US-Asia Business

US-China Market Watch: US Reopens Trade Talks with Taiwan, China Furthers Crypto Crackdown

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

Biden bans more Chinese firms, opens trade talks with Taiwan

President Biden has added five more Chinese firms to the U.S. economic blacklist for their alleged human rights abuses in the Chinese region of Xinjiang. At least some of the firms are major producers of key solar panel parts.

China has denied allegations of human rights abuses in the region and strongly condemned the maneuver. In response to the blacklist, China has enacted an “anti-foreign sanctions law” to mitigate the impact on Chinese businesses. The new law mandates that Beijing apply countermeasures against foreign entities and individuals determined to be “discriminating” against Chinese firms; countermeasures could include revoking visas, seizing and freezing assets within China, and blocking transactions with Chinese entities and individuals, among other possible actions.

The United States has also restarted trade talks with Taiwan, the first since 2016. As part of the Trade and Investment Framework Agreement (originally signed in 1994), the U.S. and Taiwan have said they would form groups to continue discussions on topics from forced labor, to intellectual property, to import and export of vaccines. The meeting is seen as a way to shore up leverage on both sides against increasingly fraught relations with China, which considers Taiwan a territory. Relationships with Taiwan, which is renowned for its semiconductor manufacturing, could also aid the U.S. in its plan to prevent China from dominating the semiconductor industry.

China furthers crypto crackdown

After the Chinese government announced back in May that it would be tightening restrictions on cryptocurrency, the People’s Bank of China (PBOC) has urged some financial institutions and payment firms to crack down harder on crypto trading. Those financial platforms and institutions include Alipay, China’s largest online payments platform; China Construction Bank; the Industrial and Commercial Bank of China; and the Agricultural Bank of China. The PBOC wants these firms to thoroughly investigate people’s accounts for any signs of restricted crypto activity and then to cut off their payment channels.

China has also extended its crackdown on cryptocurrency mining to the southern province of Sichuan, which is China’s second-largest bitcoin mining province. The local government issued a notice calling for the closure of 26 suspected crypto mining projects. According to the government, China’s crypto crackdown was issued to mitigate financial risks.

China’s box office nearly back to pre-pandemic levels

According to analytics firm Gower Street, China’s 2021 box office revenue as of mid-June is tracking at just 1% below the box office average at the same points from 2017-2019, despite theaters only opening at 75% capacity. In comparison, the United States box office is still 85% behind where it was before the COVID-19 pandemic. Gower Street predicts that China’s 2021 box office could hit $8 billion.

China’s box office recovery has been driven by strong sales during holidays such as Lunar New Year, typically a big box office weekend in the mainland, and by domestic films such as “Detective Chinatown 3” and “Hi, Mom.” Although “Fast & Furious 9” marks the biggest Hollywood title to premiere in China during pandemic times, its current box office take is far from what previous films in the franchise have earned, which suggests that Chinese moviegoers may be shifting away from Hollywood blockbusters.

Tesla recalls more than 285,000 vehicles in China

China’s State Administration for Market Regulation has stated that Tesla is implementing a voluntary recall of more than 285,000 vehicles in the country to address issues with the cruise control systems in Tesla’s Model 3 and Model Y. The recall would cover nearly 250,000 vehicles manufactured at Tesla’s Shanghai gigafactory and more than 35,000 imported Model 3 vehicles. The recall would take the form of a remote software update that will reportedly fix the issue with the cruise control system, which may mistakenly activate on its own in certain situations and could lead to safety hazards.

Although customers don’t have to physically bring their cars to a dealership, some analysts speculate that Tesla is being especially cautious after a recent string of bad press following some high-profile crashes, price changes and quality complaints.

BlackRock becomes first foreign firm to operate wholly-owned mutual fund in China

The world’s largest asset manager, BlackRock, has received approval from Beijing to begin operations on a wholly-owned mutual fund business in China, becoming the first foreign firm in mainland China to do so. In May, BlackRock had also received approval to operate a majority-owned wealth management joint venture in China.

JPMorgan Chase has also applied for full ownership of its securities joint venture in China, of which the Wall Street firm currently owns 71%. In 2020, the Chinese government had granted Morgan Stanley and Goldman Sachs regulatory approval to assume majority stakes in their Chinese securities joint ventures.

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