China Business Digest: U.S. Further Tightens Restrictions on Huawei’s Access to Chips; JD.com 2Q Earnings Beat Expectations

The U.S. government announced further restrictions on Huawei Technologies Co., adding 38 affiliates of the Chinese company in 21 countries to an economic blacklist. JD.com’s second-quarter profit and revenue beat Wall Street’s estimates, pushing the stock up more than 6%. China’s vaccine front-runner CanSino received patent approval from Beijing for its Covid-19 vaccine candidate. Shenzhen mayor says the city now has the world’s largest 5G network.

— By Lu Yutong (yutonglu@caixin.com)

** TOP STORIES OF THE DAY

China grants its first Covid-19 vaccine patent to CanSino

China’s intellectual property regulator has granted the country’s vaccine front-runner CanSino Biologics Inc. patent approval for its candidate Ad5-nCOV, Reuters reported, citing state media. CanSino’s share price in Hong Kong jumped 13.9% on Monday, while its Shanghai shares rose 4.33%.

U.S. announces new curbs on Huawei access to U.S. technology

The U.S. government announced further restrictions on Huawei Technologies Co. aimed at cutting the Chinese company’s access to commercially available computer chips, the latest move in an increasingly tense relationship between Beijing and Washington. The Commerce Department added 38 Huawei affiliates in 21 countries to an economic blacklist, raising the total to 152 affiliates since Huawei was first put on the list in May 2019.

JD.com’s stock surges after profit, revenue beat expectations

China e-commerce giant JD.com’s shares surged nearly 8% Monday in New York after it reported second-quarter earnings that beat estimates. The company posted net income from operations of $700 million, more than double from the $332 million a year ago. Revenue grew 30% to $28.5 billion.

Chinese cancer treatment developer JW Therapeutics files HK IPO

Chinese biotechnology company JW Therapeutics, a joint venture between American biopharmaceutical company Juno Therapeutics and Chinese biotech WuXi AppTec, is planning an initial public offering (IPO) in Hong Kong. It didn’t disclose the size of the offering, but earlier media reports suggest JW plans to raise $200 million to $300 million.

China DNA leader’s unit considers $1 billion Shanghai IPO

BGI Group, the world’s biggest DNA-sequencing company, is considering an initial public offering of its equipment unit on Shanghai’s STAR Market as early as this year, Bloomberg reported, citing people with knowledge of the matter. The Shenzhen-based enterpriser could seek to raise about $1 billion.

Tesla refuses to deliver car for “resale” on Pinduoduo

U.S. electric-vehicle maker Tesla Inc. said (link in Chinese) Saturday that it will not deliver Model 3 vehicles to Chinese e-commerce platform Pinduoduo, which has been offering the cars at cheaper prices via group buying deals, saying the resale of its cars violates terms of Tesla’s contract.

Shenzhen say it has world’s biggest 5G network

The southern Chinese city of Shenzhen currently boasts the world’s largest 5G network, with all areas already being covered by 5G, Mayor Chen Rugui announced on Monday in a press conference. With a total of 46,480 stations for a population of around 13 million, Shenzhen is now the world’s No. 1 city in terms of 5G stations per person.

Securities watchdog to tighten regulation of third-party platforms

The China Securities Regulatory Commission issued draft regulations Friday stipulating that securities firms must “guarantee technical security” by running their own information systems and ensuring third-party platform operators cannot get their hands on clients’ data, following a spate of private data leaks.

How China kept the dominos from falling after the Baoshang Bank crisis

The fall of Baoshang Bank, the first formal bankruptcy in China’s banking sector, triggered an anti-graft storm that brought down at least six financial regulatory officials in North China’s Inner Mongolia autonomous region, with a broader-scale investigation underway as China strives to try to prevent any potential domino effect.

** OTHER STORIES MAKING THE HEADLINES

• China’s central bank said Monday that it will keep the rate on 700 billion yuan ($100.7 billion) worth of one-year medium-term lending facility loans to financial institutions steady at 2.95%, Reuters reported.

• Microsoft Corp. is interested in buying the popular video app TikTok’s U.K. operations, expanding beyond the U.S., Canada, Australia and New Zealand units that it is already in discussions to buy. It’s unclear whether TikTok owner ByteDance Ltd. wants to sell the U.K. unit.

• Chinese drone giant SZ DJI Technology Co. Ltd. has been making sweeping cuts to its global sales and marketing teams as it faces coronavirus headwinds and mounting political pressure in key markets, Reuters reported.

• Xiaomi Corp. Chairman and CEO Lei Jun has expanded the number of senior executives on the company’s partners board with four new appointments. The four new partners aim to inject new energy into Xiaomi’s push in implementing its new 10-year strategy focusing on smartphones, artificial intelligence and the Internet of Things, Lei said.

• Geely Automobile Holdings Ltd. on Monday reported a 43% drop in half-year profit and trimmed its full-year sales goal, sending its shares down 6.35% on Monday, as the coronavirus outbreak continues to trouble the world’s biggest auto market, Reuters reported.

• Prosecutors in Northwest China are expected to drop their case against a woman who was imprisoned for more than 600 days for “picking quarrels and provoking trouble” after she reported environmental and other violations in her hometown.

** ON THE CORONAVIRUS

• The Chinese mainland reported (link in Chinese) 22 new Covid-19 cases with symptoms for Sunday, all imported, with eight of those in South China’s Guangdong province. The Xinjiang Uygur autonomous region, the site of China’s most recent domestic outbreak, recorded zero new coronavirus cases (link in Chinese) for Sunday for the first time since July 19.

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Caixin’s coverage of the new coronavirus

• As of Monday afternoon Beijing time, the number of Covid-19 infections worldwide had surpassed 21.7 million, with the death toll approaching 776,000, according to data from Johns Hopkins University.

** AND FINALLY

“Harry Potter and the Sorcerer’s Stone” topped China’s box office last week, taking in 94 million yuan in the first three days of its most recent run. It has been 18 years since the fantasy series first hit big screen in China in 2002, and it is expected to the fastest movie to rake in 100 million yuan at the domestic box office in the post-pandemic era.

** LOOKING AHEAD

Release of second-quarter financial results:

Aug. 20: Alibaba Group Holding Ltd.

Aug. 21: Meituan Dianping and Pinduoduo Inc.

Contact reporter Lu Yutong (yutonglu@caixin.com) and editors Yang Ge (geyang@caixin.com) and Michael Bellart (michaelbellart@caixin.com)

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