China and foreign CEOs dance ever trickier tango; Manila dares Beijing to arbitrate South China Sea claim, summons Chinese envoy
On return trip to China, treasury head Janet Yellen to hear US firms: sources
Welcome to this issue of The China Brief. Today is March 25, 2024. Here at The China Brief, we bring you the latest news on China's politics, economy, and society from global media sources, along with exclusive expert analysis. If you find our content helpful, please subscribe to our newsletter.
China and foreign CEOs dance ever trickier tango
Reuters BreakingViews
The relationship between China and global tech giants is becoming increasingly uneasy as tensions rise and supply chains shift. Chinese Premier Li Qiang recently welcomed 100 bosses from companies like Apple to a business conference in Beijing, emphasising China's commitment to attracting foreign investors. However, foreign direct investment in China fell by a fifth in the first two months of this year, indicating a decline in interest from global companies. Meanwhile, China is pushing ahead with plans to phase out overseas tech, such as chips, and exclude Chinese technology firms from global networks. This tension could lead to missteps in the relationship between China and global tech giants.
Manila dares Beijing to arbitrate South China Sea claim, summons Chinese envoy
South China Morning Post
The Philippines has summoned a Chinese envoy after accusing China’s coastguard of using water cannon against a civilian boat supplying troops stationed on a grounded warship at the disputed Second Thomas Shoal. The Philippines’ defence minister, Gilberto Teodoro, has challenged China to take its sovereignty claims in the South China Sea to international arbitration, following the latest stand-off. China has responded by warning the Philippines to cease “provocative actions” and comments that could lead to conflict. China claims almost all of the South China Sea as its own, including the Second Thomas Shoal, which is within the Philippines’ 200-mile (320km) exclusive economic zone.
On return trip to China, treasury head Janet Yellen to hear US firms: sources
South China Morning Post
US Secretary of the Treasury, Janet Yellen, is set to meet representatives of American businesses in the southern city of Guangzhou before heading to Beijing in early April to get face time with Chinese counterparts. She will have a 45-minute question-and-answer session with the business community to address issues facing US firms in China including overcapacity, intellectual property and import-substitution-related issues. Yellen’s Guangzhou stop and meeting with American businesses would be unusual because that is largely regarded as falling under the purview of US Secretary of Commerce Gina Raimondo.
Once high-flying bankers in Hong Kong become a lost generation
Japan Times
Finance professionals with Chinese expertise, like Eric Li, were highly sought after just five years ago, but now many are struggling to find work. Li lost his job when his employer relocated away from Hong Kong and has been searching for a new job for seventeen months. The bills are piling up, and he fears that things will only get worse. This decline in demand for finance professionals with Chinese expertise comes as Hong Kong's status as a financial nexus is rivaling New York.
TikTok bill faces uncertain fate in the Senate as legislation to regulate tech industry has stalled
Associated Press
Young supporters of social media app TikTok have been making threats of physical violence against US Senator Thom Tillis over the app’s potential ban. Tillis is one of several senators receiving threats related to TikTok after the House of Representatives passed legislation calling for the app to be banned unless its Chinese owner, ByteDance, sells its stake. TikTok had urged its young user base to contact representatives, with pop-up messages on the app warning users they would lose the app if they did not. Tillis said the messages demonstrated the influence of social media platforms on young people. The legislation has now reached the Senate, where it has encountered opposition. Regulating the tech industry has proven difficult for Congress in the past, with few bills passing. Some senators believe the TikTok bill could set a precedent for regulation. ByteDance has been given 90 days to sell its stake by the Committee on Foreign Investment in the United States.
Has China Lost Its Taste for the iPhone?
NY Times
Apple is facing challenges in China as iPhone sales continue to decline while Chinese rival Huawei sees a surge in sales. During the first six weeks of the year, iPhone sales fell 24% from the previous year, while Huawei's sales increased by 64%. Analysts attribute this decline to a combination of factors, including a slowdown in consumer spending, pressure from the Chinese government to shun US-made devices, and the rising tension between the US and China over trade and technology. Apple's grip on the Chinese market may be further threatened by these factors, as well as recent regulatory hits and the lack of mainstream appeal for its latest product, a virtual reality headset.
Chinese EV makers to take center stage at Bangkok motor show
Japan Times
Chinese automakers, including Geely's Zeekr and Xpeng Motors, are set to showcase their latest electric vehicles (EVs) at the Bangkok International Motor Show. This highlights the increasing challenge Chinese carmakers pose to Japanese auto giants that have traditionally dominated Thailand's vehicle market. The EV newcomers will be exhibiting alongside industry leaders such as Toyota at the week-long expo, which opens to the public on Wednesday.
Citic Securities slides after Shenzhen bourse scrutiny into brokerage’s IPO role
South China Morning Post
CITIC Securities, China's largest brokerage by market value, fell by the most in 18 months after the Shenzhen Stock Exchange announced it would be conducting an on-site supervision of the company. This investigation comes after the regulator pledged to tighten initial public offering (IPO) rules this month. The move is part of a wider crackdown on IPO sponsors in an effort to improve the quality of listed companies and hold sponsors accountable for their responsibilities. CITIC Securities has withdrawn seven IPO applications so far this year and still has 32 in the pipeline.
Country Garden shares soar after sourcing cash to fund skyscraper completion
South China Morning Post
Chinese property developer Country Garden has secured a CNY2.8bn ($384m) investment into a partially built 64-storey tower in Guangzhou's Baietan business district. The partnership with supply chain and technology company Guangdong Zhongwei will provide the much-needed funds to complete the project. Country Garden has struggled with cash flow after accumulating CNY257.9bn in debt, CNY109bn of which is due in June 2024.
3 Body Problem piracy in China shows some American shows can still break through
South China Morning Post
The release of Netflix's "The Three-Body Problem" in China saw a surge in online piracy. The number of downloads of BitTorrent files associated with the show hit 90,618 on the day of its release, far above the downloads of other streaming originals that have garnered positive attention in the country. The piracy spike reflects the intense interest in China to see how the US streamer is handling the best-known piece of Chinese science fiction globally. This is similar to the piracy surge that occurred after the release of Disney's live-action "Mulan" in 2020.
CATL Working With Tesla on Fast-Charging Cells, Supplying Nevada
Bloomberg
Contemporary Amperex Technology (CATL), the world's largest battery maker, is working on faster-charging batteries for Tesla as the electric car manufacturer seeks to defend its market share and roll out a new electric vehicle priced below $25,000. CATL Chairman Robin Zeng confirmed that CATL is supplying machinery to Tesla's factory in Nevada, and the two companies are collaborating on battery technologies to enable faster charging. CATL also plans to expand its licensing, royalty, and services model to other automakers and is considering building production capacity in Europe and Southeast Asia.
Xiaomi teases price of SU7 EV as showrooms in China begin displaying vehicle
South China Morning Post
Chinese electronics maker Xiaomi is set to announce the official price range for its first electric vehicle (EV) and start taking orders this week. Xiaomi's CEO, Lei Jun, stated that the goal for the EV, named the SU7, is for it to be the "best looking, easiest to drive and smartest car" priced below CNY 500,000 ($69,424). The company aims to become one of the world's top five carmakers. The SU7 will come in two versions with driving ranges of up to 668km and 800km respectively. Xiaomi has been seeking to diversify into EVs as demand for smartphones stagnates.
China state-owned investment firm's 30-year bond is oversubscribed
Nikkei Asia
China Chengtong Holding Group, a state-owned capital management firm, has issued a 30-year bond worth CNY1bn ($139m). The bond, with a coupon rate of 3.35%, will be used to pay off existing debt. It is the first ultra-long-term credit bond issued in recent years. Several Chinese firms have issued such bonds before, but usually with coupon rates of around 5%. Ultra-long-term credit debt is relatively small in China's bond market, accounting for just 2.5% of all non-financial corporate credit debts, according to Guosen Securities.
China blocks use of Intel and AMD chips in government computers
Nikkei Asia
China has introduced new guidelines that will mean US microprocessors from Intel and AMD are phased out of government PCs and servers, as Beijing ramps up a campaign to replace foreign technology with homegrown solutions.
Hong Kong’s family office hub drive augurs well for private banking: Citigroup
South China Morning Post
China's ultra-rich are turning to Hong Kong as a wealth management and family office hub for Asia, offering significant private banking opportunities, according to executives at Citigroup. The bank estimates that $100tn of wealth creation will take place across the world over the next 10 years, with the highest rate of growth in Asia. Hong Kong has the opportunity to showcase the importance of not only being an investment centre, but also a place for family offices to seek advice. An estimated $2.5tn in intergenerational wealth is expected to have changed hands across Asia by 2030.
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