US-Asia Business

US-China Market Watch: Tense Trade Talks, China’s Tech Crackdown, Tesla Model Y

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

U.S.-China high-level trade meeting ends in “stalemate”

The latest trade talks in Tianjin between U.S. and Chinese officials have ended in a tense “stalemate,” according to Chinese Vice Foreign Minister Xie Feng during his meeting with U.S. Deputy Secretary of State Wendy Sherman. Beijing stated that the United States was making China out to be “an imagined enemy,” but that they would continue to work with the U.S. as long as U.S. leaders adhered to Chinese interests, which included demands like removing sanctions on Chinese officials and lifting visa restrictions on Chinese students.

According to the U.S. State Department, the main goal of the meeting was to keep communication open between the U.S. and China. Under the Biden administration, the U.S. has increased pressure on Beijing over issues such as alleged human rights abuses in Xinjiang and Hong Kong, and national security concerns.

To counter China’s growing influence, Biden is also considering a digital trade deal in the Asia-Pacific region that would include cross-border flows of information, digital privacy and artificial intelligence standards. However, reported disagreements between National Security Council officials and U.S. Trade Representative Katherine Tai may have temporarily hindered progress.

China cracks down on education firms, calls on private business to develop digital yuan

Beijing’s latest crackdown targets private education firms and bars them from turning a profit, raising funds on stock markets, or raising foreign capital through mergers and acquisitions. The new regulations specifically target “online training institutions,” and is aimed at lowering the workload of students and improving the quality of after-school services. The announcement wiped out billions of dollars in market value off several Chinese education companies publicly traded on the New York and Hong Kong stock exchanges. However, in a move to assuage market fears, Chinese regulators said that they would still allow companies to go public on U.S. exchanges as long as they met regulatory requirements.

China’s central bank has also indicated that it will call on private companies like Ant Group and Tencent to help with the development of the digital yuan. Although it didn’t specifically call out those companies in a published whitepaper, it did make note of the prevalence of mobile wallet usage in China, which is dominated by Ant-owned Alipay and Tencent’s WeChat Pay. The People’s Bank of China also stated that the digital yuan would be circulated through approved commercial banks and nonbank lenders, which already included six state-owned banks that participated in the pilot programs. Ant’s MYbank and Tencent’s WeBank also participated but were not allowed to run full-blown tests.

Tesla launches cheaper Model Y; GM expands China design center

Tesla has launched a cheaper version of its Model Y SUV, the Model Y Standard Range RWD. Priced at just over $42,000 USD, the news of the Model Y Standard Range came as a surprise, since CEO Elon Musk had previously said Tesla would not be producing it because its current estimated range is “unacceptably low” at 244 miles. However, Bloomberg posits that Tesla’s sales slowdown in June amid a string of negative publicity could have led to the decision to launch the newer, cheaper Model Y.

General Motors announced it was expanding its GM China Advanced Design Center in Shanghai to focus on producing more electric and autonomous vehicles in the mainland. The expansion will double the facility’s design capacity, which plays into GM’s goal to eliminate combustion engines in its fleet by 2035. GM also plans to boost spending to $35 billion through 2025 to support its electric and autonomous vehicle endeavors.

“Black Widow” still awaits China release date

Marvel’s latest blockbuster “Black Widow,” which was released on July 9 in North America, is still awaiting a release date in China, even though it has been approved by Chinese regulators. “Black Widow” earned a pandemic-high of $80 million at the North American box office in its opening weekend, but the film’s box office earnings dropped a surprising 55% in its second weekend at the international box office, which took in an additional $29.9 million from 48 markets. Any further delays could impact the film’s box office earnings in China, since the film has already popped up on a number of pirated movie sites.

The months of June and July have been unexpectedly sluggish for China’s box office, with June hitting a record monthly low. July is usually reserved for domestic films, but this year, because it was the Communist Party’s 100th anniversary, the government has pushed back tentpole releases and instead pushed out propaganda films like “1921” and “Chinese Doctors.”

Beyond Meat makes online debut at JD.com

In its first foray into China’s online retail space, Beyond Meat has launched on JD.com, one of China’s largest e-commerce platforms, with its new plant-based Beyond Pork products. On July 15, Beyond Pork was made available to consumers in select cities such as Shanghai, Beijing and Shenzhen, with a wider rollout expected in the coming months. Beyond Meat first launched in China through Starbucks menu items in 2020.

Rising food safety concerns are expected to give the plant-based food industry a boost, with some reports saying the industry could grow by 200% in the next five years. China is also the world’s largest consumer of pork and the world’s biggest market for online retail, which makes the JD.com partnership integral to Beyond growing its presence in China.

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