Links for Monday, October 25, 2021


China making one company to rule all rare earths
China plans to restructure three rare earths producers to create a “world-class company” with a nearly 70% share of the materials’ domestic production quota:

  • A key ingredient in electric vehicles and smartphones, rare earths are one of many resource battlegrounds several countries are trying to dominate.
  • Subsidiaries of three major rare earths producers are “reorganizing”: China Minmetal Corp. (CMC), the Ganzhou City government, and China Aluminum Corp.

The context: China accounts for 60% of the world’s production of rare earths, according to the U.S. Geological Survey. Export destinations include Japan (49% by value) followed by the U.S. (15%).

  • Due to political turmoil in Myanmar, the source of about half of China’s rare earths concentrates, prices of dysprosium and terbium have increased 60% and 90%, respectively, from a year ago.
  • Meanwhile, Beijing’s efforts are being met by plans in the E.U., the U.S., Australia, and Japan to strengthen their hands in the industry.

Why it matters: As global demand for EVs rise, rare earths have come to symbolize the geopolitical confrontation in sedimentary form. But China’s preparations for heavier competition doesn’t mean the metals are a zero-sum game, as some experts claim.

Additional business and technology links:

Alibaba takes world record with a whopping $344 billion loss
Alibaba has lost $344 billion in world’s biggest wipeout / Bloomberg (paywall)
“Yet one year on, the technology titan has lost a whopping $344 billion in market capitalization — the biggest wipe-out of shareholder value globally, according to data compiled by Bloomberg.”

Evergrande and real estate updates
China Evergrande says work on some residential projects has resumed / WSJ (paywall)
“[The] developer posted photographs showing workers on the job in cities including Shenzhen, Dongguan and Zhongshan.”
Evergrande resumes work on projects in southern China / FT (paywall)
Evergrande pays missed dollar bond coupon, says Chinese state media / FT (paywall)
Evergrande EV unit soars after Hui pledges to shift business / Bloomberg (paywall)
“China Evergrande Group’s electric-vehicle unit jumped in Hong Kong trading after the chairman of the indebted property giant said making such cars would become its main business within a decade.”
Princeling’s surprise default roils global investors in China / Bloomberg (paywall)
“Zeng’s political pedigree has heightened speculation over the level of support troubled developers may receive as authorities clamp down on the debt-burdened sector.”
Editorial: China should stick to its guns for regulating the housing market / Caixin (paywall)

Don’t believe the reviews
人民日报调查:刷好评已成灰色生产链,虚假好评到底怎么来的? / People’s Daily
Party mouthpiece the People’s Daily ran an investigative piece today on the problem of fake reviews, specifically criticizing third-party firms that sell “good reviews” to restaurants.

Millions for password and security platform
身份云平台 Authing 完成 2300 万美元 A 轮融资,老虎环球基金领投 / 36Kr
Authing, an identity management platform, raised $23 million in a Series A led by Tiger Global Fund.

Earnings streak dims as biggest firms post “brutal” losses
China earnings to lose steam on brutal quarter for biggest firms / Bloomberg (paywall)
“A combination of raw material inflation and weak consumer spending has made the third quarter a brutal period for China’s biggest companies, with property, agriculture and power generation sectors set to show the worst plunges in profit.”

Is China’s economy in trouble?
China seeks to allay growth slowdown fears in Xinhua report / Bloomberg (paywall)
“China sought to allay concerns about the economy’s slowdown with a lengthy state media report outlining how the government is managing risks and remains confident about achieving its targets for the year.”
China outlines strategy to meet economic challenges, from power crisis to Evergrande woes / SCMP (paywall)
Chinese economy risks deeper slowdown than markets realize / Bloomberg (paywall)
COVID-19 sets back China’s plans to rebalance its economy / WSJ (paywall)
“Pandemic-era boom in demand for Chinese goods boosted exports but made the country even more reliant on trade.”
Is China in big trouble? / NYT (paywall)
By Paul Krugman: “Basically, China has masked underlying imbalances by creating an immense housing bubble. And it’s hard to see how this ends well.”
Xi’s ‘common prosperity’ in theory and practice / WSJ (paywall)
“Newly released remarks warn about the dangers of ‘welfarism’ and government dependence.”

Tax evasion at SOHO, China’s most fashionable real estate developer?
Chinese tax agency investigating high-profile developer / AP
“The Chinese government said Friday it is investigating possible tax evasion by a subsidiary of high-profile real estate developer SOHO China Ltd., the target of an aborted takeover attempt this year by Blackstone Group.”

Tighter regulations for online insurance
China tightens online insurance rules in widened crackdown / Bloomberg (paywall)
“China tightened rules for online insurance sales, seeking to root out irregularities in a burgeoning business that has bolstered platforms like Waterdrop Inc. and Huize Holding Ltd.”

The business of recycling electric car batteries
China’s next EV advantage is a mountain of retired batteries / Bloomberg (paywall)
“The first crop of EVs are coming to the end of their life in China after first appearing in fleets around 2008. Some 720,000 tons of EV batteries will be available to recycle by 2025, according to estimates, and regulators are paying this end of the spectrum more attention.”

Volvo cuts back on big IPO projections, as Chinese owner relinquishes some control
Volvo cuts back size of planned IPO to $2.3 billion / Bloomberg (paywall)
Volvo IPO prices lower than expected despite ambitious EV plans / WSJ (paywall)
“Pricing shows old auto is no match for valuations enjoyed by Tesla and other pure electric-vehicle players.”
Geely loosens grip on Volvo Cars days before $23bn IPO / FT (paywall)
“The Chinese owner of Volvo Cars has bowed to pressure from Swedish investors to loosen its grip on the group’s voting rights just days before the premium carmaker is set go public in stock market listing that could value it at as much as $23 billion.”

Tesla gets a new battery, sets up new Shanghai R&D center
Tesla supplier shows off more powerful battery / WSJ (paywall)
“Tesla’s supplier Panasonic said it has mostly solved the technology challenges with a larger lithium-ion battery that Elon Musk has called the lowest-cost way to power an electric car.”
Tesla sets up first overseas R&D center in Shanghai / Bloomberg (paywall)
“Tesla Inc. has set up a new research and development center in Shanghai as it continues to expand its presence in the Chinese market.”
Tesla opens new China research, data centers; will store data locally / Reuters

Luxury brands aim to weather the regulatory storm
Luxury brands look to ride the storm of China’s policy shifts / FT (paywall)
“Corporate strategists may draw comfort from President Xi’s recent remarks on citizens’ wealth.”

Magnesium shortage may force carmakers to shut down
EU leaders warn of risk to industry over shortage of magnesium from China / FT (paywall)
“EU leaders have raised concerns that a shortage of magnesium could force carmakers and other users of aluminium to shut down production within weeks unless China restarts its magnesium smelters.”

So many problems, but Moutai just keeps raking in the cash
Luxury Chinese liquor giant reports 12% jump in earnings as regulators try to tame runaway prices / Caixin (paywall)
“China’s legacy liquor giant Kweichow Moutai reported a year-on-year profit increase of 12.35% for the third quarter, amid a regulatory push to curb the retail prices of luxury ‘baijiu’ in the country.”

Unit of Dalian Wanda plans Hong Kong IPO
China’s biggest mall manager plans Hong Kong listing / WSJ (paywall)
“The unit of Chinese conglomerate Dalian Wanda was valued at $28 billion in a recent fundraising round.”

Honeywell, the U.S. aerospace giant, wins in China
Honeywell’s formula for success in China / WSJ (paywall)
“Shane Tedjarati spent two decades embedding the U.S.-based aerospace giant and defense contractor in Chinese life; ‘little by little, we had this Chineseness in our bones.’”

Huge valuation for Tezign to “connect designers with businesses”
Harvard-trained designer creates China business software unicorn / Bloomberg (paywall)
“A Harvard University-educated designer has turned his content marketing platform into a unicorn, helped by investors betting on enterprise software as the next big opportunity in China’s tech industry.”

Firms frustrated over Hong Kong’s tight COVID restrictions
Hong Kong sticks to strict quarantine regime even as region starts to open / FT (paywall)
“Continued pursuit of zero-Covid makes travel almost impossible and frustrates global business.”
Global banks up pressure on Hong Kong to ease restrictions / Bloomberg (paywall)
“The finance industry is ratcheting up pressure on Hong Kong to ease its strict quarantine rules and abandon its zero-COVID policy after a survey found almost half of major international banks and asset managers are contemplating to move staff or functions out of the city.”
Cruise giant Royal Caribbean appeals to Hong Kong authorities to reconsider 21-day service suspension over COVID-19 scare / SCMP (paywall)
Hong Kong’s zero-COVID policy undermining financial hub status – industry group / Reuters

More soaring food prices
Hog, apple prices jump in China as market tightens before winter / Bloomberg (paywall)


Fossil fuels are here to stay, for now
Xi says China must secure energy supply in ‘its own hands’ / Bloomberg (paywall)
“President Xi Jinping told oil workers that China must secure its own energy supply, signaling a continued role for fossil fuels in the nation’s efforts to meet power demands.”
Chinese coal titan Shenhua cashes in on record price surge / Bloomberg (paywall)
“China’s biggest coal miner is profiting handsomely from record prices, as producers of the fuel benefit from an energy crisis that’s shuttered factories in the country and threatens global economic growth.”
Cheniere bets on Chinese demand for U.S. gas exports / FT (paywall)
“Asian demand for natural gas is set to drive growth in the LNG industry for ‘decades to come,’ even as the world reduces its dependence on hydrocarbons, one of the biggest U.S. exporters of the fuel has predicted.”

University lab explosion
Explosion at Chinese university laboratory kills 2 / AP
“Two people were killed and at least nine others were injured in a laboratory explosion at a university in eastern China, state media said Monday.”

La Niña to bring a colder-than-usual winter
La Nina threatens to worsen energy crisis with colder winter / Bloomberg (paywall)
“Lower than usual temperatures from China to Japan will add to power demand at a time of already tight supply and high prices.”


Hong Kong tightens security and speech clampdowns, demands compliance from banks
With new conviction, Hong Kong uses security law to clamp down on speech / NYT (paywall)
“A Hong Kong court on Monday convicted an activist of inciting secession for shouting pro-independence slogans at a series of protests, underlining the power of a sweeping national security law to punish speech.”
As Hong Kong’s civil society buckles, one group tries to hold on / NYT (paywall)
“Unions and other organizations have dissolved after facing pressure under a new security law. The Hong Kong Journalists Association is hoping it can avoid that fate.”
Hong Kong convicts second person under National Security Law / Bloomberg (paywall)
Amnesty International exits Hong Kong, citing National Security Law / WSJ (paywall)
“Human-rights group says authorities’ crackdown on dissent makes maintaining operations in city unworkable.”
Amnesty International to shut down in Hong Kong, citing security law fears / Bloomberg (paywall)
Amnesty International to close Hong Kong offices this year / AP
Hong Kong banks to disclose related property of clients who breach security law / Reuters
Hong Kong widens security supervision with request to banks / Bloomberg (paywall)
“Hong Kong banks will be obliged to report disclosures on clients suspected of violating the national security law imposed on the financial hub by Chinese authorities last year that has led to more than a hundred arrests and key civil society groups to disband.”

Will Germany get tougher on China?
Germany’s subtle shift in tone on China / Bloomberg (paywall)
“Scholz’s prospective government coalition partners favor a tougher line on China, with the Greens more vocal in condemning Beijing’s treatment of ethnic Uyghurs and threats to Taiwan. Even if he dissents, Scholz won’t wield the foreign policy power Merkel accrued over almost 16 years.”
Hamburg is at the heart of Germany’s growing dilemma over China / Bloomberg (paywall)
“For a city that markets itself as China’s gateway to Europe, the agreement is a step toward becoming a go-to hub for COSCO’s vast cargo shipments. But away from the business of trade that Hamburg has thrived on for centuries, the tighter embrace of China is stirring concerns.”
Chinese pressure blamed as Xi Jinping book events are cancelled in Germany / SCMP (paywall)
“The abrupt cancellation of events discussing a German book on Xi Jinping has raised fresh concerns about Chinese interference in European academia, prompting Beijing’s embassy in Berlin to defend Confucius Institutes.”

U.K. foreign secretary warns on China
U.K.’s Truss says country must not become too reliant on China / Bloomberg (paywall)
“Liz Truss warned of the importance of not becoming overly reliant upon China, in an indication of her priorities as the U.K.’s new foreign secretary.”

Chinese boats “harass” Malaysian vessels in South China Sea
China harasses Malaysian oil and gas vessels on a ‘daily’ basis, Asia Maritime Transparency Initiative says / SCMP (paywall)
“Chinese boats have been harassing civilian vessels in Malaysian oil and gas fields in the South China Sea ‘on a daily basis’ for the past two years, according to the Asia Maritime Transparency Initiative.”

China beefs up border with India
China strengthens land border protection with new law / Reuters
“China passed a law on Saturday to strengthen border protection amid a protracted standoff with India, worries about spillover effects from Taliban-controlled Afghanistan and the spread of COVID-19 from Southeast Asia.”

China’s foreign minister to meet Taliban leaders yet again
China’s Foreign Minister Wang Yi to meet Afghan Taliban leaders in Doha / SCMP (paywall)
“Chinese Foreign Minister Wang Yi will hold talks with a delegation of the interim Afghan Taliban government during his visit to Qatar this week, in the first high-level engagement since the militant group took power in Kabul two months ago.”
Senior Chinese diplomat to meet Taliban interim gov’t on Qatar trip / Reuters

China’s first female astronaut shines the spotlight on gender inequality
She is breaking glass ceilings in space, but facing sexism on Earth / NYT (paywall)
“Sanitary pads and makeup: A Chinese astronaut’s six-month stay aboard the country’s space station has revealed conflicted cultural values toward gender.”

Biden talks Taiwan, China says “no room” for compromise
Biden said the U.S. would protect Taiwan. But it’s not that clear-cut. / NYT (paywall)
“After the president’s remarks at a CNN event, the White House quickly declared that the American policy of ‘strategic ambiguity’ over the island’s defense had not changed.”
White House, clarifying Biden remark, says Taiwan policy hasn’t changed / WSJ (paywall)
Biden vows to defend Taiwan from Chinese military action / FT (paywall)
“White House seeks to play down comments that appeared to signal change in ambiguous policy.”
Biden says U.S. would defend Taiwan from attack by China / Bloomberg (paywall)
China vows no concessions on Taiwan after Biden comments / AP
China’s rise is a threat the U.S. has faced for a century / Bloomberg (paywall)
Hal Brands writes: “The nations of the maritime ‘rimlands’ have been very successful at keeping Eurasian superpowers in check.”

China at the UN: Climate change, Uyghur pressure, Taiwan tensions
China will uphold world peace, Xi says, despite others’ concerns / Reuters
“President Xi Jinping vowed on Monday that China would always uphold world peace and international rules, amid concerns expressed by the United States and other countries over its increasing assertiveness globally.”
Xi takes veiled swipe at U.S. as China marks 50 years at U.N. / Bloomberg (paywall)
EU, Chinese climate officials to meet in London before U.N. talks / Bloomberg (paywall)
“The European Union’s top climate official is set to meet China’s special envoy on climate change in London as the two sides attempt to build momentum ahead of crucial talks aimed at limiting global warming that start later this week.”
Beijing will never let Taipei participate in U.N., former envoy to U.S. says / SCMP (paywall)
Taiwan, U.S. discuss U.N. participation ahead of key anniversary / Reuters
43 countries criticize China at U.N. for repression of Uyghurs / AP
“More than 40 mainly Western countries criticized China at a U.N. meeting on Thursday for the reported torture and repression of Uyghurs and other religious and ethnic minorities in Xinjiang, keeping a spotlight on the region where foreign governments and researchers say an estimated 1 million people or more have been confined in camps.”
The U.N. should open its door to democratic Taiwan / WSJ (paywall)
By Gary Schmitt and Michael Mazza: “[…] the U.S. should make clear to Beijing that absent far greater Chinese flexibility on Taiwan’s engagement in the U.N., Washington will launch a campaign to secure Taiwan’s full membership.”

U.S.-China tech wars
U.S. warns of efforts by China to collect genetic data / NYT (paywall)
“The National Counterintelligence and Security Center said American companies needed to better secure critical technologies as Beijing seeks to dominate the so-called bioeconomy.”
U.S. intelligence officials warn companies in critical sectors on China / FT (paywall)
“U.S. intelligence officials have launched a campaign to warn American companies about the risks of interacting with China in critical industries, in a push to make it harder for Beijing to obtain technology and data.”
House Republicans call for tougher controls to keep U.S. tech from China / WSJ (paywall)
“In a letter to Commerce Secretary Raimondo, the GOP lawmakers urge action to protect semiconductors, aviation and emerging technologies.”
U.S. intel warns China could dominate advanced technologies / AP


Chinese pianist Lǐ Yúndí 李云迪 named in prostitution case
Chinese pianist is held on prostitution suspicion, state media says / NYT (paywall)
“Lǐ Yúndí 李云迪, a famous performer, was accused of soliciting a woman, state news outlets said. Officials often use such accusations against their enemies.”
Beijing police name pianist Li Yundi in prostitution case / AP
China detains ‘piano prince’ Li Yundi on suspicion of hiring prostitute amid crackdown on celebrity culture / Washington Post
Last week on SupChina: China’s ‘Prince of the Piano’ Li Yundi arrested in Beijing for soliciting prostitute.

China’s early gamers
Pixel deep: How localized ‘reskins’ shaped China’s early gamers / Sixth Tone
“Known in Chinese as ‘huanpi,’ early localization efforts were half-hearted, often patronizing, and still better than nothing.”

Rowing in Shanghai
Shanghai launches new regatta aimed to rival Henley and Boston / Sixth Tone
“The inaugural Head of Shanghai River Regatta is one of the first major sports events the Chinese city has hosted since the start of the COVID-19 pandemic.”

A new law to put less pressure on students
China passes law to cut homework pressure on students / Reuters
“China has passed an education law that seeks to cut the ‘twin pressures’ of homework and off-site tutoring in core subjects, the official Xinhua news agency said on Saturday.”

No politics for Hong Kong marathon runners
Hong Kong police tell marathon runners to cover up ‘political’ clothing and tattoos / Guardian
“Hong Kong marathon runners were ordered to cover up “political” slogans and tattoos before being allowed to compete at the first major sporting event on the island in almost two years.”

“Queer-baiting” musicals
How China’s musicals lost their groove / Sixth Tone
“Chinese musical theater has largely abandoned high-concept shows in favor of shallow engagement with idol culture.”