China Business Digest: China and U.S. Hold ‘Constructive’ Talks in Hawaii; CSRC Chief on U.S. Regulators’ Access to Audits of Chinese Firms
China says its top diplomat and U.S. Secretary of State held “constructive” talks during meeting in Hawaii and pledged to implement consensus reached by leaders. The annual Lujiazui Forum indicates the possibility of China launching a large-scale stimulus package is relatively low. China’s top securities regulator says the country never barred companies from providing audit working papers to overseas regulators. And an expert says the Beijing coronavirus outbreak is under control as the capital reports 21 new cases.
— By Lu Yutong (firstname.lastname@example.org) and Han Wei (email@example.com)
** ON THE CORONAVIRUS
Beijing outbreak under control, expert says
The new wave of Covid-19 infections in China’s capital city has been controlled, a senior disease expert said Thursday afternoon at a press conference, citing a falling number of daily new cases. Beijing reported 21 additional Covid-19 cases earlier Thursday, 10 fewer than the day before, as the Chinese capital worked to extinguish an emerging coronavirus hotspot.
China adds 28 coronavirus cases with 21 in Beijing
The Chinese mainland today reported 28 new Covid-19 cases for Wednesday, after 44 for Tuesday. Twenty-four were domestic cases and 21 emerged in Beijing, with the rest in neighboring Hebei and Tianjin.
Record-keepers also added three suspected cases and three asymptomatic cases, all in Beijing.
In the Chinese capital, 158 people have been hospitalized after an outbreak in the city’s largest wholesale food market, with nearby districts locked down as authorities scramble to contain the spread.
Beijing’s Covid-19 testing backlog grows
Demand for coronavirus swab tests has soared, led by hospitality and catering workers who may have contacted those of Beijing’s biggest wholesale food market, the suspected source of the city’s cluster outbreak.
That demand now threatens to overwhelm hospitals in the Chinese capital, Caixin has learned (link in Chinese). Authorities say they are sampling some 400,000 people each day in the city, which only has capacity to test about 90,000 per day.
Chinese airlines, railways offer free refunds
China State Railway Group Co. Ltd. and seven airlines, including China Southern Airlines Co. Ltd. and Hainan Airlines Co. Ltd., are offering free refunds to passengers who had booked tickets to Beijing. Train tickets purchased before June 16 can be refunded for free, as can tickets for flights to Beijing planned before June 30.
Nucleic acid test results are currently not needed for passengers leaving Beijing by air or train.
Other virus news
As of Thursday noon Beijing time, the number of global coronavirus infections has surpassed 8.3 million, with fatalities approaching 450,000 worldwide, according to data from Johns Hopkins University.
Caixin’s coverage of the new coronavirus
** TOP STORIES OF THE DAY
China never barred companies from handing over audit working papers to U.S., CSRC chief says
China has never banned or stopped Chinese companies from providing audit working papers to overseas regulators, Yi Huiman, the country’s top securities regulatory official, told Caixin Tuesday in an interview. Yi’s comments come in response to a longstanding dispute between U.S. and Chinese regulators over access to audits of U.S.-listed Chinese companies.
JPMorgan Wins Approval for first fully foreign-owned futures business in China
Chinese regulators Thursday approved JPMorgan’s application to open the first fully foreign-owned futures business in the country. China scrapped caps on the foreign ownership of futures companies earlier this year.
JD.com shares jump 5.7% in Hong Kong debut
Chinese e-commerce giant JD.com Inc. saw its shares rise 5.7% to HK$239 ($30.84) from HK$226 at open on its first trading day in Hong Kong. JD’s secondary listing comes after it went public on the Nasdaq in 2014.
The rise narrowed to 3.54% when market closed.
Key takeaways from Lujiazui Forum
The Lujiazui Forum, an annual gathering of senior financial regulators, experts, and market participants, opened Thursday in Shanghai. Below are takeaways from some of the speeches by major attendees.
• China still faces relatively huge pressure from the slowing economy, but the situation is gradually changing for the better. The country is confident that it can handle any internal or external risks, and ensure its financial system operates steadily.
— Liu He, Chinese vice premier
• China will not launch a flood-like stimulus, let alone monetization of its fiscal deficit or employ negative interest rates. Large economies around the world need to pay attention to spillover effects of their policies. And all countries and regions should reserve certain policy space for the future when issuing new stimulus and think about how to exit large-scale stimulus in the future.
— Guo Shuqing, the People’s Bank of China’s (PBOC) Communist Party chief
• China should try to prevent moral hazard when implementing financial policies in response to the coronavirus pandemic, and think in advance about the withdrawal of the policy tools involved.
— Yi Gang, PBOC governor
• The China Securities Regulatory Commission (CSRC) will continue to strengthen cooperation with overseas financial regulators to jointly solve problems in global cooperation in audit supervision of listed companies.
— Yi Huiman, CSRC chairman
• Overseas institutional investors hold about 6.4 trillion yuan of yuan-denominated assets (link in Chinese), with have had an average annual growth rate of more than 20% in recent years.
— Pan Gongsheng, PBOC deputy governor
• The Monetary Authority of Singapore (MAS) and the PBOC are exploring possibilities to allow Chinese tourists to use the PBOC’s digital currency abroad.
— Ravi Menon, managing director of the MAS
China Signals Further Reserve Ratio Cut to Spur Bank Lending
China will reduce the reserve requirement ratio, which stands at 11% for large banks, and use its relending policy to keep liquidity ample, state television reported Wednesday, citing a State Council meeting chaired by Premier Li Keqiang.
“An RRR cut is likely to come shortly, perhaps even this weekend,” said Lu Ting, chief China economist at Nomura Holdings Inc. in Hong Kong. Lu also warned the move could backfire later if nonperforming loans rise too fast and the government has to rescue banks on a large scale.
China says top diplomat held constructive talks with Pompeo
China’s state-run Xinhua News Agency said Thursday that Yang Jiechi, the country’s top diplomat, and U.S. Secretary of State Mike Pompeo held constructive talks in their Hawaii meeting. Xinhua said the two sides will continue to communicate and take action to implement the consensus reached by Chinese President Xi Jinping and U.S. President Donald Trump.
China Pacific Insurance floats global depository receipts in London
China Pacific Insurance Group Co. Ltd. became the second Chinese company to offer its shares in London through the London-Shanghai Stock Connect program.
The market reaction was muted, with shares up just 1.14% on their first day of trade.
China quantifies financial corruption crackdown at $212 million for 2019
The inspection team of the Central Commission for Discipline Inspection (CCDI) at the China Banking and Insurance Regulatory Commission (CBIRC) reviewed more than 1,500 complaints last year, of which 178 were formally investigated, with 22 financial officials detained, the organization said.
The investigations took in more than 1.5 billion yuan ($212 million) worth of financial fraud, the agency said in a video.
** OTHER STORIES MAKING THE HEADLINES
Finance & Economy
• U.S. Trade Representative Robert Lighthizer told a congressional hearing Wednesday that China is on track to fulfill its “phase one” trade deal by upholding its purchase commitments, with $10 billion or more purchases of U.S. farm goods having been recorded so far.
• The financial regulator for Beijing issued a guideline on Tuesday that provides detailed procedures for foreign asset managers to set up local units and register their products in Beijing while clarifying taxation issues. Equity investment funds will not be subject to business income tax for profits on stock trading. Interest income from investments in treasury bonds, local government bonds and interbank transactions will also be exempted from value-added tax.
• A court in Shanghai found 58-year-old Wang Zhenhua, the billionaire founder of Chinese real estate developer Seazen Group Ltd., guilty of sex abuse of a 9-year-old girl Wednesday and sentenced him to five years in prison.
Business & Tech
• Zynn, a video sharing app funded by Kuaishou, was removed from Apple’s App Store earlier this week, just days after its disappearance from the Google Play Store, amid accusations that it had been stealing content from similar apps, according to U.S. news outlet TechCrunch. Beijing-based Kuaishou is a major rival to TikTok owner ByteDance in China.
• A report by research firm Canalys suggests that Alibaba Group Holding Ltd. took the lead in securing China’s cloud infrastructure services market with a 44.5% share in it in the first quarter of 2020. Other big service providers in the market were Huawei Cloud, Tencent Cloud and Baidu AI.
** AND FINALLY
Hong Kong Disneyland reopened on Thursday after being shut down in late January due to the coronavirus outbreak. It is the world’s second Disney park to reopen, after Shanghai Disneyland began receiving visitors last month.
Guests are required to book reservations online in advance and submit their temperature checks when entering the park. Face masks are compulsory, too.
Contact reporter Lu Yutong (firstname.lastname@example.org) and editor Flynn Murphy (email@example.com)
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