China Business Digest: Trump Says U.S. Should Get a Cut of TikTok Deal; Apple Faces $1.4 Billion Lawsuit in China

U.S. President Donald Trump said the U.S. government should get a commission if an American company ends up buying short video app TikTok’s business in the country. A Chinese company challenges Apple’s patent rights in voice assistant Siri. Meanwhile, global mining giant Rio Tinto said it is working with its Chinese partner to promote a project to develop the world’s largest untapped iron ore reserve. China outlines more policies to encourage domestic chip-making.

— By Guo Yingzhe (yingzheguo@caixin.com) and Han Wei (weihan@caixin.com)

** TOP STORIES OF THE DAY

Apple faces $1.4 billion Siri patent lawsuit in China

A Chinese artificial-intelligence company filed a lawsuit Monday against Apple Inc. over alleged patent infringement related to the U.S. giant’s virtual assistant Siri. Shanghai Zhizhen Network Technology Co. demanded 10 billion yuan ($1.43 billion) in compensation for damages and a ban on Apple’s products involving the patent.

The dispute can be tracked back to 2012 when Shanghai Zhizhen first lodged its complaint. Apple then filed a request to have the patent invalidated. China's Supreme Court ruled last month in Shanghai Zhizhen’s favor.

New policies to support integrated circuits and software industries

China’s State Council, the cabinet, issued new rules Tuesday to bolster the country’s integrated circuit and software industries including up to 10 years of tax exemptions and measures to encourage public listing. It is the latest effort to expand and upgrade domestic chip-making capacity.

Trump says U.S. government should also get paid if American firm buys TikTok

U.S. President Donald Trump said on Monday that the U.S. Treasury should receive “a very substantial portion” of the purchase price if a U.S. company buys TikTok’s U.S. operations. He also said he does not care whether it’s Microsoft or another U.S. company that ends up buying the popular short video app, but said the deal need to be done by Sept. 15.

India blocks Baidu Search, Weibo

India has blocked the influential Chinese apps Baidu Search and Weibo in the country, The Times of India reported, adding that the government has asked app stores to take down the apps that are the Chinese answers to Google and Twitter.

ByteDance founder says U.S. ultimate goal is to ban TikTok

Zhang Yiming, founder and CEO of ByteDance Ltd., the company that owns TikTok, said on Tuesday (link in Chinese) that the U.S.’ ultimate goal is to ban TikTok. In an email to staff, he said that anti-China sentiment is one factor behind TikTok’s troubles overseas.

Rio Tinto and Chalco progressing on African iron ore project

Mining giant Rio Tinto Group (link in Chinese) and its partner Aluminum Corp. of China (Chalco) are progressing on the long-delayed development of an iron ore mine in Guinea, Rio Tinto told Caixin on Monday.

Located in the mountains of southeastern Guinea, the Simandou iron ore mine is considered to have the world’s largest and highest-quality untapped iron ore reserves.

Central bank urges markedly higher money supply than last year

The central bank wants the M2 money supply, which includes savings deposits, and total social financing to grow at a markedly higher pace (link in Chinese) than last year, according to a Monday meeting of the People’s Bank of China. At the meeting, officials laid out their goals for the second half-year. It also called for a substantial growth in loans to small businesses and medium- and long-term loans to manufacturers.

Virtual banks pick a tough time to launch in Hong Kong

More than a year after Hong Kong’s banking regulator issued licenses to eight virtual banks, only three have opened for business. The Covid-19 pandemic is one factor, but the new ventures face other headwinds in a particularly competitive and highly regulated market, such as addressing technology safety risks and regulators’ concerns about the virtual banks’ impact on traditional banks. (Read the in-depth story.)

Zoom halts direct sales in China, will rely on local partners

Zoom Video Communications Inc., a popular conferencing app, will halt all sales of products in China except through locally based partners. The company informed Chinese customers that sales will be conducted only through authorized partners starting Aug. 23. (Bloomberg)

** OTHER STORIES MAKING THE HEADLINES

• China’s securities watchdog held a hearing Monday on the fraud case of scandal-plagued Kangde Xin Composite Material Group Co. Ltd. with inspectors revealing that the company had inflated export sales by as much as 4.6 billion yuan ($659 million) with help from illegal underground lenders.

• A new draft of a catalogue of listed industries, specifying sectors eligible for preferential policies to encourage foreign investor participation, has been released for public comment by China’s top economic planning agencies. The 2020 edition is longer than last year’s list, adding 125 areas and amending 76 previously listed areas to expand their coverage. (Read the full story.)

• HSBC Holdings PLC missed estimates after reporting that its first-half profit fell by about 50% to $5.6 billion because of higher credit provisions. The bank is speeding up a shakeup of its global operations after warning that fallout from the coronavirus pandemic may trigger as much as $13 billion in loan losses this year. (Bloomberg)

• Former president of Bank of Huludao Co. Ltd., Wang Xueling, is under investigation (link in Chinese) on suspicion of serious violations of law and Communist Party discipline. The top banking regulator’s branch in Northeast China’s Liaoning province has instructed the regional lender to improve its corporate governance.

• Chinese cinema conglomerate Wanda Film Holding Co. Ltd. (link in Chinese) reported a 73.9% year-on-year drop in revenue and a net loss of 1.57 billion yuan for the first half of 2020.

• China’s top economic planning agency has approved a 474.1 billion yuan railway project (link in Chinese) that aims to make it faster to travel among cities in the Guangdong-Hong Kong-Macao Greater Bay Area.

** ON THE CORONAVIRUS

• The Chinese mainland reported (link in Chinese) 36 new Covid-19 infections on Monday. Of the new cases, 30 were locally transmitted, with 28 from the Xinjiang Uygur autonomous region and two from Liaoning.

• World Health Organization official Dr. Michael Ryan said Monday that the organization cannot be sure whether the city of Wuhan is the place where the coronavirus crossed over from animals into humans. Ryan said broader retrospective epidemiological studies were needed.

• Hong Kong reported 80 new coronavirus infections on Monday, taking the number of total confirmed cases to date to 3,590. The city’s government said the existing social distancing measures will be extended for seven days starting Wednesday.

• As of Tuesday afternoon Beijing time, the number of global coronavirus infections had surpassed 18.2 million, with a death toll over 694,000, according to data from Johns Hopkins University.

** AND FINALLY

The 30th Qingdao International Beer Festival kicked off Friday in the eastern coastal city. Despite the coronavirus prevention measures, the annual event drew thousands of beer lovers eager to sample the more than 1,500 types of brew available on tap.

A man holds up a beer-filled chalice of sorts as he takes a selfie Friday in Qingdao.

 Read more 
Caixin’s coverage of the new coronavirus

** LOOKING AHEAD

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 Guo Yingzhe (yutonglu@caixin.com) and editors Marcus Ryder (marcusryder@caixin.com) and Michael Bellart (michaelbellart@caixin.com)

 Read more 
China Business Digest: Trump Allows Time for Microsoft or Others to Buy TikTok in U.S.; Two Luckin Affiliates Fined by CSRC
Support quality journalism in China. Subscribe to Caixin Global starting at $0.99.