CX Weekly Briefing: China’s Bond Market Catches Cold

The past week in and around China saw significant developments in finance, business, technology, and international relations. In the finance sector, China’s corporate bond market has cooled dramatically. Since early July, at least 128 bond sales were canceled, amounting to 43.5 billion yuan ($6 billion), as investors shifted funds from bonds to a surging stock market. This comes on the heels of major policy initiatives by Beijing, such as launching a large hydropower project in Xizang and expressing support for corporate profits. The move indicates a marked shift in investor sentiment and appetite for riskier equity investments over the safety of corporate debt [para. 2].

Relatedly, asset reshuffling continued as a Tencent Holdings Ltd.-backed subsidiary of China Ruyi Holdings Ltd. agreed to acquire a 30% stake in Kuaiqian Financial Services for 240 million yuan. This acquisition finalizes troubled developer Dalian Wanda Group’s exit from the payment provider, and allows China Ruyi to enter the nonbank payment sector, complementing its streaming and gaming operations [para. 3].

Hong Kong also made headlines as its de facto central bank, the Hong Kong Monetary Authority (HKMA), announced it would begin accepting stablecoin license applications from August 1. HKMA Chief Executive Eddie Yue warned of excessive speculation and cautioned that many of the dozens of interested institutions lack both concrete proposals and robust risk management strategies. This signals regulator concerns over the nascent and potentially unstable stablecoin market [para. 4].

In the business and technology sphere, China’s solar power sector experienced a significant slowdown. Following the end of a government-backed purchase policy for renewable power, solar installations plummeted in June by nearly 40% year-on-year and 85% month-on-month to just 14.36 gigawatts. The rush to connect solar projects before the June 1 policy deadline depleted subsequent demand, which is expected to further dampen installation growth for the remainder of the year [para. 5].

China’s video game industry achieved another milestone when indie title “Wuchang: Fallen Feathers” surged to the top of a major global bestseller list upon its Thursday release. In its first hour, over 110,000 players were concurrently engaged on Steam. The game, developed by Chengdu-based Leenzee Games over nearly six years, follows last year’s successful “Black Myth: Wukong.” However, the time and financial demands of AAA game development remain prohibitive for most indie studios [para. 6].

In legal news, Dell Technologies faces a lawsuit from Chinese distributor Highly Information Industry Co. Ltd. over 374 million yuan in unpaid bills, plus 14.7 million yuan in interest. This marks the escalation of a commercial dispute that has already severed the companies’ business ties, with the case accepted in Fujian province [para. 7].

On the international front, China and U.S. economic leaders will convene in Sweden at the end of July for new trade talks aimed at balancing economic relations [para. 8]. China also launched a state-backed enterprise to manage a 1.2 trillion yuan hydropower project on the Yarlung Tsangpo River in Xizang. This mega-dam is expected to spur renewable energy development and facilitate China’s green energy transition [para. 9].

Finally, China confirmed that a Wells Fargo executive, Mao Chenyue, has been barred from leaving the country due to alleged involvement in a criminal case. Officials emphasized the country remains open to foreign business travelers and tourists [para. 10].