Links for Monday, August 23, 2021

BUSINESS AND TECHNOLOGY:

Family feud, pork edition
A father-son feud between the chairman of WH Group and his son over succession and management problems has wiped out more than $2 billion of market value, per Bloomberg.

• Shares of WH Group, a meat and food processing company, have plunged more than 15% in two days to the lowest in over two years after Wàn Hóngjiàn 万洪建 accused his father, Wàn Lóng 万隆, the company’s founder and top shareholder, of financial misconduct.
• WH Group is the world’s largest meat processor. It owns U.S. pork supplier Smithfield Foods Inc., which it acquired in 2013.

Bilibili spends big on marketing, as gaming’s future looks uncertain
Bilibili may have overdid it on advertising and marketing as its losses more than doubled in the second quarter despite strong gains in revenues, per Caixin Global.

• Bilibili’s sales and marketing expenses skyrocketed 107% year-on-year, with cash mainly used for marketing Bilibili’s app, increasing brand awareness, promoting its mobile games, and hiring sales and marketing personnel.
• Bilibili has tried to diversify its customer segments away from its original anime fan base.
• The efforts come three weeks after an article in the state media Economic Information Daily labeled online games “spiritual opium,” triggering speculation that the business could be the next target in Beijing’s sweeping crackdown on the country’s tech and internet giants.

Car hailing: Didi dominates despite crackdown
Beijing’s cybersecurity review has done little to derail Didi’s dominance in the ride-hailing industry, per the SCMP.

• Orders rose 13% in July, above the 11% growth for the entire market but trailing other main players in the segment. The rival app of Meituan — Meituan Dache — saw a 23% increase while Geely-backed Caocao saw order numbers jump 32%.
• With 493 million users and 13 million drivers, Didi enjoys a 90% total market share. China had 241 licensed ride-hailing platforms by the end of July, but only 17 had monthly orders above 300,000.
• Didi’s stock price in New York fell 6.5% on Wednesday to $7.90, nearly half its initial public offering price at the end of June.

Beijing bails out China’s most distressed manager of distressed debt, again
Huarong will “get financial assistance from a group of state-backed companies after months of silence about its future,” per the NYT. The company said it had a $16 billion loss in 2020.

See also:

• China Huarong asset management ratings cut by Moody’s / Bloomberg (paywall)
  “China Huarong Asset Management Co.’s credit rating was cut by Moody’s Investors Service to Baa2 from Baa1, and the borrower remains on watch for a potential further downgrade.”
• China Huarong remains on CreditWatch at S&P despite bailout deal / Bloomberg (paywall)
  “China Huarong Asset Management Co. remains on S&P Global Ratings’ watchlist for a possible downgrade, even after the bad-debt manager received a state-led bailout.”
• Huarong’s survival doesn’t mean Chinese firms can’t fail / WSJ (paywall)
  “But it would be a mistake to conclude from Huarong’s rehabilitation that nothing is changing in China’s debt markets and that government support is still automatic when state companies stumble.”

China halts 42 IPOs amidst probes
China regulator halts 42 IPOs on probe of broker, law firm / Bloomberg (paywall)
“China’s market regulator halted 42 initial public offerings in Shanghai and Shenzhen after starting a probe into an investment bank, a law firm and other parties involved in the deals.”
China halts over 40 IPOs amid regulatory probe into law firm, broker / Reuters
BYD chip unit IPO stalled as China regulator probes adviser / Bloomberg (paywall)
Chinese IPO freeze widens to dozens more offerings / Nikkei Asia

Other rules for tech IPOs
China exchanges to improve IPO pricing on Star, ChiNext boards / Bloomberg (paywall)
“China’s stock exchanges have issued revised draft IPO listing rules that may help realize better prices by enabling offline institutional investors to bid higher on Shanghai’s Nasdaq-style Star and Shenzhen’s ChiNext boards.”

More restrictions on data in Beijing’s crackdown
China passes new personal data privacy law, to take effect November 1 / Reuters
“China’s National People’s Congress on Friday passed a law designed to protect online user data privacy and will implement the policy from November 1, according to state media outlet Xinhua.”
China issues tighter data security rules for ride-hailing firms amid Didi probe, but more clarity still needed / SCMP (paywall)
New Chinese law tightens control over company data on users / AP
China broadens restrictions on driver data gathered by carmakers / Bloomberg (paywall)
China eyes pushing U.S. IPO-bound firms to hand over data control — sources / Reuters
“Chinese regulators are considering pressing data-rich companies to hand over management and supervision of their data to third-party firms if they want U.S. stock listings, sources said, as part of Beijing’s unprecedented scrutiny of private sector firms.”
China removes 25 apps as the country cracks down on tech companies to protect citizens’ online privacy / Global Times

Auditing the auditors
China strengthens supervision of accounting firms in fight against forgery / Reuters

Tech shares rebound, but is it temporary?
China tech shares stage rebound after five-week selloff / Bloomberg (paywall)
Even after $1.5 trillion rout, China tech traders see more pain / Bloomberg (paywall)
“Even a $1.5 trillion selloff may not provide an attractive entry point for equity investors as they grapple with cascading risks in China’s technology sector.”
Chinese stocks slide as Beijing’s crackdown shows no sign of abating / WSJ (paywall)
Half a trillion dollars wiped from China markets in a week as clampdowns shatter confidence / Reuters

China’s crypto flight
Cryptocurrency companies are leaving China in ‘great mining migration’ / WSJ (paywall)
“Miners face high costs, other hurdles in removing their machines after China’s crackdown.”
Court in China says cryptocurrency ‘not protected by law’ in ruling that could set a precedent for bitcoin lawsuits / SCMP (paywall)

Will the government “take action sooner” on economic risks?
China plays the long game in shift to ‘cross-cyclical’ strategy / Bloomberg (paywall)
“The Chinese Communist Party has a new catchphrase to guide its economic policy, a ‘cross-cyclical’ approach that government advisers say means taking action sooner, in smaller steps and with a longer time frame in mind.”

Chinese investors to abandon Turkey expressway deal
Chinese group close to terminating Turkey expressway deal / Bloomberg (paywall)
“A group of Chinese investors who had agreed to buy a stake in an expressway project in Turkey will seek to terminate that deal after failing to close the terms of the transaction, according to an exchange filing.”

China will get Turkmenistan gas
China’s CNPC secures 51 bcm of Turkmen gas in new deal, says source / Reuters
“Chinese state energy firm CNPC will receive up to 51 billion cubic metres of gas from Turkmenistan in exchange for helping the Central Asian nation boost output at its giant Galkynysh field, a source familiar with the plans said on Monday.”

Volvo buys Chinese truckmaker
AB Volvo buys Chinese truck business for about $125.7 million / Reuters
“AB Volvo said on Monday it had struck a deal to buy a heavy duty truck subsidiary of Jiangling Motors Corp (JMC) for about 1.1 billion Swedish crowns ($125.7 million) to make trucks in the world’s biggest vehicle market.”

JD.com sees new users despite crackdown
China’s JD.com beats estimates, adds record new users amid regulatory tightening / Reuters

China’s mega steel merger
China adds to list of steel giants with new mega-mill merger / Bloomberg (paywall)
China steel firms start merger to create world’s third biggest producer / Reuters
“Chinese steelmakers Ansteel Group and Ben Gang formally began the process of merging their operations on Friday.”

Chinese iron ore miner invests in lithium to cash in on EV demand
Chinese iron ore miner to invest $164 million in lithium production / Reuters
“Chinese iron ore miner Hainan Mining Co Ltd said on Monday it would invest 1.065 billion yuan ($164 million) in a plant to make battery-grade lithium hydroxide as it looks to cash in on booming demand in the electric vehicle (EV) sector.”

Tencent’s comic app now worth more than $1 billion
Tencent-backed comics app turns unicorn in $240 million round / Bloomberg (paywall)
“Kuaikan, a comics app backed by Tencent Holdings Ltd., has raised $240 million in a new funding round that elevated it to unicorn status, giving the company a boost as competition in China’s online entertainment arena intensifies.”

The biggest IPO of 2021
China Telecom surges in 2021’s biggest listing, passing Kuaishou / Bloomberg (paywall)

SCIENCE, HEALTH, AND ENVIRONMENT:

China’s Mars rover completes program
China’s Mars rover soldiers on after completing program / AP
“China’s National Space Administration said on its website Friday that Zhurong completed its 90-day program on August 15 and was in excellent technical condition and fully charged.”

More floods and rain in Henan, Shaanxi, and Sichuan
Rains in central China cause landslides; no deaths reported / AP
“Torrential rains in central China caused landslides, knocked out power and damaged houses, but no deaths were reported in a region where flooding killed more than 300 people last month, the government said Monday.”
Central China cities issue highest flood warning level / Reuters
“Two cities in China’s central province of Henan issued highest flood warnings on Sunday.”

New forests the size of Belgium every year?
China to step up tree planting campaign to help reach net zero / Reuters
“China will plant 36,000 square kilometres of new forest a year — more than the total area of Belgium — from this year to 2025 as it bids to combat climate change and better protect natural habitats, a senior forestry official said on Friday.”

Taiwan starts using homegrown vaccines
Taiwan begins using a homegrown vaccine after months of shortages in imports. / NYT (paywall)
“Taiwan started administering its first locally developed COVID-19 vaccine on Monday after months of struggles to get sufficient supplies of doses from major foreign vaccine makers.”
President Tsai Ing-wen gets Taiwan’s domestically developed COVID-19 vaccine / Reuters via SCMP

POLITICS AND FOREIGN AFFAIRS:

Biden nominates ambassadors to China and Japan
Biden picks Burns for China ambassador; Emanuel for Japan / AP
“President Joe Biden is nominating longtime former senior State Department official Nicholas Burns to serve as his ambassador to China and former Chicago Mayor Rahm Emanuel to serve as his envoy to Japan.”
Biden nominates Burns and Emanuel to be his ambassadors to China and Japan / NYT (paywall)
Biden to nominate Nicholas Burns as U.S. ambassador to China / WSJ (paywall)
‘Not much room to move’ for next American ambassador / SCMP (paywall)
Related, on The China Project:

• U.S. and China to kick-start diplomatic ties with ambassador appointments even as ‘strategic competition’ deepens
• Who is Qin Gang, China’s new ambassador to the U.S.?

No one says Alibaba is involved yet, but Hangzhou Party secretary is being probed
China’s top anti-graft watchdog probing Hangzhou party secretary / Reuters
“China’s top anti-corruption watchdog is investigating the party secretary of Hangzhou, Zhōu Jiāngyǒng 周江勇, for serious violations of party discipline and national laws.”
China starts probe into Party boss of Alibaba’s home city / Bloomberg (paywall)
China orders Communist Party members to resolve conflicts of interest as top Hangzhou official probed / Reuters
Officials in Hangzhou urged to clean up their conflicting business ties / Caixin (paywall)

China delays Hong Kong anti-sanctions law
China delays anti-sanctions law for Hong Kong / WSJ (paywall)
“The delay is a reprieve for companies that had feared the Catch-22 of violating Chinese law by upholding sanctions or violating U.S. law by not doing so…Beijing was concerned the legislation could further shake business and investor confidence.”
Beijing unexpectedly postpones vote on adding anti-sanctions legislation to Hong Kong’s Basic Law / SCMP (paywall)
Beijing’s anti-sanctions law for Hong Kong: why is it being postponed? What do we know and don’t know about the delay? / SCMP (paywall)

Jail time and censorship: Hong Kong under the National Security Law
Candidate pulls out of Hong Kong lawyers’ group election over safety fears / Reuters
‘It’s about self-censorship’: Hong Kong counsellors struggle to navigate security law concerns / HKFP
Hong Kong pro-democracy activist Max Chung arrested over demo protesting 2019 Yuen Long mob attack / HKFP
Hong Kong ex-district councillor Roy Tam denied bail pending national security trial / HKFP
Hong Kong’s Carrie Lam faces public Q’s for first time in 2 years, hears 1 directly critical opinion from crowd largely selected by gov’t / HKFP
Chinese officials lecture Hong Kong legislators on Five Year Plan / Nikkei Asia (paywall)

Third-child policy formalized
China allows couples third child amid demographic crisis / AP
“China will now allow couples to legally have a third child as it seeks to hold off a demographic crisis that could threaten its hopes of increased prosperity and global influence.”
Couples in China can now have up to three children, but who is going to take care of them? / SCMP (paywall)
China enshrines three-child policy into law / Sixth Tone

U.S. VP in Southeast Asia
Vice President Kamala Harris to focus on countering China on Southeast Asia trip / WSJ (paywall)
“A trip by Vice President Kamala Harris to Southeast Asia will give the Biden administration an opportunity to put the focus back on countering China at a time when the U.S.’s chaotic exit from Afghanistan is raising questions about Washington’s reliability as an ally.”
Kamala Harris says U.S. focus on Afghan evacuations, pledges open South China Sea / Reuters
Singapore PM Lee backs U.S. as ‘guarantor’ of security in Asia as Harris grilled over Afghanistan chaos / SCMP (paywall)

More on Afghanistan
In Afghanistan, China is ready to step into the void / NYT (paywall)
Zhōu Bō 周波, a senior colonel in the People’s Liberation Army from 2003 to 2020, writes:

Afghanistan has long been considered a graveyard for conquerors — Alexander the Great, the British Empire, the Soviet Union and now the United States. Now China enters — armed not with bombs but construction blueprints, and a chance to prove the curse can be broken.

China both worries and hopes as U.S. departs Afghanistan / AP
China’s warm welcome for Taliban sparks backlash at home / Bloomberg (paywall)
U.K. says Russia, China needed for ‘moderating influence’ over Taliban / Reuters

Taiwan, the Taliban, and the Chinese Communist Party
Will America fight to save Taiwan? Will the Taiwanese? / WSJ (paywall)
Taiwan’s planned $7 billion missile boost may push PLA to step up combat readiness / SCMP (paywall)
Japan plans Taiwan party-level talks in move likely to anger Beijing / SCMP (paywall)
Taiwan says China wants to ’emulate’ the Taliban / Reuters
“Taiwan’s foreign minister accused China on Saturday of wanting to ‘emulate’ the Taliban, saying the island that Beijing claims as sovereign Chinese territory did not wish to be subject to communism or crimes against humanity.”

U.S. backs Lithuania over Taiwan
U.S. lends support to Lithuania against China pressure / Reuters
“U.S. Secretary of State Antony Blinken spoke with Lithuania’s foreign minister on Saturday and agreed on ‘bilateral coordinated action’ to help the country withstand pressure from China over its decision to develop ties with Taiwan, Lithuania said.”

India constructs roads near China border
Hundreds of workers flock to ‘roof of the world’ as India pushes infrastructure near China border / SCMP (paywall)
“Hundreds of workers employed by the Border Roads Organisation (BRO), the road-construction wing of the Indian army, work on the strategic arteries leading to the Line of Actual Control (LAC), the poorly demarcated, disputed 3,488km border between India and China.”

Calls to dismiss charges against Hú Ānmíng 胡安明, Chinese scientist targeted by U.S.
Calls grow for U.S. to dismiss ‘NASA lies’ case of Hu Anming, as critics cite ‘racial bias’ in accusation that he hid ties to Chinese university / SCMP (paywall)

Australia, U.K. up pressure on Xinjiang forced labor
Australian Senate passes bill banning imports made using forced labour / Guardian
“The bill would amend the Customs Act to prohibit the importation into Australia of goods produced or manufactured, in whole or in part, through the use of forced labor.”
Labour says PPE orders must not go to Xinjiang firms that use forced workers / Guardian

China expands military to keep pace with U.S.
China’s military nuclear orders rise fourfold in push to catch up with U.S. / SCMP (paywall)
China says it successfully tested two new missiles that can take out military command and communications systems / SCMP (paywall)
China-U.S. arms race set to quicken as American air force chief ups ante / SCMP (paywall)
Russia, Iran and China to hold joint drills in Gulf — RIA / Reuters
“Russia, Iran and China will hold joint maritime exercises in the Persian Gulf around late 2021 or early 2022, Russia’s ambassador to Tehran said, the RIA news agency reported on Monday.”

SOCIETY AND CULTURE:

Weibo shuts down Kris Wu defenders
China’s Weibo shuts accounts defending Kris Wu allegations / AP
“China’s microblogging platform Sina Weibo on Monday closed 145 accounts, some of which had defended pop star Kris Wu over his rape allegations, for publishing what it called ‘information harmful for maintaining social order.’”

Obituary: Artist Hung Liu (Liú Hóng 刘虹)
Hung Liu, artist who blended east and west, is dead at 73 / NYT (paywall)

Murder movie slapped with lawsuit
Film about Chinese man, murdered for standing up to shoddy developers, hits snag as family threatens to sue / SCMP (paywall)
“The family of a man who was killed and buried under a playground by several mobsters in central China in 2003 has pledged to sue a film production team that plans to make a movie about the high-profile case.”

Does China need a healthier diet?
Too much of a good thing? How China is rethinking its diet. / Sixth Tone
“As Chinese become increasingly health-conscious, labor losses caused by chronic disease have significantly decreased, but the increasing prevalence of obesity and diet-related chronic diseases poses a threat to this progress.”