Sep 01, 2020 09:19 AM

CX Daily: China Gets Serious on Money Laundering

Anti-money laundering /

Cover Story: How China is racing to catch up with money launderers

Chinese authorities are getting more serious about fighting money laundering, or the illegal hiding of the origins of money obtained through criminal activities.

Regulators got a wake-up call in 2019 when the international Financial Action Task Force (FATF) on money laundering highlighted flaws in China’s system. Later that year, several Chinese lawmakers submitted proposals to amend the nation’s 13-year-old anti-money laundering law to catch up with the rapid evolution of financial criminality.

In a video address to a virtual meeting in June of the FATF, a global money laundering and terrorist financing watchdog, People’s Bank of China Governor Yi Gang said China is revising its anti-money laundering law to broaden the scope of supervision, enhance its effectiveness and increase the severity of penalties.



The Beijing headquarters of the People's Bank of China.

Digital currency /

Exclusive: Two more state-owned banks join China’s digital currency trials

Two of the country’s largest state-owned banks have jumped on China’s digital currency bandwagon as the central bank looks to expand internal testing of the virtual yuan, sources familiar with the matter told Caixin.

Postal Savings Bank of China Co. Ltd. and China Citic Bank Corp. Ltd. joined the pilot program to create services for the digital currency developed by the People’s Bank of China (PBOC) and conduct initial tests. The two joined the “Big Four” Chinese state-owned commercial banks — Industrial and Commercial Bank of China Ltd. (ICBC), Agricultural Bank of China Ltd., Bank of China Ltd. (BoC) and China Construction Bank Corp. — in the trials.

With the digital currency designed to replace some physical cash in circulation, Chinese lenders are testing it in real-life payment scenarios with the help of the country’s telecom and internet giants, the sources said.

Economy /

China’s economic recovery continues on strong services

Economic activity continued to rebound in August with a gauge of the services industry at the strongest level since early 2018 while the expansion in manufacturing activity slowed slightly.

The nonmanufacturing gauge rose to 55.2 from July’s 54.2, the National Bureau of Statistics said Monday. The official manufacturing purchasing managers’ index moderated to 51 from 51.1 a month earlier. A reading above 50 indicates conditions improved from a month earlier.

China’s economy continued to recover from the slump in the first quarter, with government-led investment boosting demand and some reopening of overseas economies buoying the export sector. The hard-hit service industries have been picking up as the government eases virus control measures, with more subsectors such as cinemas opened again.

Foreign firms /

Japanese financial giant wins approval for majority-owned Chinese securities venture

One of the world’s largest securities firms, Daiwa Securities Group Inc., won regulatory approval to set up a majority-owned joint venture on the Chinese mainland, the latest foreign company to take advantage of China’s financial opening.

The Japanese brokerage and investment bank will own 51% of the new venture, with the remaining interests controlled by two Chinese state-owned companies based in Beijing, according to a statement (link in Chinese) by the China Securities Regulatory Commission (CSRC). The venture will offer brokerage and securities underwriting services, with 1 billion yuan ($145.9 million) of registered capital, the statement said. The venture’s chairman is likely to be Michael Xian, a Daiwa Securities senior manager of Chinese nationality, sources with knowledge of the matter told Caixin.

AmEx becomes first foreign firm to do bank card clearing in China

Blackrock approved to set up first wholly foreign owned mutual fund company in China

Stocks /

Charts of the Day: Overseas mutual funds ride the high in China stocks

Major overseas mutual funds sank more money into China stocks in the second quarter, a recent report showed, highlighting the strong performance of the country’s equities.

In the second quarter, 20 major overseas fund companies’ holdings of Chinese A-shares, H-shares, and stocks listed in the U.S grew by 21.6% from the previous quarter to $486 billion, according to a report released Thursday by Citic Securities Co. Ltd. The 20 funds held the most China stocks by value among overseas mutual fund companies.

Excluding changes in share prices, the companies invested more in the stocks of Shanghai-listed Kweichow Moutai Co. Ltd., and Hong Kong-listed Meituan Dianping, Alibaba Group Holding Ltd. and Wuxi Biologics Cayman Inc., Citic Securities analysts said in the report. The analysts said the increase in holdings was mainly due to the strong performance of Chinese stocks last quarter.

Quick hits /

China hits Australian wine with second probe as tensions mount

Hong Kong and Shenzhen bourses widen access to each other’s investors with ETF deal

Editorial: For China’s biggest cities, migrants are a wealth generator, not a burden



TikTok's office in Culver City, California on Aug. 27.

TikTok /

China fights back with potential spoiler for U.S. TikTok takeover

An update to China’s technology export restrictions means the pending sale of video app TikTok’s U.S. operations may require Chinese government approval, casting new uncertainty over a deal that has come to exemplify recent China-U.S. tensions around technology.

The update announced Friday marks one of the first major pushbacks by China beyond simple words of protest in response to a systematic campaign by U.S. President Donald Trump, who has argued Chinese technology and the companies behind it pose national security risks due to their ties to Beijing.

TikTok has been under constant assault for much of this year by U.S. lawmakers who say its owner, ByteDance, could be forced to give its pool of data on millions of U.S. users to Beijing because it is a Chinese company beholden to the government. ByteDance has argued TikTok is based offshore and therefore not subject to Chinese law.

Asset manager Centricus, video app Triller seek to buy TikTok assets for $20 billion

Vaccine /

Close on China’s heels, India tries ‘vaccine diplomacy’ with Bangladesh

When Indian Foreign Secretary Harsh Vardhan Shringla was in Dhaka earlier this month to mend a frayed relationship with Bangladesh, one of the offers he made was of a potential Covid-19 vaccine.

Bangladesh, he said, will get priority access to a vaccine produced by India. “When the vaccine is produced, it goes without saying that our closest neighbors, friends, partners and other countries will be part of it,” he told reporters in Dhaka. India’s “vaccine diplomacy” comes at a time when its strategic rival China has made a similar offer to Bangladesh. According to China’s nationalist tabloid Global Times, Chinese Ambassador in Dhaka Li Jiming has even offered to be the “first volunteer” for a phase three trial of the Chinese Sinovac vaccine in Bangladesh. Dhaka, after deliberating for more than a month, allowed Sinovac’s trials to proceed in the country last Thursday.

Cable network /

L.A.-Hong Kong internet cable sits unused after U.S. flags security threat

The undersea cables that carry the internet between continents have opened up as the latest front in deteriorating U.S.-China relations, with Google and Facebook abandoning a plan to link Los Angeles with Hong Kong after a local partner was flagged by U.S. security agencies as a threat.

The Pacific Light Cable Network (PLCN), consisting of six roughly 8,000-mile fiber optic cables, was part of Silicon Valley’s push to get in on global internet infrastructure. It could have carried 144,000 gigabits of information between the U.S. and China in just a second, according to the magazine of the Institute of Electrical and Electronics Engineers.

With a projected cost of $400 million when it was announced, the project was all but complete — and awaiting approval from American regulators to be put into action, Caixin learned. But the involvement of Hong Kong partner Pacific Light Data Communication Co. Ltd. (PLDC), and its mainland carrier parent company Dr. Peng Telecom & Media Group Co. Ltd., attracted scrutiny.

Drinks /

Tsingtao drinks up Nestle’s China water business as Swiss giant looks to offload underperforming units

Nestle SA agreed to sell its water business in China to local beer giant Tsingtao Brewery Group Co. Ltd., as part of the world’s largest food company’s ongoing effort to offload underperforming brands.

The company said Friday (link in Chinese) that the sale includes its “Dashan” and “Yunnan Shan Quan” brands as well as three water factories in Shanghai, Tianjin and Kunming, Yunnan province. As part of a licensing agreement, Tsingtao will also produce and market the Nestle “Pure Life” water brand in China, according to the statement. Details of the agreement were not disclosed. China is Nestle’s second-largest market after the U.S., with sales topping 6.9 billion Swiss francs ($7.6 billion) in 2019, accounting for 7.5% of global sales.

Quick hits /

TCL Technology takes over China-Based Samsung LCD plant

State construction giant CCCC reports six-month profit drop, first since 2013

Huawei ends rugby sponsorship as Australia-China ties worsen

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