CX Daily: China Allows More Investment Outflows to Ease Pressure on Yuan

Outflows /

China allows more investment outflows to ease pressure on yuan

China last year reported the first annual deficit on the financial account in its balance of payments in four years as regulators allowed more money to flow out of the country to ease appreciation pressure on the yuan stemming from rising foreign investment in the country’s capital markets.

The 2020 deficit, excluding reserve assets held by the central bank, amounted to $77.8 billion, although that’s down from an initial estimate of $175.9 billion given in February, according to revised figures for the balance of payments released by the State Administration of Foreign Exchange (SAFE) on Friday.

It’s the first shortfall since 2016 when the country had a financial account deficit for the year, excluding reserve assets, of $416.1 billion. The financial account includes domestic ownership of foreign assets –– such as deposits, loans, securities, commodities and direct investment –– and foreign ownership of domestic assets.

Covid-19 /

Chinese border city reports new Covid-19 outbreak

A Chinese city on the country’s southwestern border with Myanmar reported nine Covid-19 cases Wednesday, marking the Chinese mainland’s largest new outbreak since January.

Ruili, Yunnan province, ordered residents to remain at home for seven days beginning Wednesday and has started to roll out mass testing, the city’s Epidemic Control Command Center said in a public statement. According to the statement, those who need to leave their homes for “special reasons” will need to seek permission from authorities in their communities.

All businesses except supermarkets, pharmacies and farmers’ markets are to shut down, the statement said, without setting a date for reopening.

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FINANCE & ECONOMY

The headquarters of BlackRock Group in New York. Photo: IC Photo

BlackRock /

BlackRock to close China private fund after just three years

A unit of BlackRock Inc., the world’s largest asset manager, is closing down its private fund business in China after just three years and instead will focus on mutual funds in a move to meet regulatory requirements.

BlackRock’s wholly owned unit in Shanghai, BlackRock Investment Management (Shanghai) Co. Ltd., on March 23 withdrew its private fund manager registration in China, the Asset Management Association of China (AMAC) website (link in Chinese) showed.

BlackRock won approval from China’s securities regulator in August to set up a wholly foreign-owned mutual fund management company (link in Chinese), the first on the mainland, as part of the firm’s ambitions to expand the scale of its business.

Corruption /

Senior rural banking regulator turns himself in to graft investigators

Guo Hong, head of the Rural Small and Medium-sized Banking Institution Supervision Department of the China Banking and Insurance Regulatory Commission (CBIRC), turned himself in to graft busters, an official statement (link in Chinese) said Wednesday.

He was taken away by authorities Friday, sources with knowledge of the issue told Caixin. Guo, 49, had worked in a variety of positions in the now-defunct China Banking Regulatory Commission (CBRC) until 2018, when the CBRC was merged with the China Insurance Regulatory Commission to form the CBIRC. The same year, he was appointed to his current position.

Fintech /

Didi Chuxing drives deeper into consumer finance

Ride-hailing giant Didi Chuxing Technology Co. Ltd. won regulatory approval to take an equity stake in a consumer finance company, a move that could help the company deepen its footprint in the fintech sector.

Dirun (Tianjin) Technology Co. Ltd. (迪润(天津)科技有限公司), a wholly owned subsidiary of Didi, has been given the go-ahead to invest in Bank of Hangzhou Consumer Finance Co. Ltd. (BHCF) by subscribing for 853.9 million new shares, according to a statement (link in Chinese) released Friday by the Zhejiang bureau of the China Banking and Insurance Regulatory Commission (CBIRC).

No details were given about the value of the investment, although the statement said the registered capital of the consumer finance firm will rise to 2.6 billion yuan ($395.4 million) from 1.3 billion yuan.

Hong Kong /

Carrie Lam lays out schedule for next Hong Kong election cycle

The Hong Kong government will submit a draft plan revising the special administrative region’s electoral system by mid-April for the Legislative Council, the judicial arm of the semi-autonomous city, to review and approve by May, Chief Executive Carrie Lam said Wednesday during a press conference.

If the schedule proceeds as planned, the chief executive said, the Legislative Council election will take place in September, and new Legislative Council members will convene in December.

The chief executive election will be in March next year. Lam’s term will end in June 2022, and she will be eligible for a second term.

Quick hits /

Singapore says it can play key role in China’s ‘dual circulation’ economy

BUSINESS & TECH

Xiaomi /

Xiaomi joins electric car race with $10 billion investment plan

Chinese smartphone maker Xiaomi Corp. is jumping on the electric car manufacturing bandwagon with a plan to invest $10 billion in the new business over the next decade.

Xiaomi will set up a new smart car division with initial investment of 10 billion yuan ($1.5 billion), the company said Tuesday. Xiaomi’s billionaire founder and Chief Executive Officer Lei Jun will head the new unit, according to a filing with the Hong Kong stock exchange.

Lei said Xiaomi will rely on its own money to fund the new business, although many investors showed interest. With 108 billion yuan of cash and cash equivalents as of the end of 2020, Xiaomi is capable of underwriting the costs of developing the car business, Lei said.

Rio Tinto /

Rival consortiums need deal to develop world’s biggest iron ore mine, Rio Tinto CEO says

The next step in developing the world’s largest untapped iron ore mine depends on whether the two consortiums involved can strike a deal on issues including local infrastructure, Anglo-Australian mining giant Rio Tinto told Caixin.

Simandou, a 110 kilometer (68 miles) range of hills deep in the hinterland of Guinea in West Africa, is considered to be world’s largest, highest-quality iron ore deposit with some experts forecasting annual production could hit 150 million tons. That would turn the country into one of the world’s largest producers of the commodity.

But even though the project has lured in several mining conglomerates, no sustained work has been done to commercialize the site.

Academic fraud /

China was the source of 370 retracted scientific papers, Nature reports

An article in the British scientific journal Nature exposed how systematic production of falsified research by so called “paper mills” in China has affected the academic reputations of Chinese medical researchers among global publishers.

The article, “The fight against fake-paper factories that churn out sham science,” published Tuesday in Nature, reported that the journal tallied 370 articles that scientific journals retracted since January 2020. All were from authors at Chinese hospitals that either publishers or independent sleuths alleged to have been generated by companies that churn out fake scientific manuscripts to order, known as paper mills. Nature said it expects many more retractions to follow.

IPO /

Wumart hopes second time’s a charm with new Hong Kong listing

WM Tech Corp. Ltd., owner of Chinese retailer Wumart Stores, is hoping the second time is the charm as it seeks to relist in Hong Kong five years after it delisted from the same bourse citing uncertain market conditions for hypermarkets in China and as it faced growing challenges from rising e-commerce rivals.

Formerly known as WM International Holding Corp. Ltd., Beijing-based WM Tech filed for another Hong Kong initial public offering Tuesday saying this time it plans to bundle its two main businesses for the listing — Wumart and Metro China.

The company did not specify the amount of shares it plans to offer in the prospectus or give a time frame, but it said proceeds would be earmarked for investment in expanding its supply chains, continuing digitalization of its retail business and opening new offline stores.

Quick hits /

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