China Business Digest: Consumer Inflation Slows to 14-Month Low, U.K. Chip Designer Says China CEO Was Fired
China’s May consumer inflation data is in, and easing food prices kept the rate at its lowest level in 14 months. Meanwhile, SoftBank Group Corp.’s Arm Ltd. and its Chinese chip venture are in a public spat over whether the venture’s CEO has been fired. And small and midsize banks are being told not to worry about dipping into loss reserves and to lend more instead.
— By Mo Yelin (email@example.com)
** TOP STORIES OF THE DAY
Local government bond issuance drives up May total social financing
Amid China’s economic recovery and resumption of business, new credit continued to grow at a high rate in May. Local government bond issuance exceeded 1 trillion yuan ($141.6 billion), helping to drive growth of total social financing to 12.5%, the highest in two years.
Consumer inflation slows to 14-month low with easing pork prices
China’s consumer inflation slowed to its lowest level in 14 months in May as food prices rose at a slower rate, led by an easing in pork prices as the country’s African swine fever crisis of more than a year showed further signs of tapering off, official data showed Wednesday.
Smaller banks told to shrink loan-loss provisions and lend more
China’s top banking regulator slashed the amount of money small and midsize banks have to keep on hand to cover losses from bad loans, aiming to bolster lending to virus-stricken businesses, Caixin has learned. The China Banking and Insurance Regulatory Commission (CBIRC) has issued a notice making the change, people with knowledge of the matter said.
U.K. chip designer Arm Ltd. says China CEO was fired
SoftBank Group Corp.’s Arm Ltd. and its Chinese chip venture are involved in a public spat over whether the venture’s CEO has been fired. The British firm said Tuesday the board of Arm China voted to remove CEO Allen Wu and replace him with a pair of co-CEOs. Hours later, Arm China posted a statement on social media asserting Wu was still in charge. The U.K. firm then fired back to say it stood by its original statement.
Luckin founder completes break with rental car unit
As Lu Zhengyao’s business empire continues to unravel, the founder of scandal-plagued chain Luckin Coffee Inc. has resigned from his roles at Car Inc., the car rental firm that was once one of his main business interests. News of Lu’s departure sparked rally of Car Inc.’s shares as investors welcomed the break between the company and its troubled founder.
Chinese limousine service provider UCAR Inc. said Wednesday that Chairman Lu’s holding of 270 million shares of the company, a 10.05% stake, was frozen by Beijing No. 1 Intermediate Court. UCAR is Car Inc.’s largest shareholder but recently agreed to sell all of its holdings.
** OTHER STORIES MAKING THE HEADLINES
• Global contract chipmaking giant Taiwan Semiconductor Manufacturing Co. (TMSC) said Tuesday (link in Chinese) that other clients will step in and fill the order gap if U.S. sanctions prevent it from selling to Huawei. Currently, Huawei is TMSC’s second largest client, contributing about 20% of its revenues.
• Chinese Premier Li Keqiang will meet with European Union leaders online during the week of June 22, Caixin has learned, clearing the way for a summit between Chinese President Xi Jinping and leaders of the 27-country bloc previously scheduled for September in Leipzig, Germany.
• Nasdaq-traded e-commerce giant JD.com on Monday warned of risks related to U.S. legislation that may lead to the delisting of Chinese companies from American bourses as Luckin Coffee’s acknowledgement of inflated revenue dampens investors’ trust.
• Patrick Ho Chi-ping, a former Hong Kong minister who was convicted in the U.S. of bribing African officials on behalf of notorious conglomerate CEFC China Energy Co. Ltd., was released Monday after serving his jail term in New York.
• South Korea’s LG Chem Ltd. has agreed to sell 70% of its liquid crystal display polarizer business for at least $770 million to Ningbo Shanshan Co. Ltd., whose businesses include selling lithium-ion battery materials, the Shanghai-listed Chinese company said on Tuesday (link in Chinese).
• Indonesia is in talks with the U.S. government over the possible relocation of American companies operating in China to the archipelago, the Nikkei Asian Review reported.
• The U.S. State Department has notified Congress that it plans to re-open its consulate in the Chinese city of Wuhan “on and around June 22,” after it shut the consulate in late January and evacuated personnel from the virus-hit city, the Associated Press reported on Tuesday.
• Tesla Inc. shares eclipsed $1,000 for the first time Wednesday as rising demand for the company’s Model 3 in China led Wedbush analysts to tout a “massive”’ market opportunity and the company’s ongoing battery efforts, Bloomberg reported. Analyst Daniel Ives called the demand out of China “a ray of shining light for Tesla in a dark global macro” setting, with the company appearing to be on track to reach 100,000 first-year deliveries from its China plant.
** ON THE CORONAVIRUS
• International flights to the Chinese capital could be diverted to Wuhan under new rules from China's aviation regulator that also pave the way for Shanghai to take more direct overseas flights.
• As of Wednesday afternoon Beijing time, the number of coronavirus infections globally surpassed 7.25 million, with the death toll passing 411,000, according to data compiled by Johns Hopkins University.
• On Tuesday, the Chinese mainland reported three new symptomatic coronavirus cases (link in Chinese), all imported, according to official data. No new deaths were reported. The mainland added five new asymptomatic cases on the same day.
No new cases were reported in Hong Kong or Macao.
Caixin’s coverage of the new coronavirus
Contact reporter Mo Yelin (firstname.lastname@example.org) and editors Yang Ge (email@example.com) and Joshua Dummer (firstname.lastname@example.org)
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