China Business Digest: President Xi Urges Deeper Reforms in Response to Turbulence; Overseas Acquisitions by Chinese Companies Plunge
Top leaders vowed further reforms as the country faces mounting risks and challenges. Chinese companies’ spending abroad slumped to 10-year low. Meanwhile, the number of global coronavirus cases topped 17 million Thursday afternoon, and the Chinese mainland reported daily Covid-19 numbers the likes of which have not been seen since mid-April. Taiwan’s controversial former leader Lee Teng-hui died at 97.
— By Lu Yutong (firstname.lastname@example.org) and Han Wei (email@example.com)
** TOP STORIES OF THE DAY
Top leadership calls for further reforms to address long-term challenges
Chinese President Xi Jinping stressed the need for thorough reforms for China to ride out mounting risks and challenges during a meeting Thursday of the 25-member Politburo, the top decision-making body. Top leaders discussed the country’s 14th five-year plan covering 2021–2025 and longer-term development strategies during the midyear gathering, according to the official Xinhua News Agency. Officials said conditions facing China remain “complicated and grave” and said the country needs to continue restructuring its growth model to cope with challenges.
Chinese companies’ overseas acquisitions drop to 10-year low
Chinese companies’ spending on overseas mergers and acquisitions plunged 40% in the first half to a 10-year low of $14.6 billion affected by the pandemic and rising political uncertainties abroad, according to Ernst & Young. A total of 248 deals were announced during the first six months, down 17% year-on-year.
Former Taiwan leader Lee Teng-hui dies at 97
Taiwan’s former leader Lee Teng-hui died Thursday in Taipei at age 97. His death at the Taipei Veterans General Hospital was attributed to septic shock and multiple organ failure after he spent five months in the hospital.
World Bank predicts China to expand 1.6% this year
The World Bank revised down its 2020 growth prediction for China from 5.9% before the pandemic to 1.6%, which would mark the slowest expansion since 1976, according to its latest China economic update. That figure is slightly higher than the IMF’s forecast of 1%.
It also forecast that 8 to 20 million fewer people are projected to escape poverty in 2020 compared to the pre-pandemic scenario, if no additional policies are implemented.
Central planners push local governments to borrow big
China’s central government is pushing local authorities to issue a remaining 1.51 trillion yuan ($220 billion) in new special-purpose bonds that aim to spur the economy by end of October. The funds must be used for public welfare projects that generate income — spending it on existing debt, wages and pensions, land acquisitions and real estate investment is forbidden.
China’s Sinopharm to test potential Covid-19 vaccine in Brazil
Chinese pharmaceutical giant Sinopharm has agreed a deal with Brazil’s Paraná state to hold human trials of the company’s coronavirus vaccine candidate. It will be the virus-ravaged nation’s fourth major vaccine trial, with trials also underway for candidates developed by AstraZeneca, Sinovac Biotech and a Pfizer partnership with BioNTech, Reuters reported. Sinopharm’s deal is still subject to Brazilian regulatory approval.
Huawei takes global smartphone crown from Samsung
Huawei Technologies Co. Ltd. overtook Samsung Electronics Co. in smartphone shipments in the second quarter, and became the world’s top vendor for the first time, according to a report from research firm Canalys on Thursday.
In the three months through June, the Chinese company shipped 55.8 million devices, down 5% year-on-year. Samsung came in second place with 53.7 million smartphones, falling a steep 30%.
Electric SUV-maker Li Auto raises $1.1 billion in IPO
Joining its peers in tapping the U.S. capital market, Chinese new-energy car firm Li Auto Inc. sold 95 million American depositary shares for $11.50 each on its Nasdaq debut Wednesday, raking in $1.1 billion.
The electric-SUV maker plans to launch a premium vehicle in 2022, according to its filings. It sold about 10,400 of its flagship model, Li ONE, as of the end of June.
Chipmaker Qualcomm announces Huawei licensing deal
Qualcomm Inc. announced a new licensing deal with China’s Huawei Technologies Co., sending its shares up more than 12% in extended trading. The chipmaker gave a strong sales forecast for the current quarter, signaling that fifth generation mobile phone services are taking off.
** OTHER STORIES MAKING HEADLINES
• Chinese smartphone-maker Xiaomi Corp. named Zeng Xuezhong, a former executive at ZTE Corp., head of its mobile phone business in another management reshuffle the company said aimed to bring in a younger generation of executives.
• Leading Chinese epidemiologist Zhong Nanshan has urged Hong Kong to launch mass testing for coronavirus infection on all its 8 million residents amid the latest surge in Covid-19 cases in the special administrative region and to consider making its coronavirus swab tests free.
• Bankrupt Sichuan Coal Industry Group Ltd. Liability Co. announced on Wednesday that its former chairman, Jing Hongnian, is under investigation for corruption, marking the second official from the insolvent company to be placed under investigation.
• An investigation conducted by marketing services provider Tokyo Shoko Research showed (link in Chinese) on Wednesday that 1,000 out of 3,789 listed companies in Japan have lowered their financial performance forecasts. Among them, 70% of the companies specialize in manufacturing, retail and services.
• China’s Ministry of Commerce said Thursday that nationwide retail sales via e-commerce platforms reached 5.15 trillion yuan in the first half of the year, up by 7.3% over the same period in 2019.
• Chinese home-appliance group Haier Smart Home Co. Ltd. put on sale 54% of its stake in its industrial internet platform COSMOPlat for 4 billion yuan, eyeing to spin off the unit that is valued at nearly 7.5 billion yuan after rounds of fundraising earlier this year.
** ON THE CORONAVIRUS
• The Chinese mainland added (link in Chinese) 105 new symptomatic coronavirus cases for Wednesday, up from Tuesday’s 15-week high of 101. Of those, 102 were local cases with 96 in Xinjiang Uygur autonomous region and five in northern Liaoning province. Beijing Municipality also reported one local case.
• On Wednesday, Hong Kong reported 118 new Covid-19 cases, taking the total confirmed cases in the region to 3,002. Of those, 113 were locally transmitted and five were imported.
• The number of cases in the Philippines to date reached 85,486 on Wednesday, surpassing China’s total of 84,060.
• As of Thursday afternoon Beijing time, the number of Covid-19 cases worldwide topped 17 million, with a death toll of over 667,000, according to data from Johns Hopkins University.
Caixin’s coverage of the new coronavirus
** LOOKING AHEAD
Aug. 3: Release of Caixin China manufacturing PMI
Aug. 5: Release of Caixin China services PMI
Aug. 6: SMIC reports second-quarter financial results
Aug. 7: Release of China’s import and export data for July
Contact reporter Lu Yutong (firstname.lastname@example.org) and editor Flynn Murphy (email@example.com)
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