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Biden’s China policies slowly come to light
President Joe Biden is planning to focus on semiconductors,
artificial intelligence and next-generation networks in U.S.-Asia strategies, indicating future
policies toward China. The Biden administration wants to rally allies to work
together on a comprehensive strategy against so-called “techno-autocracies.”
The shift from military to technology was caused by the sudden shortage of
microchips needed for goods such as cars and mobile phones; under the new plan,
the U.S. will focus more on partners such as Taiwan, South Korea and Japan in
the region, while also attempting to bring chip manufacturing back stateside.
Biden’s recent cabinet choices have also indicated that he will
maintain a tougher stance on China and possibly leave
the Trump administration’s China tariffs in place. Although Biden
has chosen some officials from the Obama era, analysts believe that his policies will differ greatly from
Obama’s vision of a strategic alliance with China.
The Biden administration has already launched a China task force led by Pentagon official
and China expert Ely Ratner to develop a comprehensive strategy on how to
“chart a strong path forward on China-related matters.” The task force would
look into issues related to technology, defense and U.S. relations with allies.
However, Biden has yet to announce any official policy changes related to
China.
President Biden has already had an initial phone call with China’s President Xi
Jinping. During the call, Biden spoke to Xi about China’s economic practices,
human rights issues and stance on Taiwan, while Xi reinforced the idea of
bilateral cooperation, especially related to the COVID-19 pandemic and climate
change.
China implements online lending curbs and
expands digital yuan
Chinese regulators have formalized rules for online lending giants like
Ant Group and Tencent-backed WeBank that will force them to jointly fund at
least 30% of every loan with commercial lenders starting in 2022. Beijing will
also implement caps on how much individual banks can lend together with online
lenders. Under the new rules, banks have to limit their co-lending with online
platforms to no more than 25% of their Tier 1 net capital, and regional banks
can’t make loans online to borrowers who live outside of their jurisdiction.
Ant Group, which runs China’s largest digital payments service
Alipay, had run into problems with Chinese regulators that resulted in a
cancelled IPO. By June 2020, Ant Group had $267 billion in outstanding consumer
loans, or almost one-fifth of China’s outstanding short-term household debt,
according to the Wall Street Journal. Although Ant Group only funded 2% of all
the loans, the company collected fees and interest income based on loan sizes.
The concern comes from Ant Group’s partnerships with weaker banks that have
poor risk management systems in place, which left almost all of the risk with
those banks.
Meanwhile, Beijing continues to expand its digital currency pilots, this
time with the city of Chengdu. The city will hand out $6.2 million in the
digital currency, up significantly from the government’s most recent test of
handing out $1.5 million to 50,000 applicants over the Lunar New Year holiday.
Chengdu said that local residents can join a lottery for about 200,000 vouchers
worth $27 or $37 each.
The People’s Bank of China has also joined a cross-border digital currency project with
other central banks from Thailand, the United Arab Emirates and Hong Kong.
China box office resurging, but Hollywood
still struggling
Thanks to a strong recovery from the COVID-19 pandemic, Chinese
moviegoers are once again returning to movie theaters, which led to the highest Lunar New Year ticket sales to
date. According to Chinese ticketing service Maoyan Entertainment, ticket sales from February 11 to 17 reached
$1.21 billion, more than 32% higher than the same period in 2019, which held
the previous box office record. Part of the resurgence may have been attributed
to recent travel restrictions the Chinese government implemented to prevent another
mass outbreak of COVID-19. Wanda Pictures’ comedy “Detective Chinatown
3” topped the box office during the first few days of the holiday, and
was later overtaken by another domestic title “Hi, Mom.” Both movies have since grossed well
over $600 million, which puts them very close to topping the total gross of
Marvel’s “Avengers: Endgame” in China ($629.1 million).
Last year, China overtook North America to become the world’s
largest box office. With theaters in North America still struggling to reopen,
Hollywood studios are increasingly reliant on China. Foreign films’ share of
Chinese ticket receipts fell from 36% to 16% of total box office sales in 2020,
mainly because fewer foreign films were released due to pandemic-caused
disruptions. Domestic Chinese films, such as 2020’s number one film “The
Eight Hundred,” made up four of the top 10 highest grossing movies of
the year worldwide.
Ford terminates EV venture with Zotye
Ford Motor Company has ended its planned electric vehicle joint
venture (JV) with smaller Chinese automaker Zotye Automobile, due to major
changes made by the Chinese government regarding EV policies. The joint venture
was first announced in 2017 but had not made much progress since.
However, Ford’s JV with Chongqing Changan Automobile, Changan
Ford, will begin making its electric Mustang Mach-E SUV for Chinese consumers.
Changan Ford also produces most of the Ford-branded cars sold in China.
Tencent Music selects JPMorgan Chase and
Morgan Stanley for Hong Kong listing
For its planned second listing in Hong Kong, Tencent Music Entertainment Group has
chosen JPMorgan Chase and Morgan Stanley as two of the banks leading the
offering, which could happen as early as this year. Tencent Music raised close
to $1.1 billion during its New York Stock Exchange IPO in 2018; the Hong Kong
offering could raise as much as $5 billion.
Tencent isn’t the only Chinese tech giant to seek Hong Kong listings. Chinese short video app
Kuaishou debuted on Hong Kong’s stock exchange with a $5.4 billion IPO. The
trend is largely attributed to the Trump administration’s perceived hostility
toward Chinese tech companies, which resulted in the blacklisting and delisting
of some Chinese firms like China Telecom from U.S. exchanges.Click here for more US-China news updates from East West Bank