Caixin
Mar 30, 2021 09:45 AM
CX DAILY

CX Daily: Loan Shark Gang Pocketed $430 Million as It Drove 89 to Suicide

Chinese parents feel intense pressure to provide the best resources to their children.
Chinese parents feel intense pressure to provide the best resources to their children.

Education /

Cover Story: Where’s the pressure on schoolkids coming from?

A recent survey of 4,000 parents by the state-backed newspaper China Education Paper found that 92% enroll their children in extracurricular classes and that half of families spent more than 10,000 yuan ($1,500) each year on such classes. The term often used to describe this situation in China’s education is “neijuan,” or involution, which means “inside rolling,” a process of incessant competition from which no one benefits.

The issue was on the agenda of China’s annual legislative and political meetings known as the “Two Sessions” earlier this month. Chinese President Xi Jinping called disorder in the tutoring industry “a stubborn malady” and vowed to solve the problem in a March 6 meeting with medical and health education committee members attending the Two Sessions.

Within weeks, authorities in Shanghai and Beijing, where the problem is most severe, initiated crackdowns on the tutoring industry. Shares of tutoring giant New Oriental Education & Technology Group Inc.’s New York-listed stock dropped 30% in March, and shares of its rival TAL Education Group, the parent of industry pioneer Xueersi, declined 24%.

Archegos contagion hits education stocks already shaken by crackdown rumors

Covid-19 /

China passes 100 million mark for Covid vaccinations

China administered more than 100 million doses of Covid-19 vaccine as of Sunday, according to the country’s top health body.

Mi Feng, spokesman for the National Health Commission (NHC), said Sunday at a press conference that the total number of inoculations nationwide reached 102.42 million, with more than 3 million shots being administered daily since March 24, the day the NHC started publicly updating vaccination data.

Why China’s Covid vaccination drive puts the young before the old

Editorial: China needs to remove barriers to Covid-19 vaccination and move faster

FINANCE & ECONOMY

Lending

Predatory lenders in Northwest China used shell companies and shady apps to lend more than $1 billion at sky-high interest rates to nearly 400,000 people, driving many to suicide. Photo: VCG

Lending /

Loan shark gang pocketed $430 million as it drove 89 to suicide

The predatory lending of a Northwest China gang led to the criminals illegally pocketing 2.8 billion yuan ($428 million) and driving 89 people to commit suicide, according to a recent state media report.

China’s law enforcement bodies have been cracking down on such practices for several years, going after criminal loan sharks and the big data companies that have helped them gather borrowers’ personal information.

The gang based in Lanzhou, Gansu province, used internet platforms to issue loans to more than 390,000 people, according to a report (link in Chinese) on the case aired by national broadcaster CCTV. Due to sky-high interest rates, these loans were virtually impossible to repay, leading to dozens of suicides amid violent debt collection.

Ratings /

Draft rules aim to force credit ratings firms to do a better job

China released new draft rules with the goal of making credit ratings firms do a better job at rating credit, as the scandal-plagued sector faces a wide-ranging overhaul.

The rules aim to improve the quality of credit ratings, boost the domestic industry’s competitiveness, and allow it to better serve the healthy development of the bond market, according to a draft (link in Chinese) issued Sunday for public comment by five government bodies, including the central bank, the country’s top economic planner and the banking and securities regulators.

A wave of bond defaults by highly rated state-owned enterprises (SOEs) rattled China’s bond market last year and led to accusations that ratings companies were handing out excessively optimistic ratings to secure clients.

Debts /

China has a plan to keep local state firms from going too deeply into debt

China’s top state-asset supervisor has a plan to keep the debts of local state-owned enterprises (SOEs) from spiraling out of control.

The government’s State-owned Assets Supervision and Administration Commission (SASAC) wants its local counterparts to improve how they track the debt of SOEs under their purview by evaluating debt level, debt structure, profitability, cash situation, asset quality and off-balance sheet debt, according to guidelines (link in Chinese) released Friday.

The guidelines, which were handed out to local SASACs in late February, came as the value of corporate bond repayments is peaking in China this month, analysts said, raising the specter of another wave of defaults like the one that rattled bond markets last year and set off a chain reaction affecting other issuers, including local government financing vehicles.

Property /

China tightens crackdown on illicit borrowing for property speculation

Three central government ministries jointly launched a sweeping clampdown on illicit borrowing for property speculation, expanding efforts made by several local regulators to contain risks in the white-hot housing market.

The China Banking and Insurance Regulatory Commission (CBIRC), the Ministry of Housing and Urban-Rural Development (MHURD) and the People’s Bank of China (PBOC) issued a joint statement Friday announcing a nationwide inspection of business loans, targeting borrowers illicitly using individual or corporate business loans to speculate in the housing market.

The inspection is set to be completed by May 31, said the regulators in the statement, pledging to toughen punishments of violators.

Quick hits /

China sets duties on Australian wine for five years as ties sour

BUSINESS & TECH

huawei

Huawei obtained a coveted Chinese nonbanking payment license by acquiring an existing license holder, a common maneuver in the country. Photo: VCG

Huawei /

Huawei buys digital payments license, joining rush to challenge Alipay and WeChat

Huawei Technologies Co. Ltd. obtained a coveted Chinese nonbanking payment license, giving the embattled tech giant a foothold in a fintech sector dominated by Tencent and Ant Group as those companies grapple with regulators.

Huawei obtained the permit by acquiring an existing license holder, a common maneuver, purchasing Shenzhen payments company Xunlian Zhipay Thursday from Shanghai Woruiou Information Technology Co. Ltd. A Huawei spokesperson Monday confirmed the deal but did not disclose its terms.

Exactly how Huawei intends to use the license is unclear. “Huawei made this acquisition with the goal of offering a wider range of secure, easy-to-use smart services to enrich people's digital lives in all possible scenarios,” a spokesperson told Caixin.

Videos /

Bilibili becomes latest U.S.-listed stock to fall in Hong Kong market debut

Sares of video sharing platform Bilibili fell as much as 5% in its homecoming debut Monday on the Hong Kong Stock Exchange, making it the latest in a string of U.S.-listed Chinese tech stocks to suffer price declines as they seek secondary listings closer to home.

A growing cohort of New York-listed Chinese companies is response to deteriorating relations between Beijing and Washington that have led to tightened accounting scrutiny of Chinese companies on Wall Street.

Nasdaq-listed Bilibili traded at HK$790 Monday in Hong Kong, 2.23% lower than its offering price of HK$808. It declined as much as 5.26% over the course of the day before closing the session at HK$780, down 3.47% on the day.

Whirlpool /

Galanz gets Beijing’s nod to buy majority stake in Whirlpool China

China approved leading microwave oven manufacturer Galanz’s purchase of 61% of Whirlpool China Co. Ltd., the Chinese arm of one of the top U.S. makers of home appliances like washing machines and refrigerators.

Antitrust regulators in Brazil, the U.S., Germany, Austria, Turkey and Colombia have also signed off on the deal, Whirlpool China said in a Sunday stock exchange filing.

The deal had an original closing deadline of March 31. But the two sides have extended that for an additional 30 days until April 29 to complete various closing conditions.

Coal /

Roller coaster year for China coal prices undermines Shenhua

China Shenhua Energy Co. Ltd., the country’s largest listed coal miner, reported a third consecutive annual profit decline in 2020 due to weak coal prices and lower revenue from its power generation business.

The state-owned energy giant, formed in 2017 through the merger of coal giant Shenhua and power major China Guodian Corp., posted 233.3 billion yuan ($35.7 billion) in revenue last year, down 3.56% year-on-year, according to a filling to the Shanghai Stock Exchange on Friday. Profits sagged 9.43% to 39.1 billion yuan.

Quick hits /

China EV Maker Nio halts production for 5 days on chip shortage

H&M stores shut by Chinese landlords as Xinjiang backlash grows

Electric vehicle startup Faraday Future raises $100 million in run-up to U.S. backdoor listing

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