Links for Thursday, July 1, 2021

Notable China news from around the world.

BUSINESS AND TECHNOLOGY:

Global chip supply to ease, but automakers are moving on
According to the CEO of China’s largest automaker, SAIC Motor, the global automotive chip shortage is expected to ease this month, returning to normal by the third or the fourth quarter, per Yicai Global.

  • The global chip shortage has been estimated to cost the auto industry up to $110 billion, reports CNBC. For SAIC, that has meant roughly 600,000 fewer cars sold in the wholesale business.
  • During the dry season, SAIC went independent: It partnered with Beijing-based chip unicorn Horizon Robotics to develop its own smart chips for SAIC vehicles.
  • But wait, there’s more: Other companies who’ve decided not to wait for the next haul include Xiaomi (in Chinese) and Baidu, which recently established a new chip company (in Chinese).

Luckin announces financial restatement after fraud scandal
Luckin Coffee, the coffee chain embroiled in a fraud scandal last year, announced a financial restatement after it was found to have fabricated $300 million in sales in 2019, per 36Kr (in Chinese). The correction led its shares to jump 14%.

  • The restatement, conducted by an independent board, found revenues for the second and third quarters of 2019 totaling 1.5 billion yuan ($232 million), but previously it had said they were 2.45 billion yuan ($380 million).
  • Context: Check the old and new reports to compare more specific disparities.

Tencent eyes control in Sino-Japanese insurer
Tencent is reportedly considering buying a controlling stake in Great Wall Changsheng Life Insurance Co., a Sino-Japanese joint venture, per Caixin.

  • The life insurer is 70% owned by China Great Wall Asset Management Co., one of China’s “Big Four” asset management companies (AMCs), while 30% is owned by Nippon Life Insurance Co., a major Japanese insurer.
  • Context: China Great Wall put the 70% stake up for sale at $614 million on Tuesday, according to a post (in Chinese) on the Shanghai United Assets and Equity Exchange.

Chinese pastry chain receives investment from…Tencent
MoMo Pastries, a Chinese pastry brand, has received funding from Tencent, valuing the company at 5 billion yuan ($773 million), per Late Post (in Chinese).

  • Based in Changsha, Momo Pastries is a new Chinese confectionery chain making freshly baked cream puffs, cheese crisps, toast, peach puffs, egg tarts, etc.
  • Takeaway: This pastry business may be another area ripe for tech innovations and Tencent wants in early.

Musk continues charm offensive
Elon Musk praises China’s ‘economic prosperity’ on 100th anniversary of Chinese Communist Party / CNN
“In a Twitter post, Musk wrote that ‘the economic prosperity that China has achieved is truly amazing, especially in infrastructure! I encourage people to visit and see for themselves.’”
On CNN in March: Elon Musk is trying to win China back.

Didi stock finishes up 1% on first day
Didi stock rises on first day, though rally fades into the close / WSJ (paywall)
“The gains bucked the trend of poor performance that has plagued several other Chinese companies’ IPOs in recent weeks, signaling that investors are willing to overlook some risks for the promise of high growth, and that Didi and its underwriters were wise in conservatively pricing the deal.”

Oil and natural gas
Chinese oil giants flag strong rebound in first-half income / Bloomberg (paywall)
“Energy giants China Petroleum and Chemical Corp. and PetroChina Co. both forecast a sharp improvement in net income for the first half of 2021 thanks to stronger crude oil prices as the Covid-19 crisis eased and the global economy improved.”
New pipeline network shakes up China’s natural gas dynamics / Caixin

Shipping logistics company gets Series D funding
Logistics firm Yunquna raises fresh capital to expand overseas network / Caixin
“The proceeds from the round, led by Citic Capital, will be mainly used to expand its network of overseas destination ports and improve its door-to-door cargo shipping services.”

Console gaming on the rise
China’s console gaming market expected to be worth $2.5 billion by 2025 / Caixin
“China’s console gaming market has long been lackluster thanks to a government ban on the sale of foreign-made consoles and their games, leaving consumers to buy products like Sony’s PlayStation on the gray market. The ban was lifted in 2015.”

China approves use of new cancer therapies
China approves innovative new drugs for insurance price-setting talks / Caixin
“Several new treatments, including for lung and gastric cancer, have been included in the list of 433 drugs over which the government and drugmakers will strike deals for lower prices.”

Property giants tweak services for changing Chinese environment
Property development glory days are over, Vanke says, as it hypes services / Caixin
“‘It’s getting harder to make money from the development business,’ said Vanke’s president and CEO Zhu Jiusheng at the shareholders’ meeting.”

Caution signs in economic recovery
China’s cautious consumers give little lift to weak household goods market / Caixin
Sales of fast-moving consumer goods rose 1.6% in the first quarter this year compared with the same period in 2019, slower than the 3% growth achieved two years earlier.
China’s economy flashes hints of weakness / WSJ (paywall)
Weakening foreign demand and supply chain disruptions slowed China’s factory sector in June, while the services sector continued to struggle.

TikTok tops worldwide nongame app standings
Trio led by TikTok among 10 highest-grossing nongame apps in first half / Caixin
“TikTok and its Chinese version Douyin generated more than $920 million in revenue globally on Apple’s App Store and Google Play, up 74% year-on-year, according to a report by SensorTower.”

Falling short of purchasing goals in U.S. trade agreement
China’s U.S. trade deal commitments more than 30 percent short of year-to-date target, report says / SCMP (paywall)
“China’s total purchases of U.S. goods in 2021, as of the end of May, reached only 69 percent of the pledged total, according to Chinese import data.”

TikTok removes underage accounts
TikTok removes more than 7 million underage accounts / Bloomberg (paywall)
TikTok took “a significant step in enforcing the required age of users on the app” by banning “more than 7 million accounts belonging to children under 13.”

SCIENCE, HEALTH, AND ENVIRONMENT:

COVID-19: Origins, Zimbabwe gets Chinese vaccines, Clover signs vaccine deal
Search for COVID-19’s origins leads to China’s wild animal farms — and a big problem / WSJ (paywall)
A WHO team “wants an examination of farms that supplied the market where early cases emerged, but most animals are now gone.”
Zimbabwe to get millions of vaccine doses starting next month / Bloomberg (paywall)
“Zimbabwe has purchased 3.5 million COVID-19 vaccine doses from China’s Sinopharm and Sinovac and the shots are set to be delivered from July through September, according to Finance Minister Mthuli Ncube.”
Chinese biotech firm Clover signs deal to make millions of COVID-19 vaccines for Covax Facility / SCMP (paywall)
“A Chinese biotech start-up developing a protein-based COVID-19 vaccine has signed an advance purchase agreement to supply up to 414 million doses for global use by next year.”

New views of Mars
Visitors on Mars send new views to Earth / NYT
Explore shots from multiple spacecraft on Mars, including China’s Zhurong rover.

New fish fossil suggests major evolutionary split
Body armor, permanent teeth and a cousin in Vietnam: discovery in China sheds light on fish from hundreds of millions of years ago / SCMP (paywall)
“A fossil found in Chongqing is believed to belong to a new species of fish from the Silurian Period,” suggesting “a major evolutionary split among fish.”

Squid fishing on pause
China to pause squid fishing in Pacific, Atlantic breeding grounds / AFP via HKFP
“China has announced a temporary ban on its fishing fleet — the world’s biggest — from catching squid in parts of the Pacific and Atlantic Oceans after overfishing pushed populations to the brink of collapse.”

POLITICS AND FOREIGN AFFAIRS:

U.S. and Japan military planning and exercises
U.S. and Japan conduct war games amid rising China-Taiwan tensions / FT (paywall)
“U.S. and Japanese military officials began serious planning for a possible conflict in the final year of the Trump administration, according to six people who requested anonymity. The activity includes top-secret tabletop war games and joint exercises in the South China and East China seas.”

Satellite images of missile silos in Gansu desert
China is building more than 100 new missile silos in its western desert, analysts say / Washington Post (paywall)
“China has begun construction of what independent experts say are more than 100 new silos for intercontinental ballistic missiles in a desert near the northwestern city of Yumen, a building spree that could signal a major expansion of Beijing’s nuclear capabilities.”
Jeffrey Lewis, an expert on China’s nuclear arsenal, says: “We believe China is expanding its nuclear forces in part to maintain a deterrent that can survive a U.S. first strike in sufficient numbers to defeat U.S. missile defenses.”
China is radically expanding its nuclear missile silos / Foreign Policy (paywall)
By Jeffrey Lewis.

More satellite imagery shows expanded airfield in Lop Nur, Xinjiang
China is expanding its mysterious, Area-51 style airfield / NPR
“‘I think we’re observing what appears to be a pretty important facility for China’s military space activities that appears to be growing,’ says Ankit Panda, a senior fellow at the Carnegie Endowment for International Peace who tracks space issues there.”

The future of the CCP
‘Not quite a religion’: China’s Communist Party attracts new devotees / AFP via HKFP
“‘Belief in the Party is steadfast. Perhaps not as deep as a religion like Buddhism or Christianity, but something that fosters self-discipline,’ said Wang, a partial pseudonym to protect the Party member’s identity.”
China isn’t that strategic / Atlantic (paywall)
Michael Schuman on China’s reputation for long-term diplomacy: “The country is often portrayed as a master of long-term thinking. It’s not that simple.”
‘Poverty divides us’: Gap between rich and poor poses threat to China / Guardian
“Xi Jinping himself has warned China’s wealth gap is not only economic but political and could threaten [the] Party’s legitimacy.”

China’s global image nears all-time lows, according to data
China falls behind U.S. in global image, survey data shows / WSJ (paywall)
Negative views of China continue to dominate its international image, survey finds / SCMP (paywall)
Negative views of China persist despite COVID-19 gains, Pew finds / Bloomberg (paywall)
China’s international image remains broadly negative as views of the U.S. rebound / Pew Research Center
Large majorities say China does not respect the personal freedoms of its people / Pew Research Center
Despite improved marks for its handling of the pandemic, China’s global image currently hovers near all-time lows, according to a recent Pew survey. Much of this stems from reports of human rights abuse, and negative views on China’s “respect for personal freedoms.”

Hong Kong in the national security law era
Xi Jinping urges Hong Kong to ramp up national security efforts in speech on twin anniversaries / SCMP (paywall)
“China’s president urges city’s government to implement the legal and enforcement mechanisms to safeguard national security.”
Handover day: Hongkongers’ freedoms protected by security law, says acting chief exec. as 4-person demo held nearby / HKFP
“Hong Kong’s national security law imposed on the city a year ago guarantees human rights, including freedom of the media and assembly, the city’s No. 2 official John Lee said on Thursday.”
Security tight in HK on China anniversary, official says city now stable / Reuters (porous paywall)
“Police vans, water cannon trucks, armoured vehicles and police units patrolled the streets. Passers-by were stopped and searched, with 11 people arrested in the Mong Kok district for allegedly distributing ‘seditious’ leaflets.”
‘Police state’ talk overblown, Hong Kong’s civil service chief says after cabinet reshuffle centred on security / SCMP (paywall)
Hong Kong’s acting chief executive says freedoms guaranteed under security law / Reuters (porous paywall)
Hong Kong gov’t should provide national security teaching materials, says ex-head of legislature as schools mark Handover anniversary / HKFP
Nordic newspapers publish front page letter to Beijing denouncing attacks on Hong Kong media / AFP via HKFP
“The four largest Nordic newspapers marked the centenary of the Chinese Communist Party’s founding on Thursday with a joint front-page editorial denouncing the regime’s attacks on Hong Kong’s independent media.”
Hong Kong librarian suspended after books by jailed Apple Daily founder Jimmy Lai put on recommended reading shelf / SCMP (paywall)
“A Hong Kong public library employee has been suspended after being held responsible for displaying books by jailed Apple Daily founder Jimmy Lai Chee-ying as ‘the librarian’s choice’ last week.”
A year under Hong Kong’s national security law: mass arrests, sanctions, a swifter Legco and a defunct newspaper / SCMP (paywall)

Slovenia persists with EU-China investment deal
Taking the EU reins, Slovenia plans to press ahead on China investment deal / SCMP (paywall)
“Slovenia will press on with completing the EU’s troubled investment deal with China as it assumes the presidency of the Council of the European Union on Thursday.”

U.S. ends military academy program for Cambodia due to China influence in region
U.S. ends military academy program for Cambodia amid strained ties / Reuters (porous paywall)
“The United States has ended its programme with Cambodia to send students to top American military academies, a U.S. embassy official said on Thursday, marking the latest sign of strains in the relations between the two countries.”
“Washington has been concerned over China’s growing military presence in Cambodia, with the Southeast Asian country becoming one of Beijing’s most important allies in the region.”

Chinese solar association rejects Xinjiang allegations in U.S. ban
China solar association says Xinjiang forced labour claims unfounded / Reuters (porous paywall)
U.S. ban on Xinjiang solar products over forced labour claims is baseless, China solar association says / SCMP (paywall)
Over a U.S. ban on Chinese solar imports last week, the “claims that Chinese solar companies are benefiting from forced labour in Xinjiang are unfounded and unfairly stigmatize firms with operations there, the country’s solar association said.”

China-North Korea relations
NKorea’s Kim vows to boost China ties amid pandemic hardship / AP
“North Korean leader Kim Jong Un said Thursday he’ll push to further upgrade relations with China, his main ally, as he struggles to navigate his country out of a deepening crisis linked to the pandemic.”

China-Singapore relations
Peoples of China and Singapore have greatly benefited from their ruling parties’ ties, Lee Hsien Loong says / Straits Times via Caixin (paywall)
“The growing relations between Singapore’s People’s Action Party (PAP) and the Chinese Communist Party (CCP) have kept pace with the countries’ evolving development priorities and greatly benefited their peoples, Singaporean Prime Minister Lee Hsien Loong said.”

SOCIETY AND CULTURE:

Lead-up to Tokyo Olympics
China eyes another clean sweep but challenges ahead / Reuters (porous paywall)
“China will be bidding for a fourth clean sweep of table tennis medals at the Tokyo Olympics[,] and despite some mixed performances in the run-up to the Games[,] it will be a major shock if their paddlers are not standing atop the podium yet again.”
Tokyo 2020: China looks to repeat Olympic diving dominance / AP
“China remains the dominant force in the sport, having won seven of eight gold medals in 2016. The Chinese followed up by taking 12 of 13 events at worlds in 2019.”
Badminton-Japanese shuttlers bid to challenge China’s dominance / Reuters (porous paywall)
“For the first time in the history of Olympic badminton, Japan is heading into the Games in a position to challenge China’s longstanding dominance in the sport which was threatened at the last Games in Rio de Janeiro.”

Darlie toothpaste fails to uphold BLM commitments
A year on, ‘racist’ Asian toothpaste Darlie remaining on shelves, despite Colgate’s vow to rebrand / HKFP
Darlie toothpaste was “infamous for its racist branding and history.” At the height of the BLM movement last year, Colgate-Palmolive — which owns half of Darlie’s local manufacturer — told HKFP that it will make “substantial changes to the name, logo and packaging.” Yet no changes have been made, as the product is still sold on the shelves in Asia.

China’s workers maintain urban flight
‘Reverse migration’ is picking up in China as workers give up on big cities / CNBC
Millions of Chinese people did not return to urban areas for work after COVID-19 last year, partly because they “cannot afford city housing and do not have access to city healthcare.”