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US-China Market Watch: Amazon China, Trade Talks, China Gaming

US-China Market Watch: Sci-Fi, US-China Trade, Chinese Bus Ban

By Angela Bao

Apr. 1, 2019
People standing next to a poster of 'The Wandering Earth' in China
(Photo credit): STR/AFP/Getty Images

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

New age of sci-fi in Hollywood and China

After the massive success of China’s first high-production science-fiction film, “The Wandering Earth,” Hollywood seems to be capitalizing on Chinese sci-fi content. Director Justin Lin’s production company Perfect Storm Entertainment has partnered with Beijing Pu Luo Media to adapt a short story by Hao Jingfang, who was the first Chinese woman to win a Hugo Award for her novella “Folding Beijing.” The film, based on a short story titled “The Pantheon,” will be an English-language production.

Imagine TV, a production company founded by producer Brian Grazer and filmmaker Ron Howard, announced it is developing an original, Chinese-language sci-fi series called “Mindscaping.” The series will be Imagine TV’s first Chinese-language series, and the company is working with Endeavor China (which is part of a joint venture with Tencent and Sequoia Capital) to co-finance it.

U.S.-China trade negotiations continue

United States Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin traveled to Beijing to continue high-level U.S.-China trade negotiations. The White House called the talks “candid and productive” and said they were looking forward to hosting Vice Premier Liu He, who is expected to travel to Washington right after. Although neither side went into detail about the discussions, Reuters reports that both the U.S. and China are negotiating deals involving intellectual property, forced technology transfers, services, currency, agriculture and other barriers to trade.

SBA campaign 2019 ad

Prior to the trade talks, China made a few new proposals at its annual Boao forum that seem aimed at appeasing U.S. trade demands. One proposal, announced by Premier Li Keqiang, would provide foreign technology firms more access to China’s cloud-computing market by first opening a “liberalization pilot” in a free-trade zone where foreign companies would be able to own data centers. Premier Li also revealed a proposal to provide foreign banks, securities and insurance companies greater access to China’s financial services sector, such as by eliminating restrictions on securities and insurance firms. Both announcements address long-standing issues that foreign companies have faced in China.

United States economic advisor Larry Kudlow also said that some tariffs on China could be lifted as part of the trade deal but that the U.S. would keep others in place as trade leverage. However, President Trump has previously stated that he was going to keep current trade tariffs in place until a deal is reached. The meeting between Trump and Xi has been pushed back at least until late April, with some sources saying that the two may not even meet until June.

U.S. considering partial ban on Chinese buses and trains

United States senators introduced a bipartisan bill (the Transit Infrastructure Vehicle Security Act) to ban federal funds from being used to purchase train cars or buses made by Chinese companies. China has already made significant inroads into the U.S. transit system. In 2014, Massachusetts signed a $843 million contract with state-owned China Railway Rolling Stock Corporation (CRRC). In 2017, CRRC signed a deal for 45 double-deck carriages for the Southern Pennsylvania Transportation Authority and a $647 million contract with the Los Angeles County metro.

The concerns are tied to the United States’ belief that China poses a cybersecurity threat. The bill alleges that the CRRC bids had been heavily subsidized by the Chinese government, allowing them to compete well below market price. The bill hopes to link Chinese transit vehicles to overarching cybersecurity concerns, since there are fears that these transit vehicles can be used to “feed surveillance back to Beijing.”

Faraday Future to make EVs in China

California-based electric vehicle startup Faraday Future is partnering with Chinese video gaming company The9 Limited to produce a new car in China by 2020. The9 said it would invest up to $600 million in the joint venture, and Faraday Future will use the funds to create a new car called the V9, which will be modeled after its luxury SUV the FF91. Faraday will also try to get the FF91 into production in the United States in 2019.

Faraday Future had been experiencing some difficulties when it got into a financial dispute with its main investor, Chinese real estate firm Evergrande; the dispute was resolved at the end of 2018. The9 is expected to first make a $5 million deposit to help with Faraday Future’s “short-term cash flow difficulties.” They did not specify how the remaining funds will be used.

SenseTime prepares for global expansion

SenseTime, the world’s most valuable artificial intelligence startup, is planning on broadening its scope and expanding globally. The Hong Kong-based company specializes in facial recognition technology that can be used on a wide scale. As it hopes to commercialize artificial intelligence across industries, SenseTime is actively looking to invest in areas it believes its technology can benefit, such as autonomous cars, health care and education. Along with its headquarters in Hong Kong, SenseTime also has offices in China, Singapore and Japan, and is looking to expand into more cities internationally.

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