Wave of mainlanders under Hong Kong talent drive sparks diversity concerns
South China Morning Post
Hong Kong has seen an influx of mainland Chinese professionals since fully reopening in February, but foreign expatriates have been slower to return. Mainland Chinese professionals have flooded into the city on various work visas and talent schemes, with over 47,000 receiving work visas across five schemes from January to July. The majority of applicants have been mainland Chinese, accounting for over 90% of all those approved to move to Hong Kong this year. However, Western expatriates, including those from the UK, US and Australia, have been less likely to return, raising concerns about the impact on the city's diversity and international financial hub status.
The new mainland Chinese arrivals have been highly educated, many of whom studied overseas, and have integrated differently into the local community compared to earlier generations. Experts have noted that previous waves of mainland talent had ties to the city through friends and relatives, whereas newer arrivals have come from all over China and have formed their own community. While the influx of mainland professionals has been welcomed by employers in Hong Kong, concerns have been raised about the lack of diversity and the potential competition for jobs with local residents.
It remains to be seen whether the newly arrived mainlanders will remain in Hong Kong for the long term. The city’s demographic composition is changing, and if levels of Western expatriates do not return to pre-pandemic levels, it could have a significant impact on the diversity and vibrancy of Hong Kong society.
China may finally nick some metals clout from LME
The Shanghai Futures Exchange (ShFE) is reportedly planning to launch a nickel futures contract for international use, which could threaten London Metal Exchange's (LME) benchmark status in the pricing of nickel. The LME has faced a trading scandal and lawsuits after suspending trading in nickel for a week and cancelling trades when prices spiked to a record high. China is the largest consumer and producer of nickel, accounting for 60% of global consumption last year. However, building a network of reliable warehouses for the ShFE will take time and could prove to be difficult.
Would you like a phone with that car? EV maker Nio thinks Chinese buyers will
South China Morning Post
Chinese electric vehicle (EV) start-up Nio has launched a smartphone designed specifically for use with its vehicles. The device offers more than 30 car-specific features, such as initiating self-parking mode, unlocking the car with a button press even if the smartphone is powered off, and transitioning a video call from the phone to the car’s screen and speakers. The fully functional Android-based phone is priced from CNY6,499 ($890) to CNY7,499 and is compatible with all eight of Nio’s vehicle models.
Huawei smartphone spin-off Honor will not develop own advanced chips, CEO says
South China Morning Post
Honor, the smartphone brand spun off from Huawei, has no plans to develop its own system-on-a-chip (SoC) products and will continue using semiconductors from Taiwan's MediaTek and US tech firm Qualcomm, according to George Zhao Ming, CEO of Honor. The company's focus will be on noncore chips such as the C1, a self-developed radio frequency communication device that strengthens 5G signals. The move contrasts with former parent Huawei, which has launched new 5G smartphones powered by an advanced processor that are all made-in-China products.
EU envoy demands ‘progress’ on China trade barriers ahead of talks
The EU has urged China to reduce its trade surplus with the bloc, which reached €396bn ($479bn) last year, the highest in history, according to the EU's ambassador to China. The warning came ahead of a visit by EU trade commissioner Valdis Dombrovskis to Shanghai. The dispute comes amid a European investigation into Chinese electric vehicle subsidies and restrictions on chip-making equipment. European ambassadors at a China-based seminar criticised China's trade surplus, which it said was due to trade barriers rather than the competitiveness of Chinese products.
Deal signed at China-Asean expo broadens adoption of flagship aircraft
South China Morning Post
China's state-owned Commercial Aircraft Corporation of China (Comac) has signed a $2bn deal with Brunei's Gallop Air for the supply of 30 aircraft. The agreement was announced by Shaanxi-based private enterprise Tianju Group at the recent China-Asean expo in Nanning. The airline has not disclosed delivery times or the type of aircraft it has ordered. The deal marks a move by China to target Southeast Asia for its domestically-produced passenger planes while waiting for certification in wealthier markets. Comac has also announced plans to expand or downsize its C919 plane, and incorporate AI for further optimisation.
China, Japan and South Korea occupy top spots in scientific activity index
South China Morning Post
China has surpassed the US in terms of the number of science and technology clusters in the top 100 of the World Intellectual Property Organization’s (WIPO) global innovation index. China has 24 clusters in the top 100, compared to the US’s 21. The top five clusters are all located in East Asia, with Japan in first place, followed by the Tokyo-Yokohama, Shenzhen-Hong Kong-Guangzhou, Seoul, and Suzhou-Shanghai clusters. The index is based on the number of inventors and researchers in the clusters, as well as the number of articles published and patents filed.
US chip giant cuts jobs in Shanghai as economic headwinds swirl: report
South China Morning Post
Qualcomm is reportedly making job cuts at its Shanghai office as it deals with ongoing technology tensions between the US and China and economic headwinds. The company, which has a significant presence in China, did not disclose the number of layoffs, but denied speculation that the cuts would be large-scale or result in an office closure or retreat from Shanghai. Qualcomm has been facing weak demand for consumer electronics, with a 23% drop in year-on-year revenue in Q3 2023. Other US chip companies have also been cutting staff in China due to economic downturns.
Chinese EV startup Nio bets on car connectivity with new smartphone
Chinese electric vehicle startup Nio has unveiled its first smartphone, the Nio Phone, which is designed to seamlessly integrate with the company's electric vehicles. The Android device features a 6.81-inch display, a 50-megapixel camera, and uses Qualcomm processors. It allows Nio drivers to adjust functions such as air conditioning and seat massagers via the phone, and offers in-car navigation and support for remote meetings. The Nio Phone is priced from CNY6,499 ($890) and is only available in China. Nio also announced that it has begun mass production of automotive semiconductors developed in-house.
China tells its citizens to be on the lookout for spies
China's intelligence agency, the Ministry of State Security (MSS), has launched a campaign urging Chinese citizens to be aware of and report suspected spies. The government is using various methods to increase public awareness, including offering rewards of up to CNY500,000 ($68,500) for reporting spies and placing warnings about foreign snoopers on the back of bus seats. The MSS is also focusing on educating young people about national security and has shared cautionary tales on messaging app WeChat about Chinese students being recruited by foreign spies while studying abroad.
EU trade chief seeks more balanced economic ties on China visit
The European Union's trade chief, Valdis Dombrovskis, will visit China to push for fewer restrictions on European businesses. The visit comes as the EU plans to investigate whether to impose punitive tariffs on Chinese electric vehicle imports. The EU blames its trade deficit partly on Chinese restrictions on European companies. Dombrovskis will also address issues such as contradictory messages from Chinese authorities to foreign businesses and the need for clarification on what the EU means by "de-risk" in the context of China. The EU is seeking to reduce its reliance on China while maintaining trade ties.
China Relaxes Capital Controls in Top Cities to Woo Investors
China is relaxing strict capital controls in its two most important cities, Shanghai and Beijing, in an attempt to attract foreign companies as overseas investment declines and the economy slows. In Shanghai's pilot free-trade zone, foreign investors can now freely transfer their investment-related funds in or out of the country without delay if the money is "real and compliant". Beijing is also considering similar regulations for the whole city. China is experiencing a significant flight of capital, which is putting pressure on the yuan and destabilising financial markets.
How Xi Jinping is taking control of China’s stock market
China's stock market is experiencing a surge in IPOs as the government looks to direct capital towards strategically important sectors such as semiconductors, biotech, and electric vehicles. This shift in policy is aimed at reshaping China's economy and reducing its dependence on property and infrastructure investment. The government is using stock markets to guide investment and support companies that align with its priorities for control, national security, and technological self-sufficiency. However, there are concerns that this approach may not lead to the job and wealth creation seen with previous investment in property and infrastructure.
President Xi Jinping is leading the drive to create a “new whole-nation system” that co-ordinates resources from government, industry, finance, universities, and research labs to accelerate technological breakthroughs in strategically important areas. This approach is a significant departure from previous administrations and the pro-market stance initially taken by Xi. The government is using a combination of transparent IPO processes and behind-the-scenes guidance to bring companies in high-priority sectors to market while preventing those in low-priority sectors from listing.
While the government’s strategy aims to support the growth of strategic sectors, there are concerns about the long-term sustainability and economic impact of this approach. The focus on sectors such as semiconductors, electric vehicles, and biotech may not lead to the same levels of employment or consumer spending as property and infrastructure investment. Additionally, the increased state control and intervention in the stock market could deter foreign investors and damage the appeal of Chinese stocks both domestically and globally.
Chinese investors rush into local government bonds
China's credit investors have been buying up bonds issued by the country's most indebted provinces, amid hopes that the central government will help local governments clean up their debt. Local government financing vehicles, which raise debt on behalf of local governments, saw a surge in monthly bond sales in August, with the second highest on record of CNY640bn ($88bn), according to the Financial Times. The increased bond sales indicate that onshore investors believe China will find ways to refinance and cut local government debt, as part of the government's efforts to drive economic growth.
Qualcomm slashes jobs in China and Taiwan amid smartphone slump
Qualcomm is cutting hundreds of staff in China and Taiwan as a result of weak demand in the global smartphone market. The company has been struggling amid a prolonged slump in the sector and posted a 23% decline in revenue in its most recent quarterly financial report. The global smartphone market is forecast to suffer a 4.7% yearly decline in shipments in 2023 to 1.15 billion units, according to market research company IDC. The move by Qualcomm follows Huawei's release of new 5G smartphones in China using its in-house chipset, which could impact Qualcomm's sales in China.
Apple’s iPhone 15 Goes on Sale in Test of Holiday Resurgence
Apple has released its iPhone 15 and Apple Watch Series 9 models in 40 countries, including the US, UK, Australia, and China. Initial online sales have been strong, with new orders for the highest-end iPhone 15 models not due to arrive until at least mid-November in several countries. The iPhone 15 Pro and Pro Max models are expected to be Apple's biggest sellers for the rest of the year. Apple is hoping that the new devices will help it return to growth and break a streak of sales declines during the critical holiday period.
Live Markets UK competition chiefs set to approve Microsoft’s $69bn Activision deal - latest updates
The UK's Competition and Markets Authority (CMA) has indicated that it is prepared to approve Microsoft's $69bn takeover of Activision Blizzard. The CMA had previously announced that it would block the deal, despite it being cleared by regulators in Europe. Microsoft had warned that the decision made the UK a less attractive destination for investment than the continent, and the US efforts to block the deal were struck down in court. However, Microsoft offered a restructured merger deal, which involves spinning off the right to stream Activision's video games to France's Ubisoft. Ubisoft can then market those games directly to consumers or rival console companies. The CMA will consult on the proposals until 6 October.
China relaxes capital controls to entice badly needed foreign investment
China is relaxing its strict capital controls in an effort to attract overseas investors. Chinese authorities have announced that foreigners in Shanghai and Beijing will be allowed to freely move their money into and out of the country. The move comes after data showed that foreign direct investment in China had hit a record quarterly low due to a slump in business confidence. The new rules, which do not apply to mainland Chinese nationals, took effect on September 1 and are aimed at attracting foreign investment to build an open economy.
EU trade commissioner to seek relief from export barriers during China visit
EU trade commissioner Valdis Dombrovskis will visit China to address trade grievances and urge China to buy more EU goods. The trip is expected to be the most intensive in months between the two parties. Dombrovskis will question China's refusal to approve medical devices and its use of security measures to crush competition. China will challenge the EU's new carbon border tax and the investigation into subsidies for electric vehicles.
China Mulls Easing Foreign Stake Limits to Lure Global Funds
China is reportedly considering relaxing the rules that limit foreign ownership in domestic publicly traded companies in order to attract global funds back to its stock market. The country currently caps total foreign ownership in locally listed firms at 30% and subjects a single foreign shareholder to a 10% limit. The discussions are still in the early stages and details, such as which sectors might benefit and where new cap limits might be set, have not been decided. This move comes as foreign investors have been exiting the Chinese equity market, with domestic shares among the worst-performing globally this year.