China Business Digest: China’s Credit Growth Slowed in July; Russia Approves First Coronavirus Vaccine

China’s credit growth slowed in July as policymakers dialed back crisis-mode stimulus. Russia approved the first Covid-19 vaccine amid skepticism. Four city lenders in Shanxi are preparing for a major restructuring, while net profits at China’s commercial banks fell in the first half of the year during the pandemic. Meanwhile, Tencent is using its large stakes in livestreaming gaming platforms DouYu and Huya to try to force the pair to merge.

— By Timmy Shen (hongmingshen@caixin.com) and Han Wei (weihan@caixin.com)

** TOP STORIES OF THE DAY

Credit growth slowed in July as stimulus policies ease

Chinese banks issued 992.7 billion yuan ($142.5 billion) of new loans in the month, 63 billion yuan less than the same time last year and lower than estimates of 1.2 trillion yuan. It was the first year-on-year drop in monthly loan growth since the Covid-19 outbreak, central bank data showed. Total social financing added 1.69 trillion yuan in July, compared with 3.4 trillion yuan in June. Analysts said the slowing credit growth reflected a changing monetary policy stance, shifting away from crisis-mode stimulus.

Russia approves world’s first Covid-19 vaccine

Russia became the first country to approve a coronavirus vaccine for use despite scientists’ concerns the shot has yet to complete all necessary clinical testing. The locally developed vaccine passed all the required checks and will soon start mass production, President Vladimir Putin said Tuesday. He said one of his daughters has already received the inoculation.

Restructuring looms in Shanxi’s banking sector

Four midsized city commercial lenders in Shanxi disclosed plans over the weekend to hold extraordinary shareholder meetings in late August to discuss restructuring and merger issues. The simultaneous announcements sparked expectations that the four regional banks would be combined in a major overhaul of Shanxi’s scandal-plagued banking sector.

Commercial bank profits fell 9.4% in first-half

China’s commercial banks reported combined net profits of 1 trillion yuan ($143 billion) in the first half of this year, down 9.4% year-on-year, according to data from the China Banking and Insurance Regulatory Commission, reflecting the damage of the Covid-19 pandemic.

Tencent looks to merge DouYu and Huya

Game livestreaming platform DouYu International Holdings Ltd. said on Monday that its major shareholder Tencent Holdings Ltd. has proposed merging DouYu with rival Huya Inc. in a stock-for-stock deal. Like DouYu, Huya also counts Tencent as a major shareholder.

China’s car recovery gathers pace, with July sales accelerating

Retail sales of sedans, SUVs, minivans and multipurpose vehicles increased 7.9% in July from a year earlier to 1.63 million units, reversing a 6.5% drop the month before, according to a Tuesday report released by the China Passenger Car Association. Tesla Inc. and BYD Co. Ltd. led the way in electric-car sales last month. (Bloomberg)

U.S. official says Chinese companies failing to meet accounting standards will get delisted

Companies from China and elsewhere that do not comply with accounting standards will be delisted from U.S. stock exchanges as of the end of 2021, U.S. Treasury Secretary Steven Mnuchin said on Monday. The statement comes as China is urging frank dialogue on cross-border audit reviews after the Trump administration last week issued a report recommending that regulators delist U.S.-traded Chinese stocks that fail to meet auditing requirements before January 2022.

GSX Techedu under new short-selling pressure in New York

Short seller Citron Research continued to attack New York Stock Exchange-listed GSX Techedu Inc., calling the online after-school tutoring service provider “a fraud” and the only large cap stock in 20 years that reported expanding revenue of more than 350% in a year while being able to post profits during the growth.

Beijing state-owned enterprise plans stop-gap short-term borrowing

Beijing Haidian District State-owned Assets Investment Management Co. Ltd. plans to borrow 1.5 billion yuan by selling ultra-short-term bonds. The sale follows a lackluster bond issuance by its state-owned parent company last month. The proceeds are set to be used to repay two bonds due later this month and early next month.

** OTHER STORIES MAKING THE HEADLINES

Finance & Economy

• Two former China Merchants Bank Co. Ltd. employees were sentenced to prison for illegally raising 1.25 billion yuan for the Fanya Metal Exchange, a notorious trading platform that turned out to be a Ponzi scheme that deceived hundreds of thousands of investors across the country.

• Although it’s something of longshot, investors are rushing to subscribe to IPOs offered under the new registration-based system on Shenzhen’s ChiNext board in anticipation that prices will leap once the stocks begin trading.

• Ferheen Mahomed, general counsel of Hong Kong Exchanges and Clearing Ltd., will leave her post at the end of this year, Caixin has confirmed with the bourse.

Business & Tech

• Tencent Music Entertainment Group, a subsidiary of Chinese internet giant Tencent, will establish a new joint-venture music label with Universal Music Group Inc. as part of ongoing efforts to expand its catalogue of songs.

• China seized 7,831 fugitives from overseas over the last 6 1/2 years and recouped losses of nearly 19.7 billion yuan under a government campaign to pursue corrupt officials and dodgy business people who flee abroad, according to the country’s top government anti-graft agency.

** ON THE CORONAVIRUS

• On Monday, the Chinese mainland reported 44 new Covid-19 cases with symptoms (link in Chinese), including 31 imported cases and 13 that were locally transmitted, according to China’s top health body. All 13 of the local cases were reported in the Xinjiang Uygur autonomous region.

• As of Tuesday afternoon Beijing time, the number of coronavirus infections globally had crossed the 20 million milestone, with the death toll surpassing 736,000, according to data compiled by Johns Hopkins University.

** LOOKING AHEAD

Aug. 11: China Literature announces second-quarter financial results

Aug. 12: Tencent announces second-quarter financial results

Aug. 13: Lenovo, NetEase, Baidu and iQiyi announce second-quarter financial results

Aug. 14: Release of China’s investment, industrial output and retail sales data

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editors Yang Ge (geyang@caixin.com) and Michael Bellart (michaelbellart@caixin.com)

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