Caixin Business English 12 财新商业英语进阶计划 12
Loan prime rate
例句：The court has set a cap on the interest rate they can charge at four times the one-year national loan prime rate (LPR) which currently stands at 3.85%.
To learn how the phrase is used in English reporting, please click here.
例句：It could force many microcredit providers to scale back loans and push interest rates charged on credit cards and risky borrowers below commercially viable levels – which would obviously have a knock on effect on access to credit for some and would force a number of lending companies out of business.
To learn how the phrase is used in English reporting, please click here.
Series C funding
例句：The AI and cloud-based computational technologies specialist’s valuation may exceed $1 billion according to one investor, following the massive series C funding round led by investors including SoftBank Group Corp.’s Vision Fund 2, PICC Capital Investment Management Co. Ltd., and Morningside Venture Capital.
To learn how the phrase is used in English reporting, please click here.
Josh: Hello and ni hao!
This is the Caixin China Biz Roundup broadcast every week day from Beijing with the essential news for everything you need to know about China and the world of business – plus a little bit more.
I’m Joshua Dummer
Nandini: And I’m Nandini Venkata
Josh: Coming up on today’s show. A Chinese AI-powered pharmaceutical player has smashed a fundraising（募资） record amid expectations it could soon be valued at over $1 billion. Also, a Baidu senior executive has been detained（被扣留） by police on allegations of dabbling in illegal advertising operations. Plus, the country’s top decision-making body is set to meet next month to map out China’s development plan for 2021-2025.
For my top story today I want to look at a ruling by China’s highest court that has sent shockwaves throughout the country’s financial sector.
Nandini: Sounds important – so what is the court ruling and what is going on?
Josh: Very simply the ruling covers private loans by individuals and companies without a lending license. The court has set a cap on the interest rate（利率） they can charge at four times the one-year national loan prime rate（贷款市场报价利率） (LPR) which currently stands at 3.85%. I’m sure you can do the maths but that sets the limit at 15.4%.
The previous cap was set at 24% in 2015, with private lending rates above 36% being illegal.
Now the ruling officially came into effect on August 20th but we are now beginning to see its effects.
On Sept. 4 for example, a lower court in Hubei province ruled against a private lender who was suing a debtor（债务人） for failing to repay a loan of 150,000 yuan ($22,000). The original annual interest rate was 24%. So the court ordered the debtor just to repay the principal and reset the interest rate at 15.4%.
Nandini: OK I can see how this ruling will affect private lenders and small companies but you specifically said it did not affect financial institutions with a lending license – so saying the ruling has sent shockwaves throughout the financial sector seems a bit of a stretch, surely?
Josh: It is sending shockwaves, and please stop calling me Shirley.
Nandini: Oh the oldies are always the goodies. Josh, please tell me why this is sending shockwaves throughout the industry when it is only meant to affect small non-licensed lenders.
Josh: Well, it is all about how lower courts are interpreting the ruling. Even banks, technically not covered, have been affected
So for example in a lawsuit filed against a borrower for the non-payment of a loan, the Wenzhou city branch of Ping An Bank sought to have the debt repaid at a penalty interest rate of 24% per year. But the court rejected the bank’s request and imposed an interest rate of 15.4%.
Nandini: As always, I am confused. So did the ruling cover licensed lenders like banks or not?
Josh: Well in the Ping An case that I just gave many legal experts have argued that the bank should not be subject to the ruling. But it is all about the large degree of ambiguity here. And, it is not just banks that are unsure if the ruling might now affect the interest rates they can charge.
There has long been ambiguity about whether microcredit lenders should be classed as private lenders or as financial institutions. The China Microcredit Companies Association (CMCA), a self-regulating industry body, states that small-loan companies are qualified lending legal persons and their activities do not constitute private lending. But regulators have not yet given them formal recognition as financial institutions.
Nandini: So what I am hearing from you is even though the 15.4% is really just meant to impact small private loans it might become the de facto cap on loans throughout the country.
Josh: Maybe, not throughout the entire country and every lending institution, but definitely for a lot of institutions.
And that is why it is sending shockwaves throughout the sector and why it is such an important story.
It could force many microcredit（小额贷款） providers to scale back loans and push interest rates charged on credit cards and risky borrowers below commercially viable levels – which would obviously have a knock on effect on access to credit for some and would force a number of lending companies out of business.
Also it should be noted that in the first example I gave courts have interpreted the rules as being retro-active. So even if someone had previously agreed to take out a loan at a higher interest rate it looks like they now can pay it back at the lower interest rate.
One industry veteran speaking to Caixin described the impact of the judicial interpretation on microcredit companies like a nuclear bomb.
Nandini: Now I don’t want to be Toto in the Wizard of Oz pulling back the curtain and exposing your working out – but I know that you got the details of this story from a great in depth piece on our Caixin global website and people can get even deeper into the story if they just head online after this podcast or download our app.
Josh: Nandini, I love the way you so seamlessly advertise our website and app and I do love your terms of reference – I never thought you’d be able to work the Wizard of Oz into the Daily Biz Round Up podcast.
Nandini: Thanks Josh. Well, this Tuesday I have a Caixin exclusive on China’s search engine giant, Baidu. In quite a shocker of a story - it seems that a veteran executive of the company has been detained by police.
Josh: And which Baidu big shot is at the centre of this exclusive?
Nandini: That would be Shi Youcai. He’s the head of Baidu’s Mobile Ecology Group. Shi actually first joined Baidu one year after the company’s founding in 2000 and has been a long-term senior executive in charge of the company’s sales and marketing system.
But, as separate sources told Caixin, Shi’s life turned upside down this month, resulting in his detention on September 15.
Josh: How exactly did he land himself in hot water with the authorities?
Nandini: In short, Shi is being accused of illegal online advertising operations including promotion of gambling（赌博）
Or to be more specific, someone close to Baidu’s management even told Caixin that the senior executive opened the door for illegal advertising on the Chinese tech titan’s platform and even benefited personally from the business. Furthermore, according to a Baidu business partner, Shi tightened control over the search engine companies’ advertising partners and offered favors to agencies with which he had ties. The executive adds that business with regulatory risks including promotion of card games could be conducted only with certain agents.
I should also point out that, according to the sources, Shi has denied（否认） allegations that he made illegal transactions personally with advertising agencies.
Josh: So, I guess the big question is what this means for Baidu?
Nandini: At the time of recording, that bit remains unclear. However, the company did send us a statement, saying quote “Baidu insists on zero tolerance（零容忍） against all violations of laws and regulations,” endquote.
That being said, it does seem like the company has found itself in quite a tight spot recently. For one, in the past weeks, investigations have been cracked open on several other Baidu staffers starting weeks ago, most notably Vice President Li Zhongjun. We have also learned that a number of third-party advertising agencies working with the search engine player in various parts of the country were also being probed by police.
And it’s very likely more trouble could be lurking around the corner for the company, as several industry sources say it would be nearly impossible for Baidu’s senior management not to notice Shi’s alleged shady practices.
Having said all of that, this isn’t exactly the first time that Baidu has gotten mixed up in such controversy about illegal advertising.
Josh: What do you mean?
Nandini: Well, back in 2016, Baidu was scrutinized by regulators for allowing banned ads to go through its platform at night, such as those related to illegal gambling. At the time, the Chinese answer to Google pointed the finger at third-party ad agencies, denying it had direct responsibility for the problem. That same year, the company faced a major public backlash after a college student died after the company’s search engine led him to a bogus and expensive experimental cancer treatment. Since then regulators have been exerting greater pressure on Baidu to clean up its platforms from inappropriate content, prompting the company to take down over 1 billion ads in June 2019.
Josh: Alright thanks Nandini. So who knows, maybe on China’s top search engine we can even look up a quick solution to overcome this mess…
Well, moving onto our third essential tale of the day. And I dedicate the final top spot of the show to a company which hunts for drugs with AI and quantum physics（量子力学）.
Nandini: Okaaay, that is definitely not something you hear every day on the show. When you say it hunts for drugs that makes me think it searches for gangs selling illegal substances?
Josh: Not quite.
So, the Chinese company at the heart of this story is pharmaceutical tech player XtalPi. And, full disclosure, I definitely am not sure if I am pronouncing it correctly. Instead of busting dodgy narcotic rings, XtalPi actually applies quantum physics and AI machine learning technologies to draw conclusions about the structure of molecules（分子） and whether they can be used commercially in pharmaceuticals.
Nandini: Ok, that definitely all sounds very sci-fi.
Josh: Yeah, and that may very well explain why nearly all international pharma companies are now looking into using such AI technologies in the race to be first to market with innovative new medicines.
But that isn’t where the story stops. XtalPi has been making headlines for setting a striking new record.
Nandini: Let me guess, most confusing name to give your company in the history of all time?
Josh: Err, I believe that belongs to the Chinese battery manufacturer, whose name is either pronounced CATL or cattle. The true pronunciation of its name will forever be a mystery.
But getting back to XtalPi. The company has smashed the funding record for the pharmaceutical sector, raising some $320 million. The news comes as the company just completed a massive series C funding（C轮融资） round led by investors including SoftBank’s Vision Fund 2, PICC Capital Investment Management, and Morningside Venture Capital. If that does not sound impressive enough, one investor even predicts that the AI and cloud-based computational technologies specialist’s valuation could soon exceed $1 billion.
Nandini: So what’s XtalPi’s secret? How come all these investors seem to be rushing to pour their money into it?
Josh: Well, XtalPi really seems to be shaking things up in the drugmaking scene for various reasons.
First of all, one of its products has been creating a lot of excitement. The company developed something called crystal structure prediction or CSP solution, which according to XtalPi, is able to identify the most stable forms of small drug molecule candidates within two to three weeks. Now, without getting too bogged down in the science, just know that its CSP solution represents a game changer for the pharmaceutical industry. That’s down to two key reasons:
A - it significantly speeds up drug development,
and B - it also cuts related costs and risks.
Therefore it’s very likely that investors will want to cash in on this action.
Also, don’t forget that the year is 2020 and we are battling a pandemic. Covid-19 has spurred rising interest in faster and cheaper ways of making drugs, all of which has worked in XtalPi’s advantage.
Another reason why many appear willing to bet on the company is because it faces relatively little competition within the nation. With fewer rivals, it’s easier for China’s AI-powered pharmaceutical companies to take bigger shares in the world’s second-largest drug market than their European or American peers.
Nandini: Ok thanks Josh! So, all in all, this is quite literally a company to watch out for, especially because we have no clue how to pronounce its name. Now, let’s take a look at the rest of China’s headlines.
Josh: China’s top leaders are set to meet on Oct. 26–29 to draft economic and social policies for the next five years, the official Xinhua News Agency reported Monday. The Politburo（中央政治局）, the ruling Communist Party’s top decision-making body, Monday set the schedule for the fifth plenary session（五中全会） of the Communist Party’s 19th Central Committee, a key meeting to outline the country’s next-step development plans, according to Xinhua. The meeting will map out China’s development plans for 2021–25, covering almost every aspect of the country’s economic and social issues. Xinhua says that the meeting will also draw up a long-term blueprint running through 2035.
Nandini: After a disappointing loss in 2018 amid stock market turbulence, China’s sovereign wealth fund saw a strong return on its overseas investments last year as global stocks rallied. On Friday, China Investment Corp, otherwise known as CIC, reported an annual net return on its overseas investments of 17.4% in 2019. That marks a significant turnaround from a 2.4% net loss for the previous year, and the second highest rate of growth since it was founded in 2007. The highest figure was 17.6% in 2017.
Josh: Troubled Jilin Province Trust Co or JPTC has seen yet another chairman fall under an anti-graft（反腐败） probe, underscoring governance issues in the sector and adding to the state-owned company’s long streak of corruption investigations covering every chairman since 2001. According to the local anti-graft watchdog, JPTC’s chairman has been put under investigation on suspicion of quote “serious violations of (Communist Party) discipline and law” endquote – that’s a common euphemism（委婉说法） for corruption. The company is 97% owned by the Jilin provincial government’s finance department.
Nandini: Thanks for listening and stay tuned for our next episode! If you want to listen to our extensive back catalogue of podcasts or check out more of Caixin Global’s great journalism, then why not simply download our app? Or head online to caixinglobal.com
Goodbye and Zaijian.
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