US-China Market Watch: Biden Expands China Ban, China Crypto Crackdown, Fast & Furious 9

By Angela Bao
June 7, 2021
(Photo credit): Gettyimages.com/GREG BAKER/AFP

Your monthly roundup of the latest US-China business and industry news.

Biden expands ban on Chinese firms after trade meetings

President Joe Biden signed a new executive order banning Americans from investing in Chinese firms with connections to the Chinese military or that sell surveillance technology that could be used to oppress religious minorities or suppress political dissent. The ban now covers a total of 59 Chinese firms and expands upon the executive order President Trump enacted during his term.

Just a few days before Biden’s order, United States Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He held a virtual meeting. They discussed the Biden-Harris administration’s plans to support the U.S. economic recovery and the importance of cooperating in areas of U.S. interest, as well as other areas of concern.

The week prior to Yellen’s meeting, U.S. Trade Representative Katherine Tai and Vice Premier Liu held a virtual meeting to discuss the bilateral trade relationship, which marked the first trade meeting between the U.S. and China since Alaska in March, where the two sides exchanged “sharp rebukes,” according to the BBC. At this meeting, Tai discussed the Biden-Harris administration’s trade policy and raised some of her concerns, although the trade office didn’t go into detail. Tai has also said that she will continue to review whether China has met the terms of the trade deal made during the Trump administration. Both sides have agreed to keep communicating.

Trade officials from both sides had a preliminary call the day before Tai’s meeting; the Chinese team called on the U.S. to roll back Trump-era tariffs, as well as to relax the sanctions on Chinese companies like Huawei Technologies.

Beijing cracks down on cryptocurrency

China has banned financial institutions and payment companies like banks and online payment channels from offering any services related to cryptocurrency, due to concerns over its volatility. Under the new ban, institutions would not be allowed to accept cryptocurrencies, nor would they be allowed to provide exchange services between cryptocurrencies and the yuan or foreign currencies.

Beijing previously enacted a ban that would prevent institutions from opening accounts, registration, trading, and clearing and settlement. In 2019, China had banned crypto exchanges and initial coin offerings, although individuals can still hold cryptocurrencies.

Part of the crackdown could be because China is developing its own digital yuan. In its latest digital currency test, the government will issue about $6.2 million worth of digital yuan in a lottery to Beijing residents. Individuals will receive “envelopes” with 200 yuan that can be spent on selected merchants. Previously, China had conducted digital currency pilots in cities such as Chengdu and Shenzhen, including a cross-border test between China and Hong Kong.

“Fast & Furious 9” tops China box office

The ninth installment in the multibillion-dollar Fast and Furious franchise raked in a total of $185.3 million in its first two weeks at the Chinese box office. In its opening weekend, “F9” brought in $136 million before dropping 85% to take in just $20.8 million in its second weekend. The film is projected to earn a total of $211.9 million in China, which would only be slightly more than half of the $392.8 million that its predecessor “The Fate of the Furious” earned in China in 2017.

“F9” was originally forecast to make between $160 million and $180 million in its opening weekend at the international box office. The Hollywood Reporter posits that poor early reviews and “F9” star John Cena’s Taiwan gaffe could have contributed to the movie’s weaker-than-expected performance in China. However, “F9” still marks Hollywood’s largest international box office opening during the COVID-19 pandemic.

China becomes Apple’s biggest supplier

China now has more suppliers to Apple than anywhere else, a title formerly held by Taiwan. Of Apple’s top 200 suppliers in 2020, 51 of them were based in the mainland or Hong Kong. However, Apple has cut its suppliers based in other parts of East Asia: Taiwan, which had 52 suppliers in 2017, dropped to 48 suppliers in 2020, and Japan went from 43 suppliers in 2017 to 34 in 2020.

The increase in Chinese suppliers indicates that China is becoming increasingly competitive in its tech and manufacturing capabilities. Chinese suppliers have also helped Apple build out supply chains in other regions of Asia such as in Vietnam, which has been part of Apple’s strategy to diversify its supply chain.

Goldman Sachs and ICBC to form joint venture

Chinese regulators have granted preliminary approval for Goldman Sachs to form a wealth management joint venture (JV) with the state-owned Industrial and Commercial Bank of China (ICBC). Under the JV, Goldman Sachs Asset Management will own 51%, and ICBC Wealth Management Company, an ICBC subsidiary, will own the remainder. The JV will develop investment products for China that includes cross-border products and quantitative investment strategies, and the first products could be announced as soon as next year, pending regulatory approval.

In December, Goldman Sachs revealed it was taking 100% control of its mainland China securities venture, which had initially started as a JV with Beijing Gao Hua Securities. The Wall Street firm had also announced that it was planning to hire more than 400 employees in both Hong Kong and mainland China.

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