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Business Mayor
21-05-2025
- Business
- Business Mayor
CNBC's The China Connection newsletter: A fragile truce as tempers flare
Containers pile up at Taicang Port Container Terminal in Suzhou City, Jiangsu Province, China, on May 18, 2025. Nurphoto | Nurphoto | Getty Images This report is from this week's CNBC's The China Connection newsletter, which brings you insights and analysis on what's driving the world's second-largest economy. Each week, we'll explore the biggest business stories in China, give a lowdown on market moves and help you set up for the week ahead. Like what you see? You can subscribe here. The big story Just a week after a breakthrough in U.S.-China trade tensions, neither side can yet be confident that the other is holding up their end of the bargain. 'These 90 days won't be smooth,' Liu Weidong, research fellow at a state-affiliated think tank, the Chinese Academy of Social Sciences' Institute of American Studies, told me this week. That's according to a CNBC translation of his Mandarin-language remarks. He predicts elevated uncertainty and smaller steps next, given the already-large breakthrough, as the U.S. and China each try to feel the other out towards a middle ground. The posturing has already begun. China's Ministry of Commerce on Wednesday warned that it would take legal action against those involved in assisting or implementing measures to curb the usage of advanced semiconductors from China. It follows an earlier accusation by the same ministry on Monday that blamed the U.S. for undermining trade talks with a Huawei chip warning last week — although the U.S. Bureau of Industry and Security had actually toned down its language and dismissed a more restrictive Biden-era plan on chips. Many in the U.S. are also concerned that China isn't relaxing rare earth export controls, another area in which China dominates the supply chain. That's despite the joint statement's vague description of how China would 'suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.' Read More Aid Is Rushing Into Gaza While the Cease-Fire Holds 'I do think Washington was expecting the export controls on that group of rare earths to be lowered, permitting exports in a relatively unrestricted way,' said Scott Kennedy, senior adviser and trustee chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, D.C. 'If it turns out that, in fact, that is not the result, the U.S. will probably conclude that China is in violation of the agreement,' he said. 'We could see a re-escalation sooner rather than later.' While the White House has yet to respond to a CNBC request for comment, a step back reveals ambiguity on China's side. But are the rare earth export controls part of China's countermeasures to U.S. tariffs? That's up for debate. An April 4 document from China's commerce ministry and customs agency announcing the export controls did not explicitly label them as such. While China did pause restrictions on 28 U.S. entities that were slapped with export controls on critical minerals, the ministry has made several public statements about strengthening export controls on critical minerals. 'Given the comprehensive and competitive nature of bilateral relations, the current truce — while focused on trade—can easily be undermined by export controls,' said Yue Su principal economist, China, at The Economist Intelligence Unit. 'While rhetorical posturing is unlikely to undermine the 90-day truce, China may well recalibrate its export control regime in a measured response to U.S. actions,' she said. The Chinese commerce ministry on Sunday also announced duties of up to 74.9% on imports of an engineering plastic from the U.S., Europe, Japan and Taiwan. Trump-Xi talk? U.S. President Donald Trump last week told Fox News he is open to a call with Chinese President Xi Jinping, or even a trip to China. But Beijing hasn't dropped any hints. 'I'd be surprised if the two step into the middle of these issues right now with so much unclear,' Kennedy said. The new U.S. Ambassador to China, David Perdue, arrived in Beijing on Thursday, slightly more than two weeks after being confirmed by the Senate. He was previously the head of Asia for U.S. packaged consumer goods company Sara Lee. One of Perdue's first social media posts called for 'strong actions' on fentanyl. He said on X that, together with U.S. Trade Representative Jamieson Greer, they were 'meaningfully engaged with the Chinese on next steps to stop this dangerous situation.' The U.S. has left in place 20% in tariffs imposed earlier this year over China's alleged role in the fentanyl crisis. The joint statement last week said the U.S. and China would establish a mechanism for talks about economic and trade relations, but neither side has specified when the next one would occur. Liu, who helped author a report in February with The Carter Center about bilateral cooperation, emphasized the overall focus of the current talks is trade rather than tech. He expects that China could eventually agree to buy more U.S. agriculture and energy products — given the perception that pressuring farmers can influence Trump. Top TV picks on CNBC Qualcomm CEO Cristiano Amon on tariffs and China Cristiano Amon, CEO of Qualcomm, discusses tariffs and the China market for his business. Toyota North America COO on new fleet of cars and tariffs on auto imports Mark Templin, Toyota North America COO, joins CNBC's 'Closing Bell' to discuss the company's launch of their new products, the company's pricing, and much more. Walter Isaacson on biotech breakthroughs vs. federal funding cuts, Trump-U.S. business relationship Walter Isaacson, 'Elon Musk' author, Perella Weinberg Partners advisory partner and Tulane professor, joins 'Squawk Box' to discuss breakthroughs in gene editing and biotech to cure diseases, impact of federal funding cuts, the White House relationship with the business world, and more. Need to know In the markets Stock chart icon The performance of the Shanghai Composite over the past year. Chinese and Hong Kong stocks climbed Wednesday. Mainland China's CSI 300 was up 0.68% while Hong Kong's Hang Seng Index — which includes major Chinese companies — rose 0.53% as of 12 p.m. local time. The benchmark 10-year Chinese government bond yield is at 1.669%. Coming up May 22: Xiaomi to release mobile phone chip, its first SUV and other products May 27: China to report industrial profits for April
Business Mayor
20-05-2025
- Automotive
- Business Mayor
Shares in China's CATL jump over 18% in Hong Kong debut as battery maker rides EV boom
Shares of CATL debut in Hong Kong on May 20, 2025. Sopa Images | Lightrocket | Getty Images Shares of the world's largest battery manufacturer Contemporary Amperex Technology rose over 18% in their Hong Kong trading debut on Tuesday, as investors bet on the company's ability to ride the boom in electronic vehicles. Shares were last trading at 308 Hong Kong dollars apiece on the Hong Kong stock exchange, compared with the initial public offering price of HK$263 dollars per share. CATL IPO raised HK$35.7 billion ($4.6 billion) according to a company filing, reportedly making it the largest global listing in 2025. CATL shares, which had opened lower on mainland China's Shenzhen stock exchange, reversed course to rise 1.5% to 264 Chinese yuan. 'I think that as the H [Hong Kong] shares continue to perform strongly, that will pull up the A [mainland China] shares,' Neil Beveridge, senior research analyst at Bernstein, told CNBC's 'The China Connection.' 'For the H shares to be trading above the A shares just shows how exceptional the demand is for this company, particularly from global investors,' he added. CATL said in its Hong Kong filing that 90% of the funds raised will go toward building its upcoming factory in Hungary, aimed at supplying batteries to European automotive clients including Stellantis , BMW and Volkswagen . 'Europe is an exceptionally important market for CATL,' said Beveridge, adding that the company's growth in China was going to slow over the coming years due to already high sales penetration. 'Europe's only at about 20-25% [sales] penetration, so there's still a lot of growth there to come,' he added. The company's push into Europe coincided with global expansions from leading Chinese EV makers such as BYD. These efforts also come amid increased scrutiny from the U.S. and EU, which placed punitive tariffs on EVs made in China last year, citing unfair trade practices. CATL found itself in the crosshairs of U.S.-China trade earlier this year, with the Pentagon putting it on a watchlist in January over suspected links to China's military — allegations the company has rejected. According to Bill Russo, founder and CEO of investment advisory firm Automobility, the watchlist designation, coupled with Trump's latest tariffs on China, may complicate the company's U.S.-related business. However, the impact on its global ambitions will likely be limited unless broader multilateral restrictions follow, as CATL's core strategy remains focused on markets such as Europe and emerging regions, he said. Weekly analysis and insights from Asia's largest economy in your inbox Subscribe now In March, CATL posted a 9.7% drop in its 2024 annual revenue, hit by intense competition in China's electric-vehicle market that pressured the world's top battery producer. Still, the company's net profit went up by 15% year over year. Demand for electric vehicles in China, a critical market for CATL, gained momentum last year on the back of a combination of subsidies and consumer purchase incentives. EV sales in China surged to 11 million in 2024 — a 40% increase compared to the previous year, data from U.K. research firm Rho Motion showed. 'We're a big believer and investor in CATL in our global EV strategy. It's just phenomenal, it's a 'must own company,' in my opinion, along with BYD for investors in the space,' said Brendan Ahern, chief investment officer at KraneShares. Bank of America, China International Capital Corporation, Goldman Sachs, Morgan Stanely, JPMorgan Chase were the joint lead mangers for the Hong Kong offering. Speaking on CNBC's Squawk Box Asia on Tuesday, Andy Maynard, managing director and head of equities at China Renaissance, said that the CATL's IPO shows that investors still look to China to find quality plays despite recent trade tensions between Beijing and Washington. Correction: This story was revised to accurately reflect the jump in shares at market open.
CNBC
07-05-2025
- Business
- CNBC
CNBC's The China Connection newsletter: Tourism surge defies consumption slowdown
Tourists visit Pingyao Ancient City on the second day of the May labor day holiday on May 2, 2025 in Jinzhong, Shanxi province of China. This report is from this week's edition of CNBC's The China Connection newsletter, which brings you insights and analysis on what's driving the world's second-largest economy. Each week, we'll explore the biggest business stories in China, give a lowdown on market moves and help you set up for the week ahead. Like what you see? You can subscribe here. If people are spending in China, it's likely to be on travel — and businesses want a slice of that. After 10 years as the only hostel in China's Datong city, Fly by Knight suddenly gained six new competitors in one year, according to founder Daniel Huang. He said his 26-room venue was booked out for the May Labor Day holiday, which officially ran from Thursday to Monday. "Hotels are opening everywhere in Datong," he said, noting that one no-brand operator raised its prices for the holiday by more than five times to over 1,000 yuan ($140) a night. Surging interest in history and culture is helping. The popularity of Datong's Yungang Buddhist grottoes — a Unesco heritage site from around 1,500 years ago — skyrocketed after its statues were featured in the hit video game Black Myth: Wukong released last summer. More than 43,700 people visited the caves on May 1 alone, up over 10% from a year earlier, according to state media. The Grand Canyon averaged 13,477 visitors a day last year. The latest holiday shows young Chinese tourists remain very interested in museums and other cultural activities, said Ashley Dudarenok, founder of ChoZan, a China marketing consultancy. "What it means for international brands or local brands is that collaborating with those cultural icons is still a very, very important part of connecting with the consumer," she said. Nationwide, China reported 314 million domestic tourist trips over the May Labor Day holiday, continuing the steady increase in recent years and well above the pre-Covid level of 195 million in 2019. The government has extended the holiday in recent years, giving locals more time off as businesses typically offer employees only a handful of paid vacation days. China's recently built transportation infrastructure is encouraging locals to visit smaller cities such as Datong, Huang said. He pointed out that before the Covid-19 pandemic, travelers had to take a six-hour train from the capital city of Beijing to Datong. Now, a high-speed train between the cities (about $20 per one-way ticket) takes less than two hours, with dozens of departure times throughout the day. The train route opened in December 2019. Tourists in China have been turning to less popular, more remote destinations that tend to be cheaper than visiting large cities. During the latest May Labor Day holidays, trips to rural areas rose by nearly 20% from a year ago, with interest in farm-themed stays surging, according booking site Retail sales, including food, rose by 6.3% during the holiday from a year ago, according to official figures. Tourism revenue increased by 8% to 180.27 billion yuan. "Despite concerns over macroeconomic headwinds, the strength of travel numbers tells us that consumer sentiment is resilient," said Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies. The company helps foreign brands — such as Vitamix and IS Clinical — sell online in China and other parts of Asia. "Chinese consumers are prioritizing spending on what matters most to them -- and right now, that includes travel," he said. When Chinese consumers were asked where they expected to increase their spending this year, travel topped the list, followed by groceries, according to a survey conducted on behalf of financial services firm TD Cowen in February and published last month. However, in a sign of lingering uncertainty, fewer respondents than last year said they had made travel plans for the next six months. The survey covered 2,000 Chinese residents. Sales of retail goods have remained tepid since the Covid-19 pandemic, up by just 3.5% last year, according to official data. The services sector, including tourism, sports and childcare, has seen faster growth at 6.2% last year. China started reporting services retail sales on a year-to-date basis in July 2023. Chinese cities have meanwhile stepped up their efforts to attract tourists, whether through short videos on social media, virtual reality experiences or elaborate light shows splashed across skyscrapers. Some cities, such as the panda hub of Chengdu, are starting to use drones for delivering food within scenic parks, or renting out robotic-powered hiking support, Dudarenok pointed out. "We're going to see basically a lot of what the future of tourism is going to look like, and China is testing that massively over this May day holiday," she said, noting that places that have invested a lot are seeing robust tourist numbers. Chengdu, for instance, claimed a 6.2% year-on-year increase in tourist trips over the holiday to 15.52 million. That's nearly three-fourths of the city's population of 21.4 million, as of 2023. Social media influencers, as well as word-of-mouth comments about cleanliness and safety are also helping Chinese cities attract foreign travelers, Huang said. Huang said his hostel primarily served international visitors prior to Covid, and the share of foreign guests has recovered modestly to about one-fifth of customers. Local visitors tend to concentrate their travel during public holidays, while trips by foreign tourists are more spaced out, he said. China has expanded its visa-free policies in the last two years to attract foreign tourists. Citizens of the U.S., U.K., Canada and more than 50 other countries can now stay in China for 10 days without a visa, while people from Japan, South Korea and several European countries can visit for up to 30 days. Inbound travel to China around the May Labor Day holidays rose by more than 40% from last year, according to Hostel World. The data showed Chongqing, Yangshou and Guilin surged in popularity versus Beijing and Shanghai. The U.S. and China are finally going to talk on trade. It's not a presidential call, but both sides confirmed that Chinese Vice Premier He Lifeng, Beijing's top official for China-U.S. economic and trade matters, will meet with his U.S. counterparts while visiting Switzerland later this week. Ten people died after four tourist boats capsized in southwest China's Guizhou province. Vice Premier Zhang Guoqing on Monday visited the site of the accident, which state media attributed to "sudden strong winds." China's National Health Commission is investigating a hospital scandal. The probe, involving a senior physician at a prestigious hospital in Beijing, stirred discussion on Chinese social media about the potential role of connections in obtaining highly sought-after healthcare positions. Alibaba's Taobao e-commerce site has joined the on-demand delivery fray. The company is rolling out same-day delivery of food, clothing and other products, just days after and food delivery company Meituan ramped up their competition in the space. Taobao claimed it received more than 10 million orders in one day. Chinese and Hong Kong stocks climbed Wednesday after the People's Bank of China and financial regulators announced sweeping plans to cut key interest rates as they strive to shore up growth. China will cut the seven-day reverse repurchase rates by 10 basis points to 1.4% from 1.5%. The central bank will also lower the reserve requirement ratio by 50 basis points. Mainland China's CSI 300 was up 0.44% while Hong Kong's Hang Seng Index — which includes major Chinese companies — rose 1.5% as of 10:30 a.m. local time. The CSI 300 has lost roughly 2.8% while the Hang Seng Index has gained over 14.6% so far this year. The benchmark 10-year Chinese government bond yield was slightly down at 1.63%. The offshore Chinese yuan strengthened 0.18% against the greenback to 7.2227. Stock chart icon The performance of the Shanghai Composite over the past year. May 7-10: President Xi Jinping pays a state visit to Russia May 9: China's import and export data for April May 10: China's consumer price index and producer price index for April
Business Mayor
23-04-2025
- Business
- Business Mayor
CNBC's The China Connection newsletter: U.S. regulatory scrutiny fans Chinese stock delisting fears
A monitor displays Alibaba Group Holding Ltd. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Jan. 30, 2019. Bloomberg | Bloomberg | Getty Images This report is from this week's edition of CNBC's The China Connection newsletter, which brings you insights and analysis on what's driving the world's second-largest economy. Each week, we'll explore the biggest business stories in China, give a lowdown on market moves and help you set up for the week ahead. Like what you see? You can subscribe here. The big story Increased regulatory scrutiny of U.S.-listed Chinese firms has stoked delisting worries, threatening the decade-plus run of Alibaba and other Chinese companies on U.S. exchanges. A broad 'everything is on the table' comment from U.S. Treasury Secretary Scott Bessent on April 9 has reignited fears on Wall Street that hundreds of billions of dollars may flow out in a forced delisting of Chinese stocks from U.S. exchanges. Thanks to the latest version of a law made in 2020, the U.S. Securities and Exchange Commission can prompt a Chinese stock delisting if the company is deemed noncompliant with audit requests for two straight years. Paul Atkins, sworn on Monday as SEC chairman, indicated during a hearing last month that he would uphold that process for scrutinizing U.S.-listed Chinese stocks. The continuing analyst and press coverage of Bessent's comments reflects how uncertainty is broadening out — even warranting a related piece in the New York Post tabloid. 'In an extreme scenario, U.S. investors may have to liquidate US$800bn worth of holdings in Chinese stocks if they are banned from investing in Chinese securities,' Goldman Sachs said in a note last week. They predicted Chinese investors might also need to sell their U.S. financial assets, with an estimated worth of roughly $370 billion in stocks and $1.3 trillion in bonds. KraneShares, which runs a popular $5.9 billion U.S. exchange-traded fund tracking Chinese stocks, told its clients last week that delisting of Chinese companies was a 'low probability.' Back during an earlier round of delisting fears in 2022, the company started shifting the bulk of its KraneShares CSI China Internet ETF (KWEB) holdings to the Hong Kong-traded shares of U.S.-listed Chinese companies. KraneShares reiterated taking that approach in the 'unlikely event' that Chinese companies are delisted in the U.S. Read More Microsoft tops Apple as world's most valuable public company Alibaba listed additional shares in Hong Kong in 2019, five years after a massive initial public offering in New York. While Baidu, and several other Chinese companies have also offered shares in Hong Kong in recent years, Temu parent PDD Holdings notably has yet to do so. PDD did not immediately respond to a CNBC request for comment. The e-commerce company moved its headquarters from China to Ireland in 2023. A White House memo The backdrop here is U.S. President Donald Trump's 'America First Investment Policy' memo published in late February. It called for a review of U.S. investments in Chinese entities, as well as renewed scrutiny of publicly traded Chinese companies — both through commonly used listing structures and through the Holding Foreign Companies Accountable Act that became law in 2020. The memo is a broad mandate for many government agencies, including the SEC, 'to enforce existing rules and create new rules' relating to U.S.-listed Chinese companies, said Winston Ma, adjunct professor at NYU School of Law. Ma, author of 'The Digital War: How China's Tech Power Shapes the Future of AI, Blockchain and Cyberspace,' said that if regulators act now, they could use a fiscal reporting period ending April 2025 as year one, meaning that year two would end in 2026, fulfilling the 'two year' compliance period necessary for delisting. 'Delisting could come faster than you think,' he said. The Public Company Accounting Oversight Board, which falls under the SEC's oversight, said in 2022 that it was able to inspect audit records of potentially affected Chinese companies. For now, 'there are no issuers at risk of having their securities subject to a trading prohibition' under the law, according to the SEC website. Read More Jamie Dimon says India optimism is 'completely justified' The SEC did not immediately respond to CNBC's request for comment, while the PCAOB declined to comment. Political momentum The House Select Committee on China late last week sent letters to JPMorgan Chase CEO Jamie Dimon and Bank of America CEO Brian Moynihan demanding the investment banks pull out from underwriting the Hong Kong IPO of Chinese battery giant Contemporary Amperex Technology. JPMorgan declined to comment, while Bank of America did not respond. Trump's recent spat with Harvard also means more scrutiny on how U.S. universities' endowment funds have made billions from their Chinese investments. The House committee previously cited research from U.S. advocacy group Future Union on how U.S. pension funds and university endowments have invested in China. 'Atkins is under pressure to take an assertive stand against decades of duplicitous double standards,' Future Union Executive Director Andrew King said in an email. He is also managing partner at San Francisco-based venture capital firm Bastille. 'The delisting is overdue, and China overplayed its hand by stonewalling regulators and flaunting cases like Luckin Coffee fraud with inaction,' he said. 'Now they are going to lose their path to secondary funding without oversight.' China's securities regulator has sought to increase its oversight of domestic companies listing overseas, especially following ride-hailing company Didi's U.S. IPO in 2021 and its subsequent delisting. Under the Chinese securities regulator's new process, few large Chinese companies have been able to list in the U.S. in recent months, including Chinese milk tea company Chagee just last week. As the protracted delay over a legally binding TikTok divestiture has shown, the worries over delisting could be exaggerated — at least in the near term. Investors, however, may choose to vote with their feet first. Top TV picks on CNBC Need to know The White House is signaling a potential easing in China tensions. U.S. Treasury Secretary Scott Bessent told investors Tuesday he expected the U.S.-China trade war to de-escalate in the 'very near future,' a person in the room told CNBC. The comments came a day after China vowed retaliation against countries that follow U.S. calls to isolate Beijing. Nvidia CEO Jensen Huang visited China and met several prominent figures. Huang had an official meeting with Chinese Vice Premier He Lifeng in Beijing Thursday— and reportedly DeepSeek's Liang Wenfeng. The latest Pew Research survey of Americans found a softening in negative views on China. Local governments in China mull bitcoin sales to shore up empty coffers. That consideration was reported by Reuters on Thursday. China has banned cryptocurrencies for years, and cash-strapped local authorities have been sitting on the seized assets. Unemployment among Chinese youths aged 16 to 24 fell in March to 16.5%, down from 16.9% in February, according to official data. In the markets Chinese and Hong Kong stocks were trading in positive territory Wednesday as investors cheered the potential easing of U.S.-China trade tensions. Mainland China's CSI 300 rose 0.15% while Hong Kong's Hang Seng Index — which includes several major Chinese companies — climbed 2.16% as of 11:00 a.m. local time. Since the start of this year, the CSI 300 has lost 3.7% while the Hang Seng Index has risen 9.67%. The benchmark 10-year Chinese government bond yield edged up slightly to 1.660%. The offshore Chinese yuan strengthened marginally to 7.3049 against the greenback. Stock chart icon The performance of the Shanghai Composite over the past year. Coming up April 27 – 30: China's parliament standing committee to meet and review a private sector support law April 30: Official Purchasing Managers' Index for April; Caixin Manufacturing PMI May 1 – 5: China's Labor Day holiday
