Links for Thursday, July 8, 2021

BUSINESS AND TECHNOLOGY:

Didi probe and overseas listing clampdown explained by Chinese internet veteran
An op-ed (in Chinese) in the Global Times by former internet entrepreneur Fāng Xìngdōng 方兴东 explains some of the recent moves against Didi and companies listing overseas. Here are the takeaways.

• According to Fang, Chinese tech companies are moving from an era of “barbaric growth” to an “era of compliance.” In this era, internet companies need to observe domestic laws and regulations as a condition for continued operation.

China has long held restrictions on foreign investment, but a loophole beginning in the 2000s called a VIE structure allowed companies to bypass those rules.

• Chinese internet companies “should step out of the gray area,” wrote Fang, “and move toward a more rational and normalized corporate governance structure.”
• Takeaway: The government is uncomfortable with companies listing overseas without asking permission first.

Chinese tech stocks down worldwide in wake of Didi IPO
Xpeng shares skid in Hong Kong debut amid China tech fallout / Caixin
“The Chinese electric-vehicle (EV) maker’s share price [tumbled] by more than 8% Thursday as investors flee from any company at risk from a widening government crackdown on the Asian nation’s tech sector.”
Tech stocks drag key China index in Hong Kong toward bear market / Bloomberg
Chinese fitness app pulls New York IPO plan after Didi debacle / FT
China’s cyber watchdog to police Chinese overseas listings / WSJ
Didi regulatory crackdown drags Hong Kong tech stocks lower / FT
The Hang Seng Index is down 13% since its February peak after the ride-hailing group’s IPO debacle.
China seems intent on decoupling its companies from Western markets / Economist
Nearly $2 trillion in shareholder wealth is on the line.
Explainer: how Chinese clampdown will target offshore listings / Reuters
China’s securities regulator is setting up a team to review plans by Chinese companies for initial public offerings (IPOs) abroad, sources with knowledge of the matter said, including those using a corporate structure that Beijing says has led to abuse.

Beijing’s scrutiny of Big Tech shows no signs of slowing
China says measures applied to Ant Group to be imposed on other payment firms / Reuters
China’s central bank said on Thursday that anti-monopoly measures applied to ecommerce giant Alibaba’s financial technology affiliate Ant Group will also be imposed on other payment service companies.
Didi’s regulatory troubles might just be getting started / NYT
Beijing asked Didi to change app’s mapping function over security fears / FT

Tesla reveals new cheap model for hot China EV market
Tesla unveils cheaper China-made Model Y as shipments slip / Bloomberg
Tesla Inc. debuted a significantly cheaper version of its locally built Model Y sports utility vehicle in China as deliveries for June slipped amid concern that a string of negative publicity may have soured consumer sentiment toward the electric-carmaking pioneer.
EU-recognized certificates pave the way for Nio’s European expansion / Caixin
Niu’s electric scooter sales jumped 58% in second quarter / Caixin
China car sales fall with chips in short supply / WSJ

Foxconn electric vehicle venture hits a road bump
Foxconn’s journey into the EV market, in partnership with Byton — a premium electric car maker that is yet to sell a single unit — has hit a snag: One of Byton’s biggest creditors took management control of the company, per Bloomberg.

• China FAW Group, a state-owned automaker, installed one of its officials as chairman of Byton last week, hanging a cloud over whether it can meet its production goals and go public by early next year.

Aviation at the center of intensifying U.S.-China competition
China’s rival to Boeing and Airbus set to join battle for the skies / FT
State-backed Comac’s C919 nears commercial approval as trade tensions rise with the West.
How the U.S. and EU can compete with China’s Belt and Road / FT
Major U.S. index to remove more China stocks after Biden order / Reuters
The S&P Dow Jones Indices and FTSE Russell on late Wednesday decided to remove more Chinese companies from their indices after an updated U.S. executive order barred domestic investment in firms with alleged ties to China’s military.
Note: Our new China Edge company database includes a field for military ties.

Beijing pushes own digital currency after vanquishing crypto
China digital currency: Beijing Winter Olympics next key trial as pilot programme expands to 10 million / SCMP
China has made 10 million people eligible to participate in its expanding digital yuan trial as it continues to lead global central banks in developing a virtual currency, according to a central bank official.
Cross-border digital payments trial to start by year-end / Caixin
Four things to know about China’s latest crackdown on cryptocurrencies / Caixin

Macroeconomic policy
China has ‘ample room’ to absorb global minimum tax, but still ‘prickly’ on issues of economic sovereignty / SCMP
China’s decision to back a global overhaul of cross-border taxation is likely to hinge on diplomatic calculations as much as economic concerns, according to experts.
Explainer: Is China set to cut RRR soon? What are the implications? / Reuters
The Chinese government on Wednesday pledged to use timely cuts in the amount of cash that banks must hold as reserves to support the slowing economy, raising expectations about an imminent move to ease policy.
China likely to reduce banks’ reserve requirement again / Caixin
China’s dovish switch ignites fears over global recovery trade / Bloomberg

Booze and jobs: Tech giants branching out
TikTok trials video resumes to help users find work / Caixin
“TikTok is dipping a toe into the competitive U.S. recruitment market with a pilot program of video resumes, as the Chinese-owned app tries to expand beyond just being an online entertainment platform.”
Tencent-backed alcohol delivery startup said to seek fresh funds / Bloomberg

SCIENCE, HEALTH, AND ENVIRONMENT:

Earthquake hits Taipei
Earthquake shakes Taiwan’s capital Taipei / Reuters (porous paywall)
The magnitude 5 quake left no immediate reports of damage.

COVID-19 origins
More scientists say coronavirus most likely came from animals, not lab leak / SCMP (paywall)
COVID-19 origins mirror SARS’s genesis in animals, study finds / Bloomberg (paywall)

The wandering elephants of Yunnan
Runaway elephant from wandering herd in China recaptured and returned to the wild / SCMP (paywall)
Chinese rogue elephant herd’s breakaway male sent home / HKFP
One of China’s wandering elephants is returned to reserve / AP

Could massive Chinese rockets save the world?
How 23 giant Chinese rockets could save the world from ‘doomsday’ asteroid / SCMP (paywall)
“China’s space programme could one day save the world, with massive rockets traveling for years to defend the planet from huge asteroids capable of wiping out entire cities, according to a government-backed study.”
Chinese researchers propose deflecting ‘Armageddon’ asteroids with rockets / Reuters (porous paywall)

Small-scale fisheries
Can China’s fishing villages make a comeback? / Sixth Tone
The third installation in a series on the transformation of China’s small-scale fisheries (see parts 1, 2).

POLITICS AND FOREIGN AFFAIRS:

U.S. supports Taiwan but does “not support Taiwan independence”
Taiwan asserts island’s sovereignty after US restates opposition to independence / SCMP
Taiwan has reasserted its sovereignty, in response to the Biden’s administration’s first official statement opposing Taiwan’s independence.

• “We support a strong unofficial relationship with Taiwan. We do not support Taiwan independence,” Kurt Campbell, the White House Coordinator for the Indo-Pacific, said on Tuesday.
• Taiwan has also asked the U.S. not to cause “‘unnecessary speculation or misunderstanding,” after the White House deleted a social media post on COVID-19 vaccine donations that included Taiwan’s flag.

China’s youths embrace Mao?
‘Who are our enemies?’ China’s bitter youths embrace Mao. / NYT (paywall)
“In a modern China grappling with widening social inequality, Mao’s words provide justification for the anger many young people feel toward a business class they see as exploitative. They want to follow in his footsteps and change Chinese society — and some have even talked about violence against the capitalist class if necessary.”
The CCP’s greatest strength is “self-reinvention” / Foreign Policy (paywall)
Eric X. Li, silver-tongued promotor of CCP rule in American newspapers, says: “with China’s young people so in synch with the raison d’etre— chu xin—of the party, the question is how the 100-year-old party can adapt to best serve (and lead) them.”

U.S. progressives urge Biden: Stop “new Cold War” for the climate
Biden’s new Cold War with China will result in climate collapse, progressives warn / Politico
In a letter to President Joe Biden, progressives urged “cooperation with China on climate change and [to] curb its confrontational approach over issues like Beijing’s crackdown on Hong Kong and forced detention of Uyghur Muslims.”

U.K. wants China’s business, despite Xinjiang pressures
We must not “pitchfork away” every Chinese investment, says U.K. PM / Reuters (porous paywall)
“Prime Minister Boris Johnson said on Wednesday he did not want to drive Chinese investment away from Britain because of ‘anti-China spirit,’ when asked whether the sale of a semiconductor producer would go ahead to Chinese-owned Nexperia.”
U.K. government urged to hold China ‘to account’ over Uyghurs / AP
“The British government should back a political boycott of the 2022 Winter Olympics in Beijing to pressure the Chinese government over the ‘genocide’ of Uyghurs and other ethnic groups in the northwest province of Xinjiang, an influential group of [British] lawmakers said Thursday.”

More on the LGBT+ online ban
China divided as WeChat deletes LGBT accounts from platform / BBC
Outrage over shutdown of LGBTQ WeChat accounts in China / Guardian
U.S. concerned by reports of China LGBTQI Plus social media curbs / Reuters (porous paywall)
Read our original story here.

Beijing Olympics: Greece accepts invite, China slams boycott
Greek PM accepts Beijing Winter Olympics invite ahead of Euro boycott vote / SCMP (paywall)
China slams Olympic boycott call, ‘politicization of sports’ / AP

Hong Kong under the national security law: Exodus in distinct councillors
Suicide attack on Hong Kong police officer highlights tension over China’s rule / WSJ (paywall)
More than 200 Hong Kong district councillors could be forced out of office as criteria for disqualification expands / SCMP (paywall)
“More than 70 opposition district councillors have resigned since Wednesday, with Hong Kong authorities deciding on a hardline approach that will unseat any who posted slogans connected to the 2019 anti-government protests on their office walls.”
Court case of 47 Hong Kong democracy activists to resume on Sept 23 / Reuters (porous paywall)
5 more pro-democracy district councillors quit amid reports of impending mass disqualifications / HKFP
Jailed media tycoon Jimmy Lai asks court to restore his voting rights at Next Digital / SCMP (paywall)
“Jailed Hong Kong media tycoon Jimmy Lai Chee-ying (黎智英 Lí Zhìyīng) has asked a court to restore his voting rights as the major shareholder of Next Digital after the government froze nearly HK$500 million ($64.4 million) of his assets under the national security law.”

Will Hong Kong ban Falun Gong?
Pro-Beijing lawmakers urge gov’t to outlaw Falun Gong, target of 3,545 police operations in eight years / HKFP
Pro-government lawmakers urged the government to ban Falun Gong and investigate its funding, claiming the group was in “breach of the national security law.”

• The police have taken “3,545 actions against the group in the last eight years,” said Hong Kong’s Secretary of Security.
• Lawmaker Elizabeth Quat claimed the group was “disseminating ‘anti-government ideology.’”

China secret underwater drones
China reveals secret programme of unmanned drone submarines dating back to 1990s / SCMP (paywall)
“A research team in China has unveiled an underwater drone that can recognize, follow and attack an enemy submarine without human instruction.”
“The secret project, funded by the military, was partially declassified last week with the publication of a paper that gave a rare glimpse into a field test of the unmanned underwater vehicle (UUV), seemingly in the Taiwan Strait, more than a decade ago.”

SOCIETY AND CULTURE:

Boomer hipsters
For China’s fashion-forward seniors, all the world’s a runway / Sixth Tone

Will time banks help China’s worsening demographic?
Aging China relies on ‘young old’ to take care of oldest seniors / Bloomberg (paywall)
“The rapidly aging country is road-testing a model pioneered in Japan and the U.S. that encourages volunteers to earn credits they can redeem for services by performing tasks for the elderly.”

Romance scams
Pledging to save their relationships, they stole their money instead / Sixth Tone
“Ming’s story is part of a larger trend in many Chinese cities, where fraudsters have often capitalized on romance and heartbreak in order to hoodwink people into handing over their money.”

Cosmetic surgery “cowboy clinics”
Bones of contention: China’s unhappy cosmetic surgery patients / Sixth Tone
“Fueled by a Chinese public increasingly concerned about appearance and rigorous beauty standards that have been criticized as unhealthy, the country’s cosmetic surgery industry is going through a growth spurt. At the same time, there is a lack of qualified doctors and up-to-date regulations.”

Chinese cooks are quitting MSG
MSG Giant Lotus Flower withers as company auctions its trademarks / Sixth Tone
“As China’s growing middle-class stops sprinkling monosodium glutamate into their dishes, the industry is suffering.”