Hi everyone. I’m Stephanie LI.
Coming up on today’s program
· First China International Supply Chain Expo shines spotlight on supply chains stability;
· Nearly 100 Chinese cities lower mortgage rate floor for first homes.
Here’s what you need to know about China in the past 24 hours
The China International Supply Chain Expo (CISCE) kicked off in Beijing on Tuesday, bringing together hundreds of political and business leaders from around the world to strengthen cooperation and safeguard the stability of global industrial and supply chains amid mounting risks and challenges for global trade.
At the opening ceremony of the world's first state-level supply chain expo, Chinese Premier Li Qiang said that China stands ready to work with all parties to build more resilient, efficient and dynamic global industrial and supply chains, while warning against disruptions to global cooperation that will hurt many countries.
Li said that maintaining the resilience and stability of global industrial and supply chains is a vital guarantee for promoting the development of the world economy.
Highlighting that China will unswervingly ensure that industrial and supply chains are public goods, Li said the country will continue to provide high-quality Made in China products to the world.
More than 1,100 representatives from over 90 countries, regions and international organizations attended the opening ceremony on Tuesday morning. Among the world leaders who delivered speeches via video link were Indonesian President Joko Widodo and director-general of the World Trade Organization Ngozi Okonjo-Iweala.
Widodo pointed out the need to strengthen global supply chains with new solutions and better collaborations, and he said that Indonesia welcomes the first CISCE to fully support global efforts to build a stronger and more stable global supply chain.
Okonjo-Iweala said that "the inaugural supply chain expo is the right event at the right time", as the shocks of the COVID-19 pandemic and the supply disruptions that followed exposed general vulnerabilities in the way global production networks are organized.
At the ceremony, the China Council for the Promotion of International Trade (CCPIT) launched the Beijing Initiative for the Connectivity of Industrial and Supply Chains, which calls for market principles to be upheld and for concrete actions to be taken to deepen international cooperation on industrial and supply chains. It urges global cooperation to advance the liberalization and facilitation of trade and investment, and to reduce trade and investment barriers.
Many global business leaders also expressed great enthusiasm for the expo. Denis Depoux, global managing director of consultancy Roland Berger, said that, thanks to China's improved productivity, broad industrial clusters and well-established infrastructure, it will remain the factory of the world.
Isabel Ge Mahe, vice-president and managing director of Apple Greater China, who also attended the supply chain expo, said, "Chinese suppliers have grown very fast and become an indispensable and particularly important part of our supply chain over the past 30 years."
Now, 151 of Apple's 200 major suppliers, including foreign and Chinese suppliers, have a production presence in China.
"Chinese suppliers are world-leading in their technologies," she said, adding that Apple is very happy and willing to help China's transition to intelligent manufacturing.
Moving on to regional highlights
· Several of China's provincial-level regions, including Sichuan, Guangdong, and Jiangxi, have begun to distribute coupons for culture, tourism, vehicles, and household appliances to boost consumption before the end of the year. Guangdong will hand out tourism-related vouchers worth 100 million yuan and offer 1 million discounted tickets for scenic spots and 1 million cheaper flights. Shenzhen and Guangzhou in Guangdong will also further relax the application qualifications for car purchase quotas. China’s southeastern Jiangxi province will issue nearly 20 million yuan for vehicle purchases from Dec. 1, giving buyers 3,000 yuan toward the cost. Sanya in Hainan province will start distributing a third batch of duty-free vouchers to visitors, giving them a discount of 1,600 yuan on goods worth more than 20,000 yuan. Sichuan province will work with platforms and vendors to give out about 500 million yuan of coupons for dining, shopping in department stores and supermarkets, and buying furniture and home appliances.
Next on industry and company news
· Huawei is on track to reach record monthly deliveries of between 16,000 and 18,000 Aito-branded electric vehicles with manufacturing partner Seres this month, with that number expected to surpass 23,000 in December and further increase to over 30,000 in January, Richard Yu, chief executive of Huawei’s consumer business group and head of its automotive business unit, said on Tuesday. Yu added that Huawei is anticipating a potential collaboration with FAW Group, meaning it could be the latest member of the technology giant’s expanding car alliance. Yu also announced that Huawei’s first model co-developed with Chery, the Luxeed S7, will be priced from 249,800 yuan. Meanwhile, media reports suggested the new joint venture spun off from Huawei may be worth about 250 billion yuan as Changan will reportedly take a 15 percent stake for 37.5 billion yuan. The state-owned Assets Supervision and Administration Commission (SASAC) in Chongqing, Changan’s parent, will also reportedly be a strategic investor.
· Zhejiang Geely Holding Group has become the second Chinese automaker after Changan Automobile to have reached a cooperation agreement on battery swapping with new energy vehicle startup Nio. Geely and Nio today agreed to carry out comprehensive cooperation on battery standards, battery swapping technologies, battery swapping network expansion and operation, development of electric vehicles supporting battery swapping, and battery asset management, according to a press release.
· Chinese smartphone maker Xiaomi's founder Lei Jun has donated 1.3 billion yuan to its alma mater Wuhan University on the 130th anniversary of its founding, the highest-ever donation a Chinese university has received from an individual contributor. The funds will support basic research in the fields of mathematics, physics, chemistry, literature, history, and philosophy, scientific and technological innovations in computing science, and the nurture of undergraduates, Lei said. The president of Wuhan University said in an interview that basic research is in desperate need of funding and Lei agreed to allocate one third of the 1.3 billion yuan in support of it.
· Chinese display panel giant BOE Technology Group plans to set up a joint venture with two state-owned enterprises to build a 63 billion yuan organic light-emitting diode plant. BOE will invest nearly 20 billion yuan in the JV for a 52.6 percent stake, while its partners Chengdu Major Industrialization Project Phase I Equity Investment Fund and Chengdu Hi-Tech Zone Electronic Information Industry Development will invest about 9 billion yuan each for stakes of 23.7 percent, the display panel maker announced yesterday.
· Tesla has increased the price of its Model Y Long Range All-Wheel-Drive vehicles in China by another 2,000 yuan in the US electric car maker’s third such markup on the model this month, following a complete upgrade of the Model Y series in October. The Model Y Long Range now costs 306,400 yuan, the Chinese arm of Tesla said on its website today.
· Shares in Alibaba Health Information Technology surged today after the Chinese online healthcare provider said it is paying HKD13.5 billion for the exclusive marketing rights in the healthcare category on its parent firm Alibaba Group Holding’s e-commerce platform to improve its services to online vendors and boost revenue. Alibaba Health will pay Ali Mama, Alibaba’s marketing arm, HKD2 billion in cash and issue 2.56 billion of shares at a price of HKD4.50 each for the rights to some of its services on Tmall, the firm said yesterday.
· Chinese ride-hailing giant Didi Chuxing Technology has confirmed that the system failure that occurred to its apps was not due to an external cyberattack. Didi’s internal investigation showed that the cause of the glitch was a failure of the underlying system software, not a cyberattack, the Beijing-based company announced today.
Earnings reports express
· Pinduoduo’s parent company, PDD Holdings, surged more than 14 percent after reporting a stronger-than-anticipated doubling in revenue, as hit shopping app Temu ramped up discounts and marketing to grab consumers from Shein and Amazon. Revenue rose impressively by 94 percent year-on-year, totaling 68.8 billion yuan in the September quarter, with that from online marketing services growing 39 percent to 40 billion yuan, while revenues from transaction services soared 315 percent year-over-year to 29 billion yuan. Further, PDD has spent big on advertising to gain market share for Temu in the U.S. and elsewhere. Total operating expenses climbed 44 percent in local currency to $3.5 billion in the third quarter.
· Meituan nearly tripled its net profit to 3.59 billion yuan in the third quarter from a year ago, as the country's largest food delivery firm extended its recovery from the impact of the Covid pandemic last year. The adjusted profit for the June-September period surged 62.4 percent to 5.73 billion yuan. Sales rose 22 percent to 76.5 billion yuan in the quarter ended September. Quarterly revenue from core local commerce rose 24.5 percent to 57.7 billion yuan. The daily order volume at its peak reached a new record of 78 million. Revenue from in-store, hotel booking, and travel sector businesses benefited from a domestic travel rebound over the summer with transaction volume rising 90 percent year-on-year.
Switching gears to financial news
· The People's Bank of China (PBOC) said in its quarterly report that 95 Chinese cities have lowered the floor on commercial individual mortgage rates for first-time home buyers while 24 others have abolished the floor as of the end of September. The rate moderation has affected more than 22 trillion yuan of existing loans for first-time home buyers, with the weighted average interest rate lowered to 4.27 percent after the change, down 73 basis points on average compared to before the change. The report said it would help borrowers save up to 170 billion yuan in interest payments, benefiting 150 million individuals.
· China is expected to see “healthy and sustainable growth” in the year ahead, even as it navigates the challenges of transitioning from a property sector-driven economic growth model to one focused on “high-quality” growth drivers, said Pan Gongsheng, the governor of China’s central bank. Speaking at the 2023 HKMA-BIS High-Level Conference on Tuesday, Pan noted the property market has proved problematic not only in China but also in many other countries, and reiterated that the country's property is "in the middle of a major transition" and it is beneficial for China's long-term economic transformation, a journey the second-largest economy "must take.” But Pan admitted that the PBOC is paying close attention to the impact of the struggling property industry on the country's financial system.
· Bank of Communications was recognized as a global systematically important bank, or a lender so big that its failure might trigger a financial crisis, increasing the number of Chinese banks on the list to five. Bank of Communications was named as a G-SIB for the first time this year, according to the list released by the Financial Stability Board, an international body monitoring the global financial system, on Monday.
Wrapping up with a quick look at the stock market
· Chinese stocks closed lower on Wednesday with the benchmark Shanghai Composite down 0.6 percent and the Shenzhen Component losing 0.9 percent. Hong Kong’s Hang Seng index also dropped 2.1 percent and the TECH index slumped 2.3 percent.
Source : SFC
