CX Daily: Can China Overtake U.S. to Become World’s Top Consumer?

Consumption /

In Depth: Can China overtake U.S. to become world’s top consumer?

China took the crown of the world’s biggest manufacturer from the U.S. in 2010, and as rivalry between the two countries continues to dominate the headlines, the focus is now switching to consumers.

Given China’s sheer size — its population of 1.4 billion is more than three times bigger than that of the U.S. with 331 million — and expectations that the economy is likely to continue growing faster than America’s, it’s only a matter of time before the country becomes the world’s biggest consumer.

By some measures, China is within sight of the top spot –– retail sales amounted to $5.7 trillion last year, government data show, while U.S sales stood at $6.5 trillion. Analysts at JD Technology, the fintech arm of e-commerce giant JD.com Inc., estimated in a December report (link in Chinese) that China could well take the title of the world’s largest retail market in dollar terms this year. Analysts at Citic Securities Co. Ltd. are not quite as optimistic (link in Chinese), although they expect China to take the title at some point during the 14th Five-Year Plan that runs from 2021 to 2025.

Antitrust /

Beijing to big tech: Stop breaking the law within one month or else

China’s internet firms must stop abusing their market dominance and cease all illegal activities within one month or face “severe punishment,” the government said Tuesday, putting the sector on notice following the record $2.8 billion fine handed to Alibaba Group Holding Ltd. for antitrust violations.

The country’s market regulator and its cyberspace and tax agencies said at a Tuesday meeting with China’s biggest tech firms that they must comprehensively self-assess, rectify any issues and pledge to comply with China’s laws and regulations, according to an online statement (link in Chinese) by the State Administration for Market Regulation (SAMR).

In attendance were representatives from 34 companies including e-commerce giants JD.com Inc., Pinduoduo Inc. and Vipshop Holdings Ltd., takeout platforms Meituan and Ele.me, short-video app operators ByteDance Ltd. and Kuaishou Technology, internet titan Tencent Holdings Ltd., and gaming giant NetEase Inc., according to the statement.

Shanghai fines takeout platform for monopoly on English-language food delivery service

FINANCE & ECONOMY

Wang Chunying, deputy head of the State Administration of Foreign Exchange, at a press conference April 12.

Hainan /

China approves $5 billion quota for Hainan’s QDLP pilot program

China’s forex regulator has approved a $5 billion quota for a pilot program of Qualified Domestic Limited Partnership (QDLP) in the Hainan free trade port, and the program will start very soon, an official said.

The QDLP program will make it easier for domestic investors inside the free trade port to invest in foreign assets. Meanwhile, Hainan will also be included in a pilot program of Qualified Foreign Limited Partnership (QFLP) for foreign investors to tap Chinese equity assets. The State Administration of Foreign Exchange (SAFE) didn’t provide an update on progress in the QFLP program at a press conference Monday.

As part of plans to liberalize financial services further in the southern island province, SAFE will support Hainan in launching a free trade account, through which businesses can settle cross-border transactions in local and foreign currencies and conduct overseas financing business, SAFE deputy head Wang Chunying said at the press conference.

Trade /

China exports, imports rebound as pandemic impact wanes

China’s international trade continued its rebound from last year’s Covid-19 outbreak, with exports jumping by 30.6% (link in Chinese) year-on-year in March and imports surging by 38.1%, the fastest clip in four years.

Exports rose to $241.1 billion last month, data from the General Administration of Customs show. The pace of increase was lower than the median forecast for 37.4% growth in a Caixin survey (link in Chinese) of economists and was down from a 60.6% pace in the first two months of the year. The gain was also flattered by a low comparative base for March last year when exports fell 6.6% as the world was gripped by the coronavirus pandemic.

Imports increased 38.1% year-on-year to $227.3 billion in March, faster than the 22.2% growth for January and February combined, as commodity prices and the volume of purchases jumped. The pace of growth, unmatched since February 2017, was well above the median forecast in the Caixin survey for a gain of 23% and followed a 0.9% drop in the same period last year.

Fines /

Leshi, Jia Yueting each fined $37 million for financial fraud

China’s securities regulator fined Leshi Internet Information & Technology Corp. and its fugitive founder Jia Yueting each 240 million yuan ($36.7 million) for financial fraud from 2007 to 2016.

The fine resulted from a regulatory investigation launched by the China Securities Regulatory Commission (CSRC) in April 2019 after the company disclosed that its founder, also the biggest shareholder, was suspected of violating financial disclosure laws.

The regulator found Leshi committed financial fraud for ten consecutive years from 2006 to 2017, resulting in false statements in its initial public offering prospectus in 2010 and private placement offering in 2016, the CSRC said in a statement Monday.

Covid-19 /

Sinovac Covid shot 50.7% effective, Brazilian paper shows

Detailed late-stage trial data for the Covid-19 vaccine developed by Sinovac Biotech Ltd. has been disclosed in a paper penned by Brazilian researchers, which may help allay concerns over Chinese-made shots exacerbated by a dearth of such public information.

The preprint paper, which has not yet been peer-reviewed, was released Sunday via online research platform SSRN. It said Sinovac’s inactivated virus vaccine, known as CoronaVac, is 50.7% effective at preventing symptomatic Covid-19 cases. Brazilian officials previously gave the figure of 50.4%.

The researchers found that the efficacy rate against cases “requiring assistance” and cases showing moderate-to-severe symptoms was 83.7% and 100% respectively.

Hong Kong to relax restrictions on travel from mainland in mid-May

Quick hits /

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BUSINESS & TECH

Photo: Bloomberg

Huawei /

Huawei to invest $1 billion on car tech to offset impact of U.S. sanctions

Huawei Technologies Co. Ltd. is making a big bet on self-driving and electric-car technologies with $1 billion investment in 2021.

The Shenzhen-based telecommunications-gear maker said it will focus this year on software research and technologies related to electric vehicles in an effort to move into new growth areas under the assumption that the U.S. won’t lift sanctions that have cut off Huawei from access to much of the global microchip supply.

“We spent our time on solving the three U.S. sanctions in 2019 and 2020, and didn’t have much time to think about the future,” Rotating Chairman Eric Xu said at a Monday meeting to analysts. “After all that, we’ve found there’s still hope to survive after taking stock of our business, but we need to fight to live a little better.”

Autos /

China drone giant shows its hand with plan to appear at Shanghai auto show

SZ DJI Technology Co. Ltd. said Monday it will take part in the Shanghai auto show for the first time, confirming longstanding speculation that the Chinese drone giant is making a push into the car business.

The Shenzhen-headquartered firm’s automotive arm posted a digital flyer to its WeChat public account stating that it will have a presence at Auto Shanghai 2021, which opens to the public for a week starting April 21.

DJI declined to give further details before an announcement set for Monday. However, the flyer also showed a translucent image of a car with silhouettes of various widgets in the engine, body and cabin.

Camera /

U.S.-blacklisted Ofilm finds buyers for its camera unit

Semiconductor-maker Wingtech Technology Co. Ltd. said it will establish a joint venture with a subsidiary of state-owned Zhuhai Gree Group Co. Ltd. to acquire the camera module unit of backlisted Ofilm Group Co. Ltd., according to a filling by Wingtech to the Shanghai Stock Exchange Monday. Ofilm’s camera module unit’s clients include Apple Inc.

The joint venture will have registered capital of 3 billion yuan ($457.9 million), with Wingtech investing 2.1 billion yuan, the filing said. Wingtech announced last month that it will buy the business for 2.4 billion yuan.

Quick hits /

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