment for the day.

Other virus news

• An official at China’s commerce ministry warned the pandemic will “inevitably” hit automakers in China, just after the industry suffered one of its worst downturns in years.

• The coronavirus outbreak is the biggest crisis that the airline industry has faced, said the International Air Transport Association, an industry group representing around 290 airlines across the globe. The group said global air traffic demand fell 14.1% year-on-year in February, the biggest decline since the 9/11 terrorist attack.

• The Asian Development Bank forecast that the global cost of the pandemic could reach as high as $4.1 trillion, or 4.8% of the world’s GDP.

• In the U.S., hospitals are reporting shortages of some critical medicines including antibiotics, antivirals and sedatives. (NYT)

• Singapore’s government said it will temporarily close all schools and shut down most workplaces other than those in key economic sectors or that provide essential services.

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Caixin’s coverage of the new coronavirus


Luckin Coffee's shares plummet on accounting probe

Shares of Nasdaq-listed Luckin Coffee plunged more than 75% Thursday after the Starbucks challenger disclosed that its chief operating officer inflated 2019 sales by about 2.2 billion yuan ($310 million).

The fabricated transactions accounted for nearly half of the company’s total revenue over the last three quarters of 2019, according to Caixin’s calculations based on Luckin’s statement disclosing its internal probe.

China cuts reserve requirements for most banks

China’s central bank decided to cut the amount of cash small and midsize banks must hold as reserve, unleashing about 400 billion yuan ($56.4 billion) into the financial system.

The reserve requirement ratios (RRRs) for all rural banks, village banks, as well as city banks that only operate in the provincial-level regions where they are registered, will be lowered by 1 percentage point, according to the People’s Bank of China (link in Chinese). The cut will be implemented in stages on April 15 and May 15.

Caixin services PMI rebounds

The Caixin China General Services Business Activity Index (PMI) rose to 43 in March from a record low of 26.5 the previous month, a Caixin-sponsored survey showed Friday. The reading shows China’s services activity shrank at a slower pace last month than in February as the coronavirus outbreak waned.


The rates of contraction last month for total new business and new export business in the services sector were much slower than the previous month, but employment across the sector dropped at the highest rate on record.

Asian stocks flat

East Asia’s major stock markets didn’t make any big moves Friday.

Digest Stock chart


China’s securities regulator (link in Chinese) said it strongly condemns the financial fraud at Luckin Coffee and will investigate the issue.

• A deputy governor of the People’s Bank of China (link in Chinese) said the central bank will be cautious about cutting the benchmark deposit rate due to risks that it could elevate inflation and devaluate the yuan.

• Shares of Car Inc. plunged by as much as 68% on Friday morning before trading of its shares in Hong Kong was suspended (link in Chinese). The trading halt came after Luckin Coffee, which shares same founder as Car Inc., reported the investigation on a financial misconduct.

• Chinese state-owned conglomerate Citic Group and U.K. life insurance giant Prudential finished registering (link in Chinese) a joint-venture asset management firm in Beijing.

•  As China seeks to boost research into the coronavirus and improve its public health system, the employee committee of property giant China Vanke Co. Ltd. has decided to donate its entire holding in the company worth 5.3 billion yuan to fund a new research institute at Tsinghua University.


Sometimes it isn’t a good thing that everyone is running to your business and your product is all over the internet. Luckin Coffee became the talk of the town in China on Friday as costumers braved the coronavirus outbreak to redeem their Luckin vouchers while they still could.

Photos showing customers in long queues next to the coffee chain’s shops flooded social media platforms like WeChat and Weibo. In some cities, people had trouble logging onto Luckin’s app due to the surge in traffic.

The pictures of long queues at Luckin locations are reminiscent of scenes two years ago, when frustrated users of the bike-sharing company Ofo rushed to its headquarters to get their deposits refunded.


Luckin Coffee, China's Starbucks challenger, disclosed that its chief operating officer inflated sales in 2019 by about 2.2 billion yuan. Photo: IC Photo


April 4: Qingming Festival

April 10: China CPI and PPI for March


Contact reporter Tang Ziyi ( and editors Yang Ge ( and Michael Bellart (

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China Business Digest: Debate Intensifies Over 2020 GDP Target; Investors Shrug Off U.S. Stock Sell-Off

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