China Business Digest: IMF Warns of Deeper Global Recession; Air Routes Reopened Linking China and Europe, New Zealand
The outlook for the world economy looks even grimmer as virus threats grow, the International Monetary Fund says. More foreign airlines win approval to resume service to China after restrictions are eased. Food and beverage giant PepsiCo uncovers four new Covid-19 cases linked to its plant in Beijing outskirts. Meanwhile, the billionaire founder of Gome is released from jail on parole.
— By Isabelle Li (firstname.lastname@example.org) and Han Wei (email@example.com)
** TOP STORIES OF THE DAY
IMF downgrades global outlook citing virus threats
The International Monetary Fund lowered its outlook for the world economy citing rising treats of the Covid-19 pandemic. The fund said Wednesday it now expects global gross domestic product to shrink 4.9% this year, up from the 3% contraction predicted in April. For 2021, the fund sees growth of 5.4%, down from 5.8%.
The U.S. economy is expected to contract 8% in 2020, compared with the previous 5.9% projection, IMF said. China’s economy may expand 1% thanks to policy stimulus.
More flights to resume linking China and the world
Four European airlines and Air New Zealand won approval to resume China service over the past week after the Chinese aviation regulator relaxed restrictions on international flights. They followed American carriers Delta Air Lines Inc. and United Airlines Inc. in gaining a green light to reopen air routes to China.
Billionaire Gome founder released from jail
Huang Guangyu, the founder and former chairman of Gome Retail Holdings, was released from jail on parole, a Beijing court said Wednesday. Huang, 51, was sentenced to 14 years in 2010 for insider trading and corporate bribery. His jail term was reduced by 22 months for good behavior.
Local banks in Jiangsu to take stake in debt-ridden Xuzhou Rural Commercial Bank
Two listed local banks in eastern China’s Jiangsu province will spend over 1 billion yuan ($141 million) combined to take stake in and reorganize (link in Chinese) the structure of debt-ridden Xuzhou Rural Commercial Bank.
Shanghai-listed Wuxi Bank announced Tuesday evening it will invest 782 million yuan to take about 10.95% stake of the restructured bank in Xuzhou, while Shenzhen-listed Jiangyin Bank also announced on the same day its plan to invest 338 million yuan for another 4.73% of the total shares.
Reclaimed island near Sanya’s new airport to be taken down for environmental violations
Regulators in southern China’s Hainan province have ruled that a land reclamation project named Lotus Island, part of newly built commercial facilities near a new airport in provincial business hub Sanya, should be taken down (link in Chinese) for failing to receive approval from the province’s environmental watchdog.
Its developers, two companies affiliated with the Hainan Airlines group, were also fined 80 million yuan for starting construction without approval.
Meng Wanzhou extradition case to resume hearing in mid-August
A court in Canada confirmed Tuesday local time that the hearing of Huawei CFO Meng Wanzhou’s extradition case will resume on August 17 (link in Chinese). One judge said she would like to close the case by May 2021, according to a report by state-run newspaper China Daily.
China punishes 10 livestreaming apps for inappropriate content
China penalized 10 of the country’s most popular livestreaming apps, including ByteDance’s Xigua and three apps run by Tencent-backed companies — Bilibili Inc., Huya Inc. and DouYu International Holdings Ltd. — in a renewed crackdown on the rapidly growing sector. The Cyberspace Administration of China punished the group for carrying content deemed inappropriate, with penalties ranging from halting new user sign-ups to suspending content updates for “main channels.”
Didi aims for 1 million robotaxis by 2030
Ride-hailing giant Didi Chuxing aims to operate more than 1 million self-driving cars on its platform by 2030, the chief operating officer of its autonomous driving unit said Tuesday at an online conference, Reuters reported.
China Development Bank’s new bond coupon rate higher than expected
The coupon rate for a five-year bond issued Tuesday by policy lender China Development Bank was higher than market expectations (link in Chinese) as the previous issue of special treasury bonds by other government entities squeezed out demand for the policy lender’s issuance.
** OTHER STORIES MAKING THE HEADLINES
Economy & Finance
• The Hong Kong virtual bank of Chinese financial group Ping’an, operating as Ping’an Yizhangtong, announced its official opening and beginning of trial operations on Wednesday (link in Chinese).
• China Evergrande Group released preliminary results (link in Chinese) Wednesday, taking a rare step after Moody’s changed its credit outlook from stable to negative amid growing concerns about the company’s mounting debt load, Bloomberg reported.
Business & Tech
• Huawei Technologies opened its largest flagship store in Shanghai on Wednesday in a move to increase its domestic market share at the expense of smartphone rivals such as Apple.
• JD.com founder Richard Liu took back his position as chairman of JD’s fintech unit JD Digits after stepping down in February, while his wife Zhang Zetian stepped down from her board member position, business registration updates showed (link in Chinese) earlier this week.
** ON THE CORONAVIRUS
PepsiCo’s Beijing factory reports four new confirmed cases Tuesday
Food and beverage giant PepsiCo found (link in Chinese) four new Covid-19 cases tied to its manufacturing plant in the Daxing district on Beijing’s outskirts. The company reported eight cases last week, putting its confirmed total at 12 so far, health authorities in Beijing reported at a press briefing Tuesday.
Other virus news
• The Chinese mainland reported (link in Chinese) 12 new coronavirus cases with symptoms on Tuesday, seven of which were local cases in Beijing and two in neighboring Hebei province. The mainland added three new asymptomatic cases on the same day.
• As of Wednesday 6 P.M. Beijing time, the number of coronavirus infections globally had reached over 9.27 million, with the death toll at more than 477,000, according to data compiled by Johns Hopkins University.
** AND FINALLY
Dragon Boat Festival, a public holiday in China, is celebrated by eating “zongzi.” Made of sticky rice stuffed with a sweet or savory filling and wrapped in leaves, they are ubiquitous across China in June. In September 2019, China’s proposal to establish a regional standard for zongzi was approved at the 21st session of the FAO/WHO Coordinating Committee for Asia. As people stock up on zongzi for the upcoming festival on Thursday, they are again debating whether or not their beloved snack needs a regional standard.
** LOOKING AHEAD
June 25-26: China’s financial markets closed for the Dragon Boat Festival
Contact reporter Isabelle Li (firstname.lastname@example.org) and editors Yang Ge (email@example.com) and Gavin Cross (firstname.lastname@example.org)
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