Million-dollar jobs, travel perks and racy parties vanish as China’s pullback sends chills through banks and brokers
Biden to call for tripling tariffs on Chinese steel; German police target China-linked human smuggling gang with raids on homes and businesses
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German police target China-linked human smuggling gang with raids on homes and businesses
Associated Press
German police have carried out a large-scale raid against an international human smuggling gang. Over 1,000 police officers searched dozens of homes, stores and lawyers’ offices across western and southern Germany, detaining 10 suspects. The gang is accused of exploiting German immigration rules to procure residency permits for around 350 Chinese nationals in exchange for hundreds of thousands of euros. Raids were carried out in several states, including North Rhine-Westphalia, where the 10 suspects were arrested.
South China Morning Post
Chinese brokerage analysts are facing job cuts and pay reductions as the industry retrenches after years of expansion. The prolonged market slump has led to a reduction in trading commissions, which has resulted in brokerages slashing budgets and tightening limits on research analysts. This is a stark contrast to a few years ago when securities firms were aggressively hiring and offering high compensation packages. The industry has also been hit by Beijing's proposal to cut trading fees paid by public investment funds and the decline in demand for equity research as investors become less keen to put money into the Chinese stock market. The combined profits at Chinese brokerages fell over 20% in 2022 and a further 3% in 2023. Analysts are also under pressure to be cautious about what they say and write in research reports. Some have faced public criticism for negative calls and firms have warned against making bearish calls or negative comments.
Germany engineers sharper China-EU autos debate
Reuters BreakingViews
German Chancellor Olaf Scholz has warned against industrial overcapacity during his visit to China, echoing US Treasury Secretary Janet Yellen's concerns. However, Scholz also expressed reservations about potential electric vehicle protectionism in the EU, suggesting that the bloc may take a more nuanced approach to Chinese automakers such as BYD. China is a crucial market for German automakers, with Volkswagen, BMW, and Mercedes all heavily reliant on sales in the country. While China's auto industry does benefit from state support and cheap loans, the idea of deliberate overproduction is exaggerated. China is currently producing more cars than its domestic market requires, but there is growing global demand for affordable electric vehicles. Furthermore, leading EV exporters BYD and SAIC are using around 80% or more of their capacity, suggesting that excessive overcapacity is not a major issue.
Japan's exports grow on semiconductor equipment sales to China
Nikkei Asia
Japan's exports increased for the fourth consecutive month in March, with semiconductor manufacturing equipment driving growth in China-bound shipments. Japan's total exports reached JPY9.46tn ($61bn), up 7.3% from a year earlier, while total imports came in at JPY9.1tn, down 4.9%, resulting in a trade surplus for the first time in three months. Daiwa Institute of Research economist Kazuma Kishikawa suggested that the upturn in the semiconductor industry led to higher electronic parts exports. Exports to Asia increased by 6.6%, while those to the US grew by 8.5%.
Tim Cook Says Apple Considers Making Gadgets in Indonesia in Pivot From China
Bloomberg
Apple is considering the possibility of manufacturing some of its products in Indonesia as it looks to diversify its production bases beyond China. Apple CEO Tim Cook made the comment in response to a request from Indonesian President Joko Widodo. The move comes as Apple seeks to minimise geopolitical risks by increasing its manufacturing in countries such as India and Vietnam. Production in Indonesia could help Apple tap into the fast-growing Southeast Asian market, which has over 650 million consumers. The company has already invested $98.5m in opening four Apple Developer Academies in Indonesia.
Biden to call for tripling tariffs on Chinese steel
Nikkei Asia
President Joe Biden is set to triple tariffs on Chinese steel and aluminum in a bid to protect American workers. Biden is to make the announcement at the headquarters of United Steelworkers in Pittsburgh. The president is expected to argue that China's steel is among the world's most emissions-intensive and sold at artificially low prices, while American steel is cleaner. The move comes as China reported that its GDP grew 5.3% in Q1 2024. Biden is seeking to win over union workers in swing states such as Pennsylvania and Ohio ahead of the November 2024 presidential election.
Chip equipment giant ASML misses orders forecast, but China sales hold up despite US sanctions
South China Morning Post
ASML, the leading supplier of equipment to computer chip makers, reported weaker than expected new bookings for the first quarter, causing shares in the company to drop 6%. However, sales to China remained strong despite US-led restrictions on exports. ASML maintained its full-year financial forecasts and expects sales to remain flat at €27.6bn ($29.3bn) from last year. The company is preparing for strong growth in 2025. Sales of ASML's lithography systems to Chinese customers made up a record 49% of total sales in the first quarter. ASML dominates the market for lithography systems and will benefit from new chip plants being planned in several countries.
Key iPhone assembler Foxconn to introduce rotating CEO role
Nikkei Asia
Foxconn, the world's largest contract electronics manufacturer and major Apple supplier, will introduce a rotating CEO role this month to cultivate the company's next generation of leaders and improve corporate governance. The rotating CEO will serve for six months before handing over the role to the next person. The role will only manage Foxconn's own affairs and will not be involved with its listed subsidiaries.
China's money managers lament loss of quality research amid analyst cutbacks
Japan Times
The brokerage industry in China is experiencing a period of retrenchment after years of expansion. At Guotai Junan Securities, several senior analysts have recently resigned due to pay cuts and stricter performance metrics. This is indicative of the challenges facing brokerage analysts in China, as the industry grapples with a new reality.
Morgan Stanley downsizing: Hong Kong, China to bear the brunt of US bank’s Asia-Pacific job cuts
South China Morning Post
Morgan Stanley is reportedly planning to cut around 50 investment banking jobs in the Asia-Pacific region, with at least 80% of the reductions occurring in Hong Kong and China. The planned cuts would affect around 13% of the bank's 400 bankers in the region. The job cuts come as the world's second-largest economy continues to grapple with a property crisis and doubts over growth. Morgan Stanley's net revenue from Asia fell 12% to $1.74bn in Q1 2022 from a year earlier.
A glow-up for China’s state-owned enterprises
Financial Times
Venture capital firm Andreessen Horowitz has raised $7.2bn in funds, one of the largest amounts since the tech sector downturn. The firm plans to use the funds to invest in start-ups in sectors such as artificial intelligence and biotechnology. Meanwhile, stocks from China's state-owned enterprises are performing well compared to the wider market, as Beijing's reforms to attract investors take effect.
China, US defence chiefs hold first substantive talks in nearly 18 months
Al Jazeera
The United States Secretary of Defense, Lloyd Austin, and his Chinese counterpart, Dong Jun, held their first substantive talks in nearly 18 months to restore military ties between the two countries. The talks, held via videoconference, focused on issues such as respect for freedom of navigation in the South China Sea, China's claims over Taiwan, and the need to maintain open lines of communication to reduce the risk of potential conflicts. The US and China have been working to improve their relationship, which had become increasingly strained over issues such as Taiwan, the South China Sea, trade, and human rights.
Sanctioned Chinese security camera maker Dahua divests from U.S.
Nikkei Asia
Chinese surveillance camera manufacturer Zhejiang Dahua Technology has divested from the US by selling its fully owned subsidiary, Dahua Technology USA, to Taiwanese filmmaker Central Motion Picture USA for $15m and $1m worth of inventory. Dahua's security cameras were designated "covered telecommunications equipment or services" under the National Defense Authorization Act of 2019, and it was placed on the US Commerce Department's Entity List in October 2019 for alleged links to the mistreatment of Uighur Muslims in the Xinjiang Uighur Autonomous Region.
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