China Business Digest: U.S. Stocks Post Biggest Drop Since June; Beijing Aims to Counter Trump With Sweeping Support for Chipmakers
U.S. equities slump the most in nearly three months led by the tech sector. Beijing will include sweeping government policies supporting the development of its semiconductor industry in its next five-year plan to be revealed next month. TikTok’s potential buyers are discussing four options to acquire the short video app from its Chinese owner, including one that would exclude key software to bypass Beijing’s new export restrictions. Meanwhile, a study predicted that China’s growth rate would fall to 3.5% in 2030 if it decouples with the U.S.
— By Lu Yutong (firstname.lastname@example.org) and Han Wei (email@example.com)
** TOP STORIES OF THE DAY
U.S. stock market tumbles as tech shares sink
U.S. equities had the worst day in almost three months as highflying tech shares ran out of momentum following months of defying gravity. The Dow Jones Industrial Average lost 2.8%, or 800 points, while the S&P 500 Index weakened by more than 3.5%. The tech-heavy Nasdaq Composite finished 5% lower, its largest one-day percentage fall since June. Big technology companies, including Facebook and Apple Inc., led the declines.
Livestock breeder’s 9-day stock surge spurs hype warning
A money-losing livestock breeder became the darling of small investors on China’s newly restructured ChiNext tech board in Shenzhen, fueling a nearly 300% price surge over nine trading days while eliciting a warning from regulators against excessive speculation. The stock of Xinjiang Tianshan Animal Husbandry Bio-Engineering Co. Ltd. rose from 6 yuan to 23.16 yuan ($0.88–$3.39) in more than a week with transaction volume hitting records. Regulators said more than 90% of the buyers were individual investors seeking quick returns.
Zijin Mining one step closer to losing $1 billion-a-year gold mine
China’s largest gold producer Zijin Mining may lose its operating rights at a $1 billion-a-year gold mine in Papua New Guinea after the Pacific island country’s national court dismissed a request for judicial review of the government’s decision to take control of the mine.
U.S. announces new restrictions on Chinese diplomats
The U.S. Department of State announced Wednesday that senior Chinese diplomats now need its approval to visit university campuses or meet with local government officials.
In a press statement, the department said it will also now need to approve cultural events with an audience larger than 50 hosted by Chinese diplomats outside of embassies and consulates. Finally, the department said it would “take action to help ensure” that official Chinese embassy and consular social media accounts are identified as government accounts, without providing details.
China to plan sweeping support for chip sector to counter Trump
China is planning a sweeping set of new policies to develop its “third-generation semiconductors” for the five years through 2025, in a bid to counter restrictions imposed by the Trump administration, Bloomberg reported.
The measures, which will bolster research, education, and financing for the industry, have been added to a draft of the country’s 14th five-year plan, due to be released in October.
TikTok buyers eye option to bypass Chinese restrictions
TikTok’s prospective buyers are discussing four ways to acquire the popular short video app from its Chinese owner Bytedance Ltd., Reuters reported. The measures include buying the app’s U.S. operations without key software, which could circumvent restrictions on exporting advanced technology imposed by Beijing on Friday.
Services sector recovery slows: Caixin PMI
The Caixin China General Services Business Activity Index fell to 54 last month from 54.1 in July. The index had been in expansionary territory for four straight months, though it was down from June’s decade-high.
Employment in the sector grew for the first time since January.
Decoupling with U.S. would cut China’s growth to 3.5%: study
China’s potential growth rate could fall to about 3.5% in 2030 if it decouples from the U.S., Bloomberg reported, citing a study by Bloomberg Economics. The figure is down from the current forecast of 4.5%, which assumes relations between the two superpowers remain broadly unchanged.
** OTHER STORIES MAKING HEADLINES
Finance & Economy
• Eighteen companies have ended or suspended plans to go public in the months since their sponsor GF Securities Co. Ltd. was suspended from securities sponsoring due to its role in a client’s fraud case.
• Singaporean banking giant DBS Bank Ltd. has won regulatory approval to set up a majority-owned securities joint venture on the Chinese mainland. It will own 51% of the new venture, with the remaining stake controlled by four Shanghai companies.
• The chairman of TCL Technology Group Corp. said a trader using his account accidentally sold 5 million company shares for 35.9 million yuan ($5.3 million), before buying back the shares two hours later at lower price.
Business & Tech
• A cargo ship headed to China from New Zealand was caught in Typhoon Maysak and is thought to have sunk, the BBC reported. The Japanese coastguard rescued one crew member Friday, but failed to find more from the ship, which was carrying over 40 crew members and 6,000 cattle.
• China made up (link in Chinese) 61.2% of the world’s total crude steel production in July, with daily output of 3 million tons, data from industry consultancy Mysteel showed.
• The New York Stock Exchange has revealed that Beijing-based online educator GSX Techedu Inc. is under investigation by the U.S. Securities and Exchange Commission over short-seller allegations that it is cooking its books. The company posted strong results for the second quarter.
• Oil has been leaking (link in Chinese) from a pipeline owned by state-owned China National Petroleum Corp. in the northwestern province of Shaanxi since Friday, local authorities said. It is the second leak discovered this month.
• Huayi Brothers Media Corp.’s first-half revenue slumped 69.9% (link in Chinese) year-on-year to 324 million yuan, leaving the film studio 231 million yuan in the red. Its hometown rival Beijing Enlight Media Co. Ltd. saw its revenue for the first half plunge 77.9% year-on-year to 259 million yuan.
• Michelle Li, the 23-year-old granddaughter of Hong Kong tycoon Li Ka-shing, has been named (link in Chinese) the new chairman of the Li Ka Shing Foundation, a charity organization that accounts for one-third of Li’s unlisted assets.
** ON THE CORONAVIRUS
• On Thursday, the Chinese mainland reported (link in Chinese) 11 new coronavirus cases for Wednesday, up from eight a day earlier. All of the cases were imported, with six diagnosed in Northwest China’s Shaanxi province and three in the country’s southern Guangdong province.
• Two buses headed to a Buddhist temple in Ningbo, Zhejiang province in January — one with a person with pre-symptomatic Covid-19 on board — have formed the basis of a natural experiment that provides strong evidence that the coronavirus can spread through the air. The case was published in JAMA Internal Medicine this week.
Caixin’s coverage of the new coronavirus
• As of Thursday afternoon Beijing time, the number of global Covid-19 cases has topped 26 million, with death toll of more than 863,000, according to data from Johns Hopkins University.
** AND FINALLY
During the Covid-19 pandemic, dogs have had a role beyond being man’s best friend — in Finland at least. The European country has brought dogs to its airport in order to help detect whether inbound passengers are carrying the coronavirus.
Contact reporter Lu Yutong (firstname.lastname@example.org) and editor Flynn Murphy (Flynnmurphy@caixin.com)
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