China Business Digest: Caixin New Economy Index Records Third Straight Monthly Drop; Global Stock Markets Shake Off News of Trump’s Positive Covid-19 Test
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The contribution of high value-added new economy industries to China’s total economic inputs continued to decline in September. U.S. President Donald Trump signed an executive order aimed at expanding domestic production of rare-earth minerals to reduce dependence on China. Global stock markets tumbled after Trump and wife Melania tested positive for Covid-19.
— By Guo Yingzhe (yingzheguo@caixin.com)
** TOP STORIES OF THE DAY
Caixin new economy index records third straight monthly drop
The Mastercard Caixin BBD New Economy Index (NEI) came in at 28.9, down from 30.4 in August, in a further sign that the economy’s recovery is slowing. This was the third straight drop since the index hit a two-year high in June at 32.1.
Trump moves to expand rare earths mining, cites China threat
U.S. President Donald Trump signed an executive order aimed at expanding domestic production of rare-earth minerals that are vital to many critical manufacturing sectors to reduce dependence on China. The order, which declares a national emergency in the mining industry, directs the Interior Department to explore using the Defense Production Act to hasten the development of mines.
China’s newly formed oil pipeline operator starts operation
China’s newly formed national oil and gas pipeline network, known as PipeChina, signed asset transfer agreements with its nine shareholders Wednesday, marking the state-owned pipeline giant’s official start of operations.
Global stock markets tumble after Trump tests positive for Covid-19
The news that U.S. President Donald Trump tested positive for Covid-19 sent turbulence to global stock markets. But major U.S. indexes erased early losses amid rising hopes for further economic stimulus. The S&P 500 Index fell 0.76% in afternoon trading, while the Nasdaq Composite declined 2%. The pan-European Stoxx600 fell 0.5%, pulling back from early losses of as much as 1.1%.
China’s robust manufacturing recovery loses a step, Caixin PMI shows
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) edged down to 53 in September from 53.1 in August, reflecting that the sector remained healthy, according to a report released Wednesday. (Read the full story.)
The separately compiled official manufacturing PMI, which was also released on Wednesday, rose to 51.5 in September from 51 the previous month. The official PMI polls a larger proportion of big companies and state-owned enterprises than the Caixin PMI.
China tech to face even closer scrutiny from global governments
China’s tech companies will face a tougher time globally as digital decoupling accelerates and countries with shared values join forces to promote their technology standards and ethics, according to a report from the Hinrich Foundation.
Jack Ma is stepping down from the Alibaba board
Alibaba Group Holding’s founder Jack Ma is leaving the board of the giant e-commerce company after stepping down as executive chairman a year ago. Chief Financial Officer Maggie Wu will fill the seat.
Tesla further slashes prices of China-made Model 3
Tesla Inc. further cut the price of its Shanghai-made Model 3 electric car to 249,900 yuan ($36,800) after government subsidies, bringing the starting price of Tesla’s most-affordable model down by almost 10%.
Nearly 100 million tourists on the move on China’s National Day
China’s tourism continues to recover from the impact of the Covid-19 pandemic. On Oct. 1, which is both the National Day holiday and the Mid-Autumn Festival, nearly 100 million visitors (link in Chinese) showed up at 233 major tourism sites around the country, generating revenue of 76.65 billion yuan ($11.27 billion), state-run Xinhua News Agency reported.
China issues draft rules on global systemically important banks
China has issued long-anticipated draft rules governing the ability of its global systemically important banks’ (G-SIBs) to absorb losses in an effort to guard against systemic financial risks.
The draft regulations require G-SIBs — banks that are “too big to fail” as their failure could trigger a wider financial crisis — to meet certain capital adequacy targets starting from 2025. (Read the full story.)
BeiDou satellite system reaches consumers
As the Chinese government continues to encourage businesses to use its domestic challenger to the U.S.’ GPS, it has unveiled a list of recommended consumer products that use the BeiDou Navigation Satellite System, from smartphones to vehicles. (Read the full story.)
World Bank raises China’s GDP growth forecast to 2% in 2020
The World Bank raised its forecast for China’s 2020 GDP growth to 2% in its latest report Tuesday from a previous estimated 1.6%. It said the country’s economy has been “boosted by government spending, strong exports, and a low rate of new Covid-19 infections since March, but checked by slow domestic consumption.”
Hainan duty-free sales expected to reach 30 billion yuan this year
Duty-free sales in the southern island province of Hainan reached 8.3 billion yuan ($1.2 billion) in the 88 days since new duty-free shopping policies took effect on July 1, Shen Danyang, a deputy governor of the province, said on Tuesday (link in Chinese). Shen said that sales of both duty-free and non-duty-free products by duty-free shops increased 230% year-on-year during that period.
He expected duty-free sales at the free-trade port in the making to reach 30 billion yuan this year.
Search engine Sogou joins exodus of Chinese firms from Wall Street
New York-listed Chinese search engine Sogou Inc. has signed a deal to be privatized by Tencent Holdings Ltd. at a healthy premium, becoming the latest Chinese firm to leave U.S. bourses amid tensions between Washington and Beijing. (Read the full story.)
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** OTHER STORIES MAKING THE HEADLINES
Economy & Finance
• The share of yuan assets in global official foreign exchange reserves rose to 2.05% at the end of the second quarter from 2.01% a quarter earlier, International Monetary Fund data show.
• Some Chinese commercial banks have cut their foreign currency deposit rates (link in Chinese) recently to reflect the loose monetary policies of overseas economies amid the pandemic.
Business & Tech
• Chinese war film “The Eight Hundred” achieved the nation’s first ever global box office year-to-date win this month, aided by a post-coronavirus bounce, shuttered cinemas abroad and the poor performance of its closest Hollywood rival. (Read the full story.)
• China’s rail operator has identified three lines to include in a national pilot program involving real estate investment trusts for infrastructure projects, a top executive revealed, providing the company with yet another tool to lighten its heavy debt load by bringing in outside investors. (Read the full story.)
• One of China’s foremost energy experts has urged the country to place market forces at the center of its transition to clean power and to wean its renewables sector off government support over the next five years, as part of its efforts to slash carbon emissions to net zero by 2060. (Read the full story.)
• Southeast Asia will produce half of the world’s laptop computers in 2030, a Taiwan think tank predicts, with Vietnam and Thailand pegged as the main manufacturing hubs. (Nikkei Asia)
• Alibaba Group Holding Ltd. foresees its cloud services arm turning profitable for the first time this year, a milestone for the decade-old business. (Bloomberg)
• New Ruipeng Pet Healthcare Group Co. Ltd., a specialist providing medical care for pets, said on Tuesday that it had pocketed “hundreds of millions of US dollars” in a funding round led by tech giant Tencent. (Deal Street Asia)
• A court in Papua New Guinea has dismissed the third application by Barrick Niugini Ltd. to review the government’s previous decision not to extend the lease of the Porgera gold mine to the joint venture between Chinese Zijin Mining Group Co. Ltd. and Canadian Barrick Gold Corp. (Read the full story.)
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** ON THE CORONAVIRUS
• The Chinese mainland reported (link in Chinese) 19 new symptomatic Covid-19 infections on Tuesday, all imported. The mainland also added 22 asymptomatic cases, also all imported.
• As of Wednesday evening Beijing time, the number of global coronavirus infections had surpassed 33.6 million, with the death toll over 1 million, according to data compiled by Johns Hopkins University.
• Hong Kong is proposing to lift the mandatory quarantine for local residents returning from the Chinese mainland after getting its third wave of Covid-19 infections under control. (Read the full story.)
Read more
Caixin’s coverage of the new coronavirus
** AND FINALLY
Macao, one of the world’s foremost gambling hubs, is struggling to recover from the fallout of the Covid-19 pandemic, despite travel restrictions easing over the past month. (Read the photo essay.)
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A customer wearing a mask looks at his cellphone at a gambling hall in Macao. Photo: Liang Yingfei/Caixin |
** LOOKING AHEAD
Oct. 1-8: Chinese mainland markets closed during the combined National Day and Mid-Autumn Festival holidays
Oct. 9: Release of Caixin China services PMI
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editors Yang Ge (geyang@caixin.com) and Gavin Cross (gavincross@caixin.com)
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