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.
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.
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 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.
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.