Study of BABA and CWEB – Part I

A lot of great information on BABA, score 3.7/5

Potential upcoming catalysts

1. holiday season for e-commerce companies
2. end of release of regulatory laws. Chinese government’s crack down on big tech might come to end by the end of the year
3. reconfiguring growth and household properties will be shift to equities. cash flows will be substantially higher.
4. IPO of Ant’s financial (one news here)
5. 中金：北京证券交易所宣布设立，中国资本市场迎来新格局
6. upcoming Biden-Xi summit by end of the year
7. One Upside to Economic Woes May Be China-U.S. Thaw
   Strong exports and weak domestic demand in China, paired with scarce goods and inflation in the U.S., underline the two economies’ mutual dependency
8. Jack Ma reappears in Hong Kong
9. The Biden administration has continued the tough public façade of confronting China on trade.
10. China to relief and abandon CV-zero Policies
11. relief of Chinese real estate market crisis
12. The pursuit of COVID-zero and the consequential lockdowns sparked panic-buying, boosting online sales
13. With Xi Jinping’s third-term re-election largely assured, investors could also be relieved by a likely continuation of an administration they are familiar with.

Risks

1. delisting of China stocks from us market
2. downfall of China economy
3. bad outcome from upcoming Biden-Xi summit
4. fraud is uncovered in Chinese stocks and crash the stock price. Possibly in specific stocks, hard on all stocks
5. VIE cancellation – biggest risk
6. Real estate property market will drag down the whole economy (Property accounts for about 70% to 80% of household wealth in China, and drives about 10% of household income, according to Moody’s.)
7. In China, War and Stagflation Jitters May Permanently Damage the Market
8. a new draft of China’s overseas listing rules that may be finalized as soon as this month

***********************************************************************************

• 12/26/2021 – Chinese companies set up as variable interest entities (VIEs) are allowed to list in offshore markets if they register with regulators and meet compliance rules, according to a draft of a new regulation released on Christmas Eve by the China Securities Regulatory Commission (CSRC). The regulation also allows mainland-incorporated firms to directly list overseas without the need for a VIE if they meet the requirements. The draft was published online to solicit public opinion through January 23. The CSRC said that the rule is not retroactive, so companies already listed as VIEs overseas are exempt from the stricter rules. The new rules “don’t demand companies that seek offshore listing get regulatory approval, instead they need only file relevant documents with the CSRC for records. So it is essentially paving the way for overseas listings,” said Luo Zhiyu, a partner at DeHeng Law Offices who specialises in cross-border IPOs, mergers and acquisition – is this good news?

China’s new VIE rule eases concerns about overseas IPOs following months of uncertainty after Didi probe

1. China’s securities watchdog published a new draft regulation stating companies can list overseas as variable interest entities if they meet compliance rules
2. A requirement for security reviews of certain companies seeking overseas listings after Didi Global’s New York IPO led to uncertainty about the VIE structure

• 12/15/2021 – I just don’t think China’s government is going to allow U.S. regulators to have unfettered access to internal auditing documents of Chinese companies.” “And if U.S. regulators can’t get access to those documents, then they can’t protect U.S. markets from fraud,”

It’s ‘game over’ for U.S.-listed Chinese companies, global asset manager says

1. Chinese companies listed on Wall Street will likely to be cut off from U.S. capital markets in the next three years as tensions between Beijing and Washington persist, according to David Loevinger from the TCW Group.
2. He predicted that by 2024, most Chinese companies listed on U.S. exchanges are no longer going to be listed in the United States.
3. Many of China’s top internet companies listed in the U.S. have already undertaken dual listings in Hong Kong. Some high-profile names include e-commerce giant Alibaba, its rival JD.com, search engine giant Baidu, gaming firm NetEase and social media giant Weibo.

Beyond Didi, many of China’s top internet companies listed in the U.S. have already undertaken dual listings in Hong Kong. Some high-profile names include e-commerce giant Alibaba, its rival JD.com, search engine giant Baidu, gaming firm NetEase and social media giant Weibo.

“We have already hit the turning point,” Loevinger said, pointing to Didi’s delisting announcement. “I just don’t think China’s government is going to allow U.S. regulators to have unfettered access to internal auditing documents of Chinese companies.”

“And if U.S. regulators can’t get access to those documents, then they can’t protect U.S. markets from fraud,” he added.

• 12/13/2021 – I’m not certain the SEC feels terribly comfortable going down this [delisting] path, but they are going to have to, ultimately. The question is how many companies will voluntarily delist before the SEC does. China wants to avoid seeming as if Chinese companies are being kicked out of America, so they are going to make it look like they are leaving. The problem is that Hong Kong doesn’t have the liquidity to absorb all of these companies. DiDi’s [DIDI] plan to delist from the U.S. presages similar moves by many other Tier 1 U.S.-listed China companies. Tier 1 companies can relist. But they are going to have to engineer a number of acquisitions of Tier 2 companies to avoid too many listing in Hong Kong and draining liquidity. We believe that the most “real” China companies generally lie about 20% to 30% of their revenue, and we’ve seen numerous China companies lying about over 90% of their revenue. – I should find a way to exit these stocks, gradually. Because they have no long term future.

Stay on Guard When Investing in China, Expert Says. ‘Expect to Be Blindsided Again.’

Barron’s spoke with Block on the phone from his new office in Austin, Texas, about why U.S. investors should rethink investing in China, how he sees the delisting push playing out, and why passive funds are making life hard for short sellers. An edited version of our conversation follows.

Barron’s: Chinese companies are facing more scrutiny now. Are regulators finally listening to you?

Block: It’s hard to talk about today in isolation and ignore the arc of how we got here. We published the first successful fraud exposure of a Chinese company with Orient Paper, and from 2010 to 2012 short sellers exposed more. A lot of the companies went dark and were delisted. But what China did was smart: They used [their] banks to take private some companies that were abject frauds, betting that if you put some real money in pockets of U.S. investors who are long these obvious frauds, it would help wipe the memory of them.

Between 2013 and 2014, we had the SEC basically saying [investigating this sort of fraud] produces black holes of time and effort. And since China cleaned up the mess somewhat, the zeitgeist moved on. Everyone’s memory had been wiped, and in 2014 everyone wanted a piece of the Alibaba Group [BABA] IPO, so it was off to the races.

That paved the way for the SEC to delist Chinese stocks that don’t comply with auditing disclosures.

This could be unprecedented, so I’m not certain the SEC feels terribly comfortable going down this [delisting] path, but they are going to have to, ultimately. The question is how many companies will voluntarily delist before the SEC does.

Large companies like Alibaba have already gotten secondary listings in Hong Kong. Will others follow?

China wants to avoid seeming as if Chinese companies are being kicked out of America, so they are going to make it look like they are leaving. The problem is that Hong Kong doesn’t have the liquidity to absorb all of these companies. DiDi’s [DIDI] plan to delist from the U.S. presages similar moves by many other Tier 1 U.S.-listed China companies. Tier 1 companies can relist. But they are going to have to engineer a number of acquisitions of Tier 2 companies to avoid too many listing in Hong Kong and draining liquidity.

How prevalent is that?

We believe that the most “real” China companies generally lie about 20% to 30% of their revenue, and we’ve seen numerous China companies lying about over 90% of their revenue. For example, we worked with Wolfpack Research on its 2020 short of iQiyi [IQ], which spun out of Baidu [BIDU] and we stated publicly is a fraud. [In August 2020, iQiyi said it had engaged advisers to conduct an internal review of the allegations.]

I find it remarkable the way people rationalize China equity investments and try to dismiss what I’m saying as just a few bad apples. This is what we supposedly learned from the financial crisis: When you give people in finance this choice—heads you win and tails you don’t lose—it leads to bad outcomes. That’s clearly the situation with China. In its settlements with [U.S. regulators over accounting fraud], Luckin returned just a minority of the money they raised through fraud in the U.S.—and that was the most successful resolution ever of a confirmed fraud in China!

Asset managers don’t seem dissuaded by this and are enthusiastically building business in China. What’s the takeaway for investors?

I never thought China was investible. The thing China has been excellent in doing strategically that never occurred to the Soviet Union is that China co-opts the American elite, whether Hollywood or finance, by giving the most important people real economic stakes in China. By doing that, they make it harder for the U.S. to politically gather the will to confront China. Should you participate in this co-option of our elite and further corruption of our system? It should be a moral choice, but I realize the vast majority of investors are going to laugh that statement out of the room. If you think the future of the world is in totalitarian regimes and that doesn’t bother you, then sure, load up on China.

• 12/07/2021 – CSRC denies the “news” on delisting Chinese companies

Chinese securities regulator says it recently had constructive communication with US SEC, PCAOB

A number of recent reports and US policy moves have triggered sharp declines in the stocks of Chinese companies listed in the United States. The China Securities Regulatory Commission (CSRC) gave its position today in a question-and-answer session.

The CSRC and relevant regulators have always been open to companies choosing where to list abroad and fully respect the companies’ independent choice of listing venue in accordance with the law and compliance, the statement said.

“Recently, individual media reports that Chinese regulators will prohibit companies with variable interest entity (VIE) structures from listing abroad and promote the delisting of Chinese companies listed in the US are completely misunderstood and misinterpreted,” the statement said.

“We leaned that some domestic companies are actively communicating with domestic and foreign regulatory agencies to promote listing in the United States,” according to the statement.

In terms of US-China audit and regulatory cooperation, the CSRC has recently had frank and constructive communication with the SEC, the Public Company Accounting Oversight Board (PCAOB) and other regulators on resolving issues in cooperation, and has made positive progress in advancing cooperation on some key matters, the statement said.

“We believe that as long as regulators on both sides continue to uphold this principle of mutual respect, rationality, pragmatism and professional mutual trust in conducting dialogue and consultation, we will be able to find a mutually acceptable path of cooperation,” according to the statement.

In fact, China and the US have been cooperating in the field of audit and supervision of China concept stocks, and had also explored effective ways of cooperation through pilot inspections, laying a better foundation for cooperation between the two sides.

However, some US political forces have politicized capital market regulation in recent years, suppressing Chinese companies listed in the US for no apparent reason and coercing Chinese companies to delist, which is not only contrary to the basic principles of market economy and the concept of the rule of law, but also damages the interests of global investors and the international status of the US capital market, the statement said.

“This is a ‘multi-loss’ approach that will benefit no one,” the statement said.

In today’s highly globalized capital markets, there is a greater need for regulators to deal with audit and regulatory cooperation in a pragmatic, rational and professional manner, and forcing the delisting of Chinese companies listed in the United States should not be a responsible policy option, the CSRC said.

For some time now, Chinese regulators have introduced a series of policy measures to promote the regulated development of the platform economy, the main purpose of which is to regulate monopolistic practices, protect the rights and interests of SMEs and data security and personal information security, and eliminate the vacuum of financial regulation and prevent disorderly expansion of capital, the statement said.

In response to these new issues, regulators in various countries are also trying to adopt different regulatory measures to promote a healthier and more sustainable development of the platform economy. “Therefore, the policies introduced by the Chinese government are not a suppression of specific industries or private enterprises, and are not necessarily related to the overseas listing activities.”

In implementing the relevant regulatory measures, Chinese regulators will steadfastly promote reform and openness and further improve the transparency and predictability of policy measures, the statement said.

The CSRC will also continue to maintain open communication with its US regulatory counterparts in an effort to resolve the remaining issues in audit and regulatory cooperation as soon as possible, the statement said.

证监会新闻发言人答记者问

• 12/02/2021 – To me it sounds more like the US putting pressure on China regarding Taiwan or other issues by threatening delisting. CSRC’s (China Securities Regulatory Commission) Director General of the department of international affairs Shen Bing’s statement from 2021.11.26 “There may be de-listing risks for Chinese stocks which the CSRC will do it’s best to avoid. We do not believe that the de-listing of Chinese shares in the US is good, for the companies, the global investors or China-US relations.”www.pressreader.com/…

chinese_delisting

• 12/02/2021 – SEC finalizes rule to allow delisting of Chinese stocks. what Chinese govt will do next? – “It’s the Chinese regulators who are preventing the U.S. regulators from inspecting the audits,” Ahern said. “The issue unfortunately has been politicized. These companies are all audited by the Big Four accounting firms, but under Chinese law regulators are not allowing those audits to be sent to the PCAOB.” – we will what will happen by the end of this year. – should I get out of cweb or buy put?

SEC finalizes rule that allows it to delist foreign stocks for failure to meet audit requirements

Foreign public companies that are listed in the United States may be delisted if their auditors do not comply with requests for information from U.S. regulators.

Today the Securities and Exchange Commission adopted amendments to finalize rules to implement the Holding Foreign Companies Accountable Act (HFCAA). The law was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board (PCAOB), which was created in 2002 to oversee the audits of public companies, to inspect the audits of Chinese firms that list and trade in the United States.

The law permits the SEC to ban companies from trading and be delisted from exchanges if the PCAOB is not able to audit requested reports for three consecutive years. It also requires companies to declare whether they are owned or controlled by any foreign government.

The rules adopted today establish a framework for the law’s implementation.

“We have a basic bargain in our securities regime, which came out of Congress on a bipartisan basis under the Sarbanes-Oxley Act of 2002. If you want to issue public securities in the U.S., the firms that audit your books have to be subject to inspection by the PCAOB,” SEC Chair Gary Gensler said in a statement.

Gensler noted that while more than 50 foreign jurisdictions have worked with the PCAOB to allow inspections, “two historically have not: China and Hong Kong.”

The finalized rules will allow investors to identify foreign companies that are listed in the U.S. that are not allowing the PCAOB to inspect their audits.

“This is a tough situation, because the companies are being held hostage,” Brendan Ahern, chief investment officer of KraneShares, which runs several China-focused ETFs, including the KraneShares China Internet ETF, told me.

“It’s the Chinese regulators who are preventing the U.S. regulators from inspecting the audits,” Ahern said. “The issue unfortunately has been politicized. These companies are all audited by the Big Four accounting firms, but under Chinese law regulators are not allowing those audits to be sent to the PCAOB.”

“What you have is Chinese law clashing with U.S. law,” he said. “This needs to be dealt with above the regulator level, perhaps at the trade representative level.”

• 12/01/2021 – this might be the biggest risk:“I believe it will turn out that China has new data control requirements extending to firms using the VIE mechanism, not that the VIE mechanism itself is the main target,” says Derek Scissors, senior fellow at the American Enterprise Institute.“The practical effect is likely to be as we’ve already seen: Companies which gather a great deal of data will be forced to share with the Chinese government and effectively be barred from meeting foreign disclosure requirements, whether or not they use the VIE structure,” Scissors said. “They will be pushed toward Hong Kong and Shanghai and will have less market value.”

Beijing Could Add Pressure to U.S.-Listed Chinese Stocks. What It Means for Investors.

Beijing’s crackdown on Chinese companies and tighter control around data has also paved the way for a rethink of the VIE structure. Chinese regulators asked  DiDi Global (ticker: DIDI) last week to delist from U.S. markets, potentially by going private or listing in Hong Kong and then delisting.

The ride-hailing company has been in regulators’ crosshairs after it went public in the U.S. despite Beijing’s concerns about data security. China launched a probe that sent its shares tumbling shortly after its public offering. The incident fed pressure for increased scrutiny of Chinese listings, with the SEC hitting pause on new listings from China using the VIE structure.

And on Wednesday, Bloomberg, citing people familiar with the matter, reported that Beijing is discussing plans to ban companies from going public abroad through the VIE structure, though companies could still possibly use the structure in Hong Kong with regulatory approval. Existing VIEs may have to provide more transparency, according to the report.

China’s securities regulator on their website said the report wasn’t true but didn’t offer more details. The China Securities Regulatory Commission isn’t the only regulator that has some oversight over the VIE structure,

“The VIE structure is a legal enforcement gray zone in the cross-border context.  Tightening VIE regulation appears to be a rare consensus between the U.S. and China governments “ Ma told Barron’s. But control over data could be the bigger issue for Beijing. “I believe it will turn out that China has new data control requirements extending to firms using the VIE mechanism, not that the VIE mechanism itself is the main target,” says Derek Scissors, senior fellow at the American Enterprise Institute.

“The practical effect is likely to be as we’ve already seen: Companies which gather a great deal of data will be forced to share with the Chinese government and effectively be barred from meeting foreign disclosure requirements, whether or not they use the VIE structure,” Scissors said. “They will be pushed toward Hong Kong and Shanghai and will have less market value.”

• 12/01/2021 – risk of delisting China high tech firms in US. Companies currently listed in the U.S. and Hong Kong that use VIEs would need to make adjustments so their ownership structures are more transparent in regulatory reviews, especially in sectors off limits for foreign investment, the people said. It’s unclear if that would mean a revamp of shareholders or, more drastically, a delisting of the most sensitive firms — moves that could revive fears of a decoupling between China and the U.S. in areas like technology. Details of the proposed rules are still being discussed and could change. The ban, intended in part to address concerns over data security, is among changes included in a new draft of China’s overseas listing rules that may be finalized as soon as this month

China to Close Loophole Used by Tech Firms for Foreign IPOs

(Bloomberg) — China is planning to ban companies from going public on foreign stock markets through variable interest entities, according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors.

The ban, intended in part to address concerns over data security, is among changes included in a new draft of China’s overseas listing rules that may be finalized as soon as this month, said the people, asking not to be identified discussing private information. Companies using the so-called VIE structure would still be allowed to pursue initial public offerings in Hong Kong, subject to regulatory approval, the people said.

The China Securities Regulatory Commission said on its website Wednesday that a media report about banning the overseas listings of companies using the VIE structure is not true, without giving further details.

Companies currently listed in the U.S. and Hong Kong that use VIEs would need to make adjustments so their ownership structures are more transparent in regulatory reviews, especially in sectors off limits for foreign investment, the people said. It’s unclear if that would mean a revamp of shareholders or, more drastically, a delisting of the most sensitive firms — moves that could revive fears of a decoupling between China and the U.S. in areas like technology. Details of the proposed rules are still being discussed and could change.

The overhaul would represent one of Beijing’s biggest steps to crack down on overseas listings following the New York IPO of ride-hailing giant Didi Global Inc., which proceeded despite regulatory concerns. Authorities have since moved swiftly to halt the flood of firms seeking to go public in the U.S., shuttering a path that’s generated billions of dollars for technology firms and their Wall Street backers.

It’s all part of a yearlong campaign to curb the breakneck growth of China’s internet sector and what Beijing has termed a “reckless” expansion of private capital. Banning VIEs from foreign listings would close a gap that’s been used for two decades by technology giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd. to sidestep restrictions on foreign investment and list offshore. It potentially thwarts the ambitions of firms like ByteDance Ltd. contemplating going public outside the mainland.

The China Securities Regulatory Commission didn’t immediately respond to a request for comment.

While a universal ban on the VIE structure isn’t being contemplated, a halt on foreign listings and additional review for Hong Kong IPOs would mean the model will no longer be a viable way for many startups to tap capital markets. Some investment banks have already been advised by regulators to stop work on new deals involving VIEs, a person familiar with the matter said.

The demise of the VIE route would further threaten a lucrative line of business for Wall Street banks, which have helped almost 300 Chinese firms raise about $82 billion through first-time share sales in the U.S. over the past decade.

VIEs have been a perennial worry for global investors given their shaky legal status. Pioneered by Sina Corp. and its investment bankers during a 2000 IPO, the VIE framework has never been formally endorsed by Beijing.

It has nevertheless enabled Chinese companies to bypass rules on foreign investment in sensitive sectors including the internet industry. The structure allows a Chinese firm to transfer profits to an offshore entity — registered in places like the Cayman Islands or British Virgin Islands — with shares that foreign investors can then own.

While virtually every major Chinese internet company has used the structure, it has become increasingly worrisome for Beijing after technology firms infiltrated every corner of Chinese life and amassed reams of consumer data. Companies holding the data of more than 1 million users must undergo approval when seeking listings in other nations, the Cyberspace Administration of China said in July.

A cybersecurity review may also be required for firms planning IPOs in Hong Kong if it’s decided that the listing will potentially have an impact on national security. The change hasn’t stopped data-rich companies like music streaming venture Cloud Village Inc. and artificial intelligence giant SenseTime Group Inc. from planning debuts in the city.

Till recently, authorities had little legal recourse to prevent sensitive overseas listings, as with the Didi IPO. Officials have asked the ride-hailing giant to devise a plan to delist from the U.S., people familiar said last week, an unprecedented request.

Since a crackdown on Didi began in early July, only one mainland-based Chinese company has priced a U.S. IPO, while 29 have listed shares in Hong Kong, according to data compiled by Bloomberg. NetEase Inc.’s Cloud Village will debut in the city on Thursday, while the closely-watched offering of SenseTime is expected to start trading in the week of Dec. 13.

A senior official at the securities regulator said last week that China fully supports companies that choose Hong Kong as a primary listing venue. China doesn’t think delisting from the U.S. is a good thing for the companies, for global investors or for the China-U.S. relationship, added Shen Bing, director-general of the CSRC’s department of international affairs.

China’s heightened regulatory scrutiny has been echoed in the U.S. The Securities and Exchange Commission has halted pending IPOs by Chinese companies until full disclosures of political and regulators risks are made, warning investors may not be aware they are actually buying shares of shell companies instead of direct stakes in businesses

• 11/25/2021 – Chinese authorities are working with U.S. counterparts to prevent Chinese companies being delisted from U.S. stock exchanges. the communication is currently smooth and open. There is a risk of delisting of these companies but they are working very hard to prevent it from happening. Speaking at the same conference, Ashley Alder, CEO of Hong Kong’s Securities and Futures Commission said he feared Sino-U.S. tensions could prevent a solution.

China Regulator Seeks to Avoid U.S. Delistings of Chinese Firms

• 11/23/2021 – China shows no signs of abandoning its zero-Covid strategy anytime soon, says Jefferies

1. From the U.S. to large swathes of Europe and Asia, many countries are learning to live with the virus and have started lifting most restrictions.
2. But China has not eased its ultra-strict zero-Covid strategy which involves mass lockdowns — even if just one or a handful of cases are detected.
3. Jefferies highlighted three things that hint at China’s lack of immediate plans to move away from its zero-tolerance approach.

• 11/23/2021 – I think it is good for CCP to crack down on cloud-business fraud. Does CCP to do all these regularization toughening to help Chinese companies to stay in US listing?

China pressures Alibaba, Baidu to crack down on cloud-business fraud

1. Two of China’s biggest and best-known Internet companies are facing more pressure from the Beijing government, this time over the practices of their cloud business units.
2. The Chinese Ministry of Industry and Information Technology said Tuesday it has told Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU) that those companies need to do a better job of preventing telecom fraud after the ministry determined their cloud platforms had been used to gain access to fake and fraudulent websites. According to a report from Reuters, the ministry said Alibaba (BABA) and Baidu (BIDU) must “earnestly fulfill their main responsibilities for network and information security.”
3. Initial reaction to the Chinese government’s latest moves was muted, as both Alibaba (BABA) and Baidu (BIDU) edged into positive territory in pre-market trading, Tuesday.
4. The Chinese government has been putting pressure on many of its largest Internet companies for what it views as anticompetitive business practices and lax oversight of consumers’ personal data. Over the weekend, China’s State Administration for Market Regulation levied fines equivalent to $78,000 on Alibaba (BABA), Baidu (BIDU) and several other companies for failing to disclose some acquisitions made over the past decade.

• 11/22/2021 – The Rationale Behind the Selloff of BABA and CWEB – The US Public Company Accounting Oversight Board on Wednesday adopted a new framework that would help it implement a law banning foreign companies from U.S. exchanges if their auditors haven’t been inspected by American regulators

One of the major reasons behind this selloff is the SEC’s firm stance against non-compliant foreign companies that are listed on US bourses, such as Alibaba. The regulator essentially wants such companies to open up to audit inspections, or be eventually delisted from US exchanges. Its chief had previously warned such companies about the delisting risk, and the regulator took a step further this month by approving the framework to remove non-compliant companies from US exchanges. It’s evident that the SEC isn’t backing down. This presents us with a few possible scenarios:

• Maybe the US-China trade tensions subside, this whole thing goes away for good and Alibaba’s shares rally, or;
• Maybe companies such as Alibaba get hit with fine(s) but they remain listed on US exchanges, or;
• Maybe Alibaba and similar firms open up to US audit inspections and severe reporting irregularities show up, or;
• Maybe these firms open up to US audit inspections but no reporting irregularities are found, or;
• Maybe Alibaba and other such firms are actually delisted from US exchanges.

It’s anyone’s best guess as to what the future holds for Alibaba’s US-listed shares.

U.S. Audit Watchdog Adopts Rule to Help Implement New Trading Ban
Move follows passage of law banning foreign companies from the country’s exchanges if their auditors haven’t been inspected by American regulators. A serious warning from Mr. Gensler is chair of the Securities and Exchange Commission. Whether in California, the Cayman Islands or China, all companies that seek to raise money in the deep and liquid U.S. capital markets should play by America’s rules. The steps that Congress, the SEC and the Public Company Accounting Oversight Board are taking to protect investors aim to do just that. The clock is ticking.

The Public Company Accounting Oversight Board on Wednesday adopted a new framework that would help it implement a law banning foreign companies from U.S. exchanges if their auditors haven’t been inspected by American regulators.

The U.S. audit watchdog, which regulates the audits of public companies, plans to use the framework to decide whether it can investigate or review a public audit firm in certain jurisdictions, such as China or Hong Kong. The Securities and Exchange Commission, which oversees the PCAOB, could then require additional disclosures from the companies audited by those firms and take other actions, including issuing a trading ban.

SEC Chair: Chinese Firms Need to Open Their Books – WSJ
China’s companies must allow their audit firms to be audited or their shares won’t trade in U.S. capital markets.

The Securities and Exchange Commission may need to prohibit trading in about 270 China-related companies by early 2024. The reason can be traced to the Enron and WorldCom accounting scandals.

Congress passed the Sarbanes-Oxley Act in 2002, mandating inspections of public companies’ auditors by the Public Company Accounting Oversight Board. More than 50 foreign jurisdictions allow the board to “audit the auditors.” Two do not: China and Hong Kong.

Congress acted last year to fill this gap by unanimously passing the Holding Foreign Companies Accountable Act. The law prohibits trading in an issuer’s stock if a foreign jurisdiction prevents our oversight board from inspecting the company’s audit firm for three consecutive years. The SEC has taken all the required steps to implement this law, and the oversight board is on track to finalize its relevant rulemaking before the end of the year. The three-year clock began ticking in 2021.

Now it’s up to Beijing to let the oversight board in so we can ensure the relevant audits are up to U.S. standards. Early next year I expect we will announce which companies, if any, used an auditor that didn’t open its workpapers to U.S. overseers. If these companies use an audit firm in a noncompliant jurisdiction for two more years consecutively, their shares will be prohibited from trading in our capital markets beginning in 2024.

In June the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would wind the three-year clock down to two. We welcome discussions with Chinese authorities, but Congress has spoken. Unless China’s companies abide by the rules, their shares won’t be able to trade in the U.S.

• 11/16/2021 – Ray Dalio is starting to invest more in China. Chinese stocks are looking more promising?

Ray Dalio’s Bridgewater is reportedly looking to raise $469 million in new China fund

1. Ray Dalio is launching a new China fund through a local subsidiary, according to a report Tuesday in China’s Securities Times, citing sources.
2. The fund aims to raise more than 3 billion yuan ($468.8 million), the report said, citing sources.
3. Bridgewater China did not immediately respond to a CNBC request for comment.

• 11/15/2021 – good to see US-China have more cooperation

Biden-Xi virtual meeting ends with both sides calling for more cooperation amid tensions

1. Both The U.S. and China noted points of tension, and issued public statements after the meeting that emphasized ways to avoid conflict.
2. Xi said during the meeting that for China and the U.S. to get along “in a new era,” three principles of mutual respect, peaceful coexistence and win-win cooperation should be followed, according to China’s official English-language readout.

• 11/11/2021 – Baba keeps setting record of sales

Alibaba, JD smash Singles Day record with $139 billion of sales and focus on ‘social responsibility’

1. Alibaba and JD.com racked up around $139 billion of sales across their platforms on China’s Singles Day shopping event, setting a new record.
2. The record sales come despite worries about the strength of the Chinese consumer and the impact of Beijing’s crackdown on technology companies.
3. Singles Day was a slightly more muted affair as Chinese technology companies continue to face scrutiny from regulators and President Xi Jinping pushes for so-called “common prosperity.”

• 11/11/2021 – China will keep country door open and open even more, with more order and sound regulation, which will benefit long term growth and prosperity. 中国将坚定不移推进改革开放，为亚太经济发展提供助力。中国致力于推进高标准市场体系建设，推动重要领域和关键环节改革取得新进展，打造高水平、制度型对外开放格局，持续优化营商环境，打造统一开放、竞争有序的市场体系，不断夯实中国经济长远发展根基，并为亚太及全球工商界来华投资兴业提供更好保障。

习近平出席亚太经合组织工商领导人峰会并发表主旨演讲

原标题：习近平出席亚太经合组织工商领导人峰会并发表主旨演讲

11月11日，国家主席习近平应邀在北京以视频方式向亚太经合组织工商领导人峰会发表题为《坚持可持续发展 共建亚太命运共同体》的主旨演讲。

习近平指出，当前，新冠肺炎疫情仍在全球蔓延，世界经济复苏艰难曲折。亚太地区应该勇担时代责任，发挥引领作用，坚定朝着构建亚太命运共同体目标迈进。

第一，全力抗击疫情。越是困难时刻，越要坚定信心，越要沉着勇毅。面对这场事关人类前途命运的世纪考验，亚太各经济体和社会各界要坚持人民至上、生命至上，弘扬科学精神，团结一心，努力赢得抗击疫情的彻底胜利。

第二，坚持开放合作。各方要把握大势，积极主动扩大开放，推进贸易和投资自由化便利化，维护产业链供应链稳定顺畅，推动经济复苏，实现联动发展。要坚持向前看、朝前走。亚太地区不能也不应该回到冷战时期的对立和割裂状态。

第三，推进绿色转型。要坚持共同但有区别的责任原则，落实好应对气候变化《巴黎协定》和《生物多样性公约》第十五次缔约方大会成果，共同走绿色、低碳、可持续发展道路。坚持以人民为中心，协调好经济增长、民生保障、节能减排，在经济发展中促进绿色转型，在绿色转型中实现更大发展。

第四，积极推进创新。要加速科技和制度创新，推动科技成果转化，培育经济发展新动能。加强亚太成员科技创新协作，为科技发展打造开放、公平、公正、非歧视的环境。工商界要努力成为研发投入、成果转化的主力军。

习近平强调，中国经济发展一直同亚太区域合作进程相融相伴。中国如期实现全面建成小康社会，开启了全面建设社会主义现代化国家新征程，这将为亚太地区带来更大机遇。

中国将坚定不移推进改革开放，为亚太经济发展提供助力。中国致力于推进高标准市场体系建设，推动重要领域和关键环节改革取得新进展，打造高水平、制度型对外开放格局，持续优化营商环境，打造统一开放、竞争有序的市场体系，不断夯实中国经济长远发展根基，并为亚太及全球工商界来华投资兴业提供更好保障。

中国将推进全面绿色转型，为亚太及全球生态文明建设作出贡献。中国将积极推进生态文明建设，坚定实施应对气候变化国家战略，统筹低碳转型和民生需要，如期实现碳达峰、碳中和目标。欢迎亚太工商界积极参与，共创绿色发展未来。

中国将致力于促进合作共赢，为亚太经济发展添砖加瓦。坚持真正的多边主义，积极参与全球经济治理，推动建设开放型世界经济。坚定推进高质量共建“一带一路”，加强全球减贫、粮食安全、发展筹资等领域合作，为亚太经济复苏和可持续发展注入动力，构建全球发展命运共同体。

• 11/10/2021 – Could it be a good summit to repair China-US relationship?

Biden-Xi virtual summit tentatively set for Monday
The long-anticipated meeting aims to reset strained bilateral ties.

The much-anticipated virtual summit between President Joe Biden and Chinese leader Xi Jinping is tentatively scheduled for the evening of Nov. 15, a U.S. official told POLITICO on Wednesday. A second non-administration source familiar with the summit’s planning also confirmed the date.

The two leaders telegraphed their intent Tuesday to establish a positive tone for the summit via letters of congratulations both leaders sent to the National Committee on United States-China Relations to mark its 55th anniversary. Xi’s letter, read by China’s ambassador to the U.S., Qin Gang, at Tuesday’s NCUSCR black-tie gala dinner, stated that “China stands ready to work with the United States to enhance exchanges and cooperation across the board … so as to bring China-U.S. relations back to the right track of sound and steady development.” The intent of the letter’s message was underscored by its wide reporting Wednesday in Chinese state media.

The summit presents the biggest opportunity yet to reset the bilateral relationship. No major breakthroughs are expected on hot-button issues, including tensions over Taiwan, Xinjiang and Hong Kong. But the meeting is likely to produce initiatives on a range of issues, including easing of visa restrictions, the creation of a bilateral nuclear weapons dialogue and a possible framework to ease trade frictions to demonstrate bilateral resolve to move the relationship from confrontation to cooperation.

Ambassador Qin Gang Attends the Annual Gala Dinner of the National Committee on U.S.-China Relations and Reads Out President Xi Jinping’s Congratulatory Letter

On November 9, the National Committee on U.S.-China Relations hosted its 2021 Gala Dinner. President Xi Jinping and President Joe Biden sent congratulatory letters to the Gala Dinner. Ambassador Qin Gang and Chairman of the National Committee Jacob Lew read out the letters respectively.

President Xi expressed his appreciation and recognition to the Committee and its members for their long-time dedication to the growth of China-U.S. relations and to the exchanges and cooperation between our countries in various areas. President Xi pointed out, the China-U.S. relationship is among the most important bilateral relationships in the world today. Whether our two countries, the world’s biggest developing country and the biggest developed country and two permanent members of the UN Security Council, can handle our relations well bears on the fundamental interests of the two countries and peoples, and matters to the future of the world. Right now, China-U.S. relations are at a critical historical juncture. Both countries will gain from cooperation and lose from confrontation. Cooperation is the only right choice. President Xi stressed that following the principles of mutual respect, peaceful coexistence and win-win cooperation, China stands ready to work with the United States to enhance exchanges and cooperation across the board, jointly address regional and international issues as well as global challenges and, in the meantime, properly manage differences, so as to bring China-U.S. relations back to the right track of sound and steady development. I hope the Committee and all those who care for and support the development of China-U.S. relations will reinforce confidence, keep up your good work, and contribute even more wisdom and strength to the advancement of China-U.S. friendship to the benefit of people in our two countries and around the world.

President Biden said, I send greetings to everyone gathered for the National Committee on U.S.-China Relations 2021 Gala Dinner. For over fifty years, the National Committee on U.S.-China Relations has promoted cooperation between the United States and China, helping foster mutual understanding and constructive conversation to help find common ground. Today, our world is at an inflection point in history. From tackling the COVID-19 pandemic to addressing the existential threat of the climate crisis, the relationship between the United States and China has global significance. Solving these challenges and seizing opportunities will require the broader international community to come together as we each do our part to build a safe, peaceful, and resilient future. I am grateful for your dedication to strengthening the bonds between the people of our two countries. Through the advocacy of organizations like yours, we can seek greater connectivity and advancement of interests that affect our countries and the world.

Press Briefing by Press Secretary Jen Psaki and National Security Advisor Jake Sullivan, October 26, 2021

• 11/10/2021 – China is leveraging climate change to try to collaborate with US

U.S., China Jointly Pledge to Step Up Efforts to Fight Climate Change at COP26 – WSJ
Proposal by host U.K. seeks quicker emissions cuts, as weekend deadline at summit nears

• 11/10/2021 – It seems like Chinese government is quite smart to deal with real estate bubble. Evergrande would turn an electric-vehicle unit into its core business within a decade, while drastically cutting property sales by more than two-thirds,

China’s Plan to Manage Evergrande: Take It Apart, Slowly – WSJ
Beijing is working on a controlled implosion of the real-estate giant, selling off some assets while limiting damage to home buyers and businesses

Some investors feared that China Evergrande Group, the world’s most indebted real-estate firm, would collapse spectacularly, triggering losses far and wide. Instead, the Chinese state is dismantling the giant developer slowly and behind the scenes, in what amounts to one of the biggest financial challenges Beijing has faced in years.

The plan, according to people familiar with the matter and official government statements, is to manage a controlled implosion by selling off some Evergrande assets to Chinese companies while limiting damage to home buyers and businesses involved in its projects.

• 11/09/2021 – Is it a good news for Chinese stocks? The expectation should not be too high: A spokesperson for the White House National Security Council said last week that the planned meeting was part of U.S. efforts to responsibly manage the competition with China and not about seeking specific deliverables.

Xi says China is ready to work with U.S. on condition of ‘mutual respect’

1. “Right now, China-U.S. relations are at a critical historical juncture,” Xi said, according to a letter addressed to the National Committee on U.S.-China Relations, a New York-based non-profit.
2. Qin Gang, China’s ambassador to the U.S., read the letter in English to attendees of the committee’s annual gala, which was livestreamed Wednesday morning Beijing time.
3. Overall, Xi’s comments maintained the firm, calm tone of most language from Beijing on relations with the U.S., rather than some of the harsher remarks Chinese officials have made in the last several months.

Biden and Xi are set to hold a virtual meeting as soon as next week, Reuters reported a few hours ahead of the letter’s readout, citing a source familiar with the matter. In early October, CNBC reported the two leaders planned to hold such a meeting before the end of the year.

“Following the principles of mutual respect, peaceful coexistence and win-win cooperation, China stands ready to work with the United States to enhance exchanges and cooperation across the board,” according to the letter.

It was read in English by China’s ambassador to the U.S., Qin Gang, during the annual gala of the National Committee on U.S.-China Relations. The event was livestreamed Wednesday morning Beijing time.

Biden-Xi virtual meeting planned for as soon as next week -source

WASHINGTON, Nov 9 (Reuters) – A virtual meeting planned between U.S. President Joe Biden and Chinese leader Xi Jinping will be held as soon as next week, a person briefed on the matter told Reuters.

Spokespersons for the White House and the Chinese embassy in Washington declined to confirm whether the meeting would take place next week.

Stakes for the meeting are high – Washington and Beijing have been sparring on issues from the origins of the pandemic to China’s expanding nuclear arsenal – but Biden’s team has so far set low expectations for specific outcomes.

Experts believe the two sides may work toward an agreement to relax curbs on visas for each other’s journalists and have also said a deal to reopen consulates in Chengdu and Houston shuttered in a diplomatic dispute in 2020 could help improve the mood.

The Biden administration has said, however, that a deal on the consulates was not being discussed ahead of the meeting.

A spokesperson for the White House National Security Council said last week that the planned meeting was part of U.S. efforts to responsibly manage the competition with China and not about seeking specific deliverables.

• 11/08/2021 – positive coverage again from the likes of Financial Times and The WSJ but the representative ETFs of Chinese companies ended in the red.

Alibaba’s Double-11 On Covid-Zero Booster, Tencent Is Into Metaverse

1. In a repeat of the previous week, we have positive coverage again from the likes of Financial Times and The WSJ but the representative ETFs of Chinese companies ended in the red.
2. The regulatory crackdown on the internet industry has shifted to the healthcare sector, prompting another bout of selling across related stocks.
3. The pursuit of COVID-zero and the consequential lockdowns sparked panic-buying, boosting online sales.
4. Tencent has a head start on the metaverse. It would be worth tracking its advancement in this upcoming trend.

5. Another week, another property developer in trouble

6. Although the situation seems dire, international media reports on China have turned more positive. On Monday, an article by The Wall Street Journal suggested that the mutual reliance of the U.S. and China could point the way to a ‘thaw’ in the antagonistic relationship between the two economic powers. The two countries have more to benefit from cooperating than exchanging barbs.
7. Despite the harsh regulatory actions over the past year, global investors aren’t all frightened away for good. Financial Times noted that both investors and analysts are warming up again to Chinese opportunities. Herald van der Linde, the chief Asia equity strategist at HSBC, revealed to the paper: “I expected [clients] to tell me I’m nuts to go overweight on China, but actually they told me they are thinking the same.”
8. Sounds familiar? That is because you are a regular reader of CIW and many others have commented similarly in previous publications. While it may be wise to stay away amid the deep uncertainty of government policies, a Nikkei Asia noted that foreign investors are tiptoeing back into Chinese stocks due to the “fear of missing out” if the shares recover as fundamentals and corporate performance take precedence.
9. Investors are realizing that the economic woes experienced by China while it fixes the excesses are just what the country needs to do before the problems fester further. As Charlie Munger of the Berkshire Hathaway (BRK.A)(BRK.B) fame remarked to CNN recently, China “steps on a boom in the middle of it instead of waiting for the big bust. Of course, I admire that. In that one respect, they are wiser than we are.”
10. TCOM stock may also have been supported by reports that Merck is “working with China” to bring its COVID pill to the populous country. Meanwhile, China has over 75 percent of its 1.4 billion population fully vaccinated against COVID-19.Reuters estimated that based on the average of about 5,120,449 doses administered each day, “it will take a further 55 days to administer enough doses for another 10 percent of the population,” bringing the fully vaccinated share to over 85 percent. The high vaccination rate, better COVID-19 treatment, and upcoming major international events are expected to be strong drivers for TCOM stock in the coming months.

11/05/2021 –

1. the delay in reporting the qtr until Nov 18th when wall street was expecting the report today
2. overall Chinese market is weighted down by real estate sector (Chinese real estate developer Kaisa halts trading in Hong Kong, as debt concerns escalate)
3. Covid partial lock down reins in the market (Half of Beijing’s flights are canceled as China’s capital city tightens Covid restrictions) – if US’s vaccine and covid pill start to sell/implement in China, will we see a changed landscape?

• 11/03/2021 – good news from Tencent

Tencent launches three new chips as China’s tech giants bolster efforts in semiconductors

• 10/05/2021 – More real estate companies to drop might weight down Chinese market further down, buying opportunities?

Chinese real estate developer Kaisa halts trading in Hong Kong, as debt concerns escalate

1. Hong Kong-listed Chinese real estate developer Kaisa Group Holdings and three of its subsidiaries suspended trading in their shares on Friday ahead of the market open.
2. Kaisa said Thursday that its finance unit missed a payment on a wealth management product, amid increased worries about its strained liquidity.
3. Among Chinese developers, the company ranks second only to Evergrande in terms of issuance of U.S. dollar-denominated offshore high-yield bonds, according to Natixis.

• 11/02/2021 – A 80 bil pension company bought $13 mil BABA stocks recently

A Huge Pension Sold Netflix, Bank of America, and Intel Stock. Here’s What It Bought.

State Teachers Retirement System of Ohio increased its investment in Alibaba Group Holding (ticker: BABA), and cut positions in Netflix (NFLX), Bank of America (BAC), and Intel (INTC) in the third quarter. STRS Ohio, as the pension is known, disclosed the trades, among others, in a form it filed with the Securities and Exchange Commission.

• 11/01/2021 – There was positive coverage from the likes of Bloomberg and The Wall Street Journal yet the representative Chinese ETFs headed south instead. While the astounding mega sales festival data has thus far failed to lift e-commerce stocks, I elaborate on the efforts that could one day be appreciated by investors.

Alibaba’s Earnings And Double-11 In Focus, Futu’s Global Footprint Provides Relief

Chinese tech stocks began the week well thanks to reports streaming in over the weekend covering the interview of China’s top financial regulator saying he expects to “achieve significant progress in the ongoing crackdown on fintech firms before the year-end.” The statement boosted the bulls camp’s belief that Beijing’s drive to rectify the malpractices in the Internet space could be nearing a finale.

Source: Bloomberg

The chairman of China Banking and Insurance Regulatory Commission Guo Shuqing explained that the affected companies have cooperated with the investigations and demonstrated positive acceptance to the feedback from the authorities, with about half of the proposed rectifications having already been implemented. The good pace of progress led him to believe more can be achieved before the end of the year.

Meanwhile, the geopolitical tension between the U.S. and China appears to be ameliorating. U.S. Treasury Secretary Janet Yellen and Chinese Vice-Premier Liu He were reported to have held their second call in about four months on Tuesday. The Chinese side described the call as “pragmatic, candid and constructive” in a statement while a U.S. statement noted Dr. Yellen “frankly raised issues of concern” with Mr. Liu.

The two officials agreed to strengthen communication and coordination on macroeconomic policies. More importantly, it was comforting to see both statements saying the two sides concurred on continuing to talk amid the perceived clashes on various issues between the two economic powerhouses.

Interestingly, Bloomberg ran another enlightening commentary noting the positive work beneath the surface between the U.S. and Chinese governments even as their leaders appeared to be in combative mode. This served as a good reminder for investors to look beyond the obvious rhetoric when assessing the geopolitical risks on their investments.

Source: Bloomberg

On the more immediate macro front, China Evergrande surprised market players with another last-minute debt payment ahead of a Friday deadline. It marked the second time in two weeks that the giant property developer had averted default.

Given that there are several upcoming payment deadlines and Evergrande potentially remaining in a cash-strapped position, we should be expecting déjà vu-like experiences when reading news on the topic over the next few months — Evergrande’s next bond deadline looms; Evergrande averts default again (‘recycle’ the headlines).

Source: Bloomberg

• 10/29/2021 – CV-zero Policies will carry mounting costs for China’s economic growth. But once it is relived, it might become a big catalyst for China and world economic growth.

China Sticks to Covid-Zero Policies, Despite Rising Pressure to Ease Restrictions – WSJ
Businesses have called for a plan to end the strict pandemic regime, warning of the increasing economic toll

A day after a group representing some of the world’s biggest banks urged Hong Kong’s government to consider more open borders earlier this week, the city said it had no plans to abandon its zero-tolerance approach to Covid-19. Instead, the financial hub said it would tighten measures further.

As much of the world has begun opening borders and making plans to eventually treat the disease as endemic, Hong Kong and mainland China have shown no signs of easing some of the strictest coronavirus containment regimes.

• 10/28/2021 – from Tilson’s friend Brett Eversole. The government’s crackdown has cut many Chinese tech stocks in half. But Steve argued that the selloff is overdone and recommended two ways to profit from this: First, buy a basket of stocks in the sector via the KraneShares CSI China Internet Fund (KWEB) and/or shares of Alibaba (BABA). He presented a slide like this one, showing that Alibaba’s stock is currently trading close to its lowest level ever on both enterprise-value-to-sales and price-to-earnings multiples

The most intriguing stock idea I heard of was Chinese tech giant Alibaba (BABA), which was pitched by Brett Eversole, the senior analyst for my friend Steve Sjuggerud, who just celebrated the 20th anniversary of his True Wealth newsletter at Stansberry Research.

I’ve never invested in China because I consider it outside of my circle of competence, but Steve knows the country and its markets well. In fact, here’s a picture of us at the Great Wall of China with a few dozen of our subscribers who joined us at the Stansberry Spring Summit in Beijing in May 2019 (Steve is in the back center, and I’m in the back a little to the left, highlighted by the red arrows):

He presented a slide like this one, showing that Alibaba’s stock is currently trading close to its lowest level ever on both enterprise-value-to-sales and price-to-earnings multiples:

3) Las Vegas is absolutely booming! The flights out here and back were oversold, and when I booked my roundtrip ticket back here in two weekends to run the 24-hour World’s Toughest Mudder in the nearby desert, I had to pay $800 for basic economy tickets.

• 10/21/2021 – An initial proposal to test-run the tax in some 30 cities has been scaled back to just around 10. Officials are still haggling over how to set the tax rate for the pilot initiative and whether to offer discounts and exemption areas. A new law aimed at advancing the tax across the country likely won’t be finalized until around 2025, the last year of the current five-year development plan

In Tackling China’s Real-Estate Bubble, Xi Jinping Faces Resistance to Property-Tax Plan – WSJ
After negative feedback from within the party, an initial proposal to test a property tax in some 30 cities has been significantly scaled down

Chinese President Xi Jinping has made no secret of his desire to deflate China’s property bubble. But according to people with knowledge of government deliberations, he is facing resistance over a measure aimed at curbing housing speculation: a nationwide property tax.

An initial proposal to test-run the tax in some 30 cities has been scaled back to just around 10. Officials are still haggling over how to set the tax rate for the pilot initiative and whether to offer discounts and exemption areas. A new law aimed at advancing the tax across the country likely won’t be finalized until around 2025, the last year of the current five-year development plan, the people said.

• 10/25/2021 – Property tax will drag down property market of China

There’s a chance China might finally put taxes on property

1. Chinese President Xi Jinping has the political momentum to finally get the ball rolling on property tax, analysts said.
2. On Saturday, the top executive body, the State Council, was authorized to conduct a property tax test for five years in unspecified regions.
3. “I think the central government has chosen [the] right time because of the political reshuffling happening before and after the 20th party congress next year, so to really resist a central government policy will be [a risk] to local government officials’ own career,” said Yue Su, principal economist at The Economist Intelligence Unit.

While prices for food climb, they have stagnated where the majority of Chinese household wealth is stored — in real estate. Property accounts for about 70% to 80% of household wealth in China, and drives about 10% of household income, according to Moody’s.

One of Beijing’s top regulatory campaigns in the last 18 months has been a crackdown on the massive real estate industry’s heavy reliance on debt. Worries about fallout from a default by indebted developer Evergrande rattled global investors earlier this year.

The housing market has slumped, even though prices can vary widely by city and region.

An early look at October new home prices barely rose from the prior month, up 0.09% and marking a fourth-straight month of slowing growth, according to industry data from China Index Academy. Official new home price data for last month is due out Nov. 15.

• 10/21/2021 – Maybe it is like what Todd said, Chinese government will find a way to go through the pain of Evergrande, and come up stronger than it was before

China Evergrande Makes Overdue Interest Payment on Dollar Bonds, State Media Says – WSJ
Chinese real-estate developer sent $83.5 million to the trustee for the dollar bonds, staving off a default

China Evergrande Group EGRNF -8.05% made an overdue interest payment to international bondholders, the state-owned Securities Times reported Friday, an unexpected move that allows the property company to stave off a default.

The Chinese real-estate developer on Thursday sent $83.5 million to the trustee for the dollar bonds, and that financial institution will in turn pay bondholders, the Securities Times reported. The financial paper is run by the Communist Party’s flagship People’s Daily newspaper.

• 10/12/2021 – Is he getting ready to IPO Ant?

Billionaire Alibaba founder Jack Ma reappears in Hong Kong – sources

Alibaba Group (9988.HK) founder Jack Ma, largely out of public view since a regulatory clampdown started on his business empire late last year, is currently in Hong Kong and has met business associates in recent days, two sources told Reuters.

The Chinese billionaire has been keeping a low profile since delivering a speech in October last year in Shanghai criticising China’s financial regulators. That triggered a chain of events that resulted in the shelving of his Ant Group’s mega IPO.

While Ma made a limited number of public appearances in mainland China after that, as speculation swirled about his whereabouts, one of the sources said the visit marked his first trip to the Asian financial hub since last October.

Alibaba did not immediately respond to requests for comment outside of its regular business hours. Comments from Ma typically come via the company.

Billionaire Alibaba founder Jack Ma reportedly reappears in Hong Kong

According to Joe Tai, Jack Ma is laying low, and enjoying his hobby now. Joe texts Jack everyday, and Jack is very good.

1. Alibaba Group founder Jack Ma, largely out of public view since a regulatory clampdown started on his business empire late last year, is currently in Hong Kong, two sources told Reuters.
2. The Chinese billionaire has been keeping a low profile since delivering a speech in October last year in Shanghai criticizing China’s financial regulators.
3. Ma met at least “a few” business associates over meals last week, said the sources.

• 10/12/2021 – It seems like Biden admin is gradually rolling back Trump’s Trade war with China. China’s market is too huge for Biden admin to ignore and decouple. China will also help Biden with his climate goal. China has quite a few leveraging tools to deal with US. Taiwan is also one of China’s leverages

U.S. Wants New Trade Talks With China, but Will Keep Tariffs – WSJ
Policy outlined by U.S. Trade Representative Katherine Tai builds on Trump’s foundation

At the same time, U.S. Trade Representative Katherine Tai  said, the U.S. will reopen a process for U.S. companies to seek exemptions from tariffs. That exemption process ended after President Biden took office, drawing complaints from manufacturers and others who say they have no cost-effective alternatives to certain Chinese components.

She declined, for instance, to start enforcement action allowed under the Phase One deal. She also deferred for now an administration plan to start a trade action aimed at getting China to reduce its use of industrial subsidies. In her talk she said such subsidies have hurt the U.S. steel and solar-panel industries.

When trade discussions resume, Beijing is expected to press for the relaxation of sanctions against Chinese companies including telecommunications giant Huawei Technologies Co. Such sanctions are of greater concern to China’s leaders than tariffs, which so far have had limited impact on the Chinese economy.

U.S. Poised to Unveil China Trade Policy – WSJ
Top trade official to provide details of Biden strategy as tariffs linger and businesses push for talks to resume

Since taking office in March, Ms. Tai has largely sidestepped questions about China by deferring to the administration’s review process. She has said that she would work within the parameters of the Trump administration’s Phase One deal, which included a yet-to-be-tested mechanism for enforcement if a country is coming up short on its commitments.

U.S.-China Trade Talks Take First Steps in Re-Engagement – WSJ
Virtual meeting follows Biden administration’s outline of a policy that builds on Trump initiatives

The Biden administration kicked off its trade-policy engagement with China late Friday with a virtual meeting between U.S. Trade Representative Katherine Tai and Chinese Vice Premier Liu He.

A statement issued by the official Xinhua News Agency said the Chinese side asked the U.S. to remove tariffs imposed on Chinese products as well as the sanctions against Chinese companies. It also said the Chinese side clarified its position on China’s economic model and industrial policies during the call with Ms. Tai.

Both sides “agreed to resolve each other’s concerns through consultation,” the Xinhua statement said.

The resumption of trade-policy discussions comes as the two nations prepare for a long-awaited virtual summit meeting between President Biden and Chinese President Xi Jinping. National security adviser Jake Sullivan met with a top Chinese diplomat in Zurich on Wednesday to prepare for the meeting, to be conducted in coming weeks.

Biden, Xi plan U.S.-China virtual summit before year’s end, U.S. says

1. US adviser Sullivan, China’s Yang meet for 1st time since Alaska
2. Both sides describe 6-hour talks as constructive, candid
3. Talks come amid higher tensions over China-claimed Taiwan
4. Sullivan to debrief EU officials on his meeting with Yang

Meetings like Biden-Xi summit may be only way forward for U.S. and China, former Obama advisor says

1. U.S. President Joe Biden and Chinese President Xi Jinping could hold a virtual summit by the end of this year, sources told CNBC’s Kayla Tausche.
2. Such top-level talks can help to address the most contentious issues at the heart of U.S.-China competition, said Evan Medeiros, who was President Barack Obama’s top advisor on Asia-Pacific.
3. That signals a “limited thaw” in bilateral relations, said Scott Kennedy of Washington D.C.-based think tank Center for Strategic and International Studies.
4. Taiwan will “for sure” come up again when Biden and Xi hold their virtual meeting, said Kennedy, who’s senior advisor and trustee chair in Chinese business and economics at CSIS.

• 10/11/2021 – a great bull case on China stock on macro level. Chinese equities have been hammered since the trade tensions escalated in the second half of 2018. If Tai accedes to the demands of the American businesses and removes the tariffs, it wouldn’t be U.S. firms celebrating. Shareholders of Chinese stocks would cheer too, as the move would likely boost sentiment and see investors returning.

Chinese Internet Stocks: Relief Rally Or The Start Of A New Dawn?

U.S. lawmakers’ deal on a short-term debt ceiling extension spurred a bullish run on stocks last week but the depressed Chinese equities rallied even more.

The Biden administration has continued the tough public façade of confronting China on trade. Katherine Tai, the U.S. Trade Representative, provided no hints that she intended to lift the tariffs implemented by the last administration. Furthermore, Tai expressed a plan to shift the efforts from securing market access and instead focus on pursuing “smarter, more resilient trade” with a more holistic policy. This led to words of caution from Anna Ashton, vice president of government affairs at the U.S.-China Business Council, who disclosed “most of our companies say they can’t be successful globally if they are not successful in China.”

Source: Barron’s

The Biden administration’s approach on trade negotiations with China appears to run antagonistically with American firms. For instance, the American Apparel & Footwear Association [AAFA] on September 27 called for the extension of tariff exemptions for products such as medical care ones to supply hospitals and health care workers.

The AAFA is requesting the White House to do more, arguing that across-the-board tariff relief would “help manufacturers, farmers, and retailers offset extraordinary freight costs this year” amid an upheaval in the shipping industry ravaged by the coronavirus pandemic. While the tariffs are good for optics – giving the impression that China is suffering from the imposition – it is the business community in the U.S. that is being punished.

“At a time when industry is struggling with an unprecedented supply chain crisis due to our crumbling infrastructure, economic fallout from a damaging pandemic, and unprecedented freight costs, it is distressing that the administration has chosen to continue to subject U.S. companies to these damaging taxes. Although restarting an exclusion process is an important step forward, the far better course would have been to discontinue use of these tariffs entirely.” – AAFA President Steve Lamar

Chinese equities have been hammered since the trade tensions escalated in the second half of 2018. If Tai accedes to the demands of the American businesses and removes the tariffs, it wouldn’t be U.S. firms celebrating. Shareholders of Chinese stocks would cheer too, as the move would likely boost sentiment and see investors returning.

• 09/30/2021 – watch out whether there are some opportunities in China. reconfiguring growth and household properties will be shift to equities

China’s Next Bull Market Is Coming. How to Prepare.

Justin Leverenz: It is a polarized environment, with China apologists and the tourists—those who don’t have to get involved, and call [China] uninvestable. I sit in between. While much of [the regulation] came in a dizzying fashion, China is going to have an uber bull market in the next five to 10 years. Investment will be domestic in nature.

What will drive the Chinese into the market?

The less-talked-about part of regulations is the focus on not increasing leverage in the system and reconfiguring growth. Part of that is increasing restrictions on property speculation. Chinese households have the second largest balance sheet in the world. That is going to shift to equities, much as it did in the U.S. in the 1980s and 1990s, and drive a significant bull market. A multi-year transformation of the asset allocation of households in China will drive prices. Why would one not be part of this explosive opportunity?

It’s anomalous that a country as large as China has its most important companies inaccessible to domestic savers [because they are listed on non-Chinese exchanges]. The effort to create a domestic market, albeit offshore in Hong Kong, and therefore control capital flows more easily, is an important part of the calculus.

What are some of the underappreciated effects of Beijing’s regulatory drive?

Even the China apologists haven’t recognized that this regulation is favorable to cash flows. It will allow [previously] destructive competition to become a lot healthier. While growth will be lower, it will be much more focused on realistic profitability. There will be a tradeoff in valuations, but cash flows will be substantially higher.

• 09/13/2021 – be alert to the incoming debt crisis in China.  Evergrande has $300 bil liability, Total real estate sales were 16tn yuan ($2.5tn) in 2019, or 10% of the country’s entire economic output.

Indebted developer China Evergrande says property sales continue to drop, warns again it could default

1. The Chinese property giant said in a filing with the Hong Kong stock exchange it expects a “significant” continued decline in sales this month.
2. Evergrande has been trying to sell some assets to ease its liquidity crunch, but said those efforts haven’t yielded anything yet.
3. Evergrande also warned its escalating troubles could also lead to broader default risks.

Evergrande also warned its escalating troubles could also lead to broader default risks.

“In view of the difficulties, challenges and uncertainties in improving its liquidity as mentioned above, there is no guarantee that the Group will be able to meet its financial obligations under the relevant financing documents and other contracts,” it warned investors.

It said that if it was unable to repay its debt, it may lead to a situation of “cross default” under its existing financing arrangement and relevant creditors demanding payment.

A cross default means that a default triggered in one situation may spread to other obligations. That could lead to broader contagion in other sectors.

Evergrande investors face 75% hit as company edges closer to restructure
Analysts say massively indebted China property group likely to be dismantled to avoid triggering market-wide panic

Evergrande has been struggling to manage its enormous $300bn debt pile for several years but tougher regulations about debt levels brought in last year as part of president Xi Jinping’s drive against inequality has accelerated its crisis. A firesale of its properties has failed to dent the debt pile despite generous discounts, a strategy further undermined by falling house prices.

The property market has exploded in China in the past two decades. Total real estate sales were 16tn yuan ($2.5tn) in 2019, or 10% of the country’s entire economic output.

• 09/13/2021 – SEC is getting serious on auditing Chinese stocks, otherwise, they will be delisted

SEC Chair: Chinese Firms Need to Open Their Books – WSJ
China’s companies must allow their audit firms to be audited or their shares won’t trade in U.S. capital markets.

The Securities and Exchange Commission may need to prohibit trading in about 270 China-related companies by early 2024. The reason can be traced to the Enron and WorldCom accounting scandals.

In June the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would wind the three-year clock down to two. We welcome discussions with Chinese authorities, but Congress has spoken. Unless China’s companies abide by the rules, their shares won’t be able to trade in the U.S.

• 09/12/2021 – Beijing to break up Ant’s Alipay

Beijing to break up Ant’s Alipay and force creation of separate loans app
Chinese fintech will turn over user data to new joint venture partly owned by state

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/01b7c7ca-71ad-4baa-bddf-a4d5e65c5d79

Beijing wants to break up Alipay, the 1bn plus-user superapp owned by Jack Ma’s Ant Group, and create a separate app for the company’s highly profitable loans business, in the most visible restructuring yet of the fintech giant. Chinese regulators have already ordered Ant to separate the back end of its two lending businesses, Huabei, which is similar to a traditional credit card, and Jiebei, which makes small unsecured loans, from the rest of its financial offerings and bring in outside shareholders. Now officials want the two businesses to be split into an independent app as well. The plan will also see Ant turn over the user data that underpins its lending decisions to a new credit scoring joint-venture which will be partly state-owned, according to two people familiar with the process. “The government believes big tech’s monopoly power comes from their control of data,” said one person close to financial regulators in Beijing. “It wants to end that.” The move may slow down Ant’s lending business, with the enormous growth of Huabei and Jiebei partly powering its planned IPO last year. The CreditTech unit, which includes the two units, overtook Ant’s main payment processing business for the first time in the first half of 2020, to account for 39 per cent of the group’s revenues. The size of the unit, which helped to issue about one-tenth of the country’s non-mortgage consumer loans last year, surprised regulators who fretted about predatory lending and financial risk. Ant has been struggling for control of the new joint venture with regulators, but in June a compromise was reached that will see state-owned companies in its home province, including the Zhejiang Tourism Investment Group, holding a majority stake. The provincial government did Ant a favour by pushing for local state-owned groups to become its new partners, the people said.  “Given the mutual trust between Ant and Zhejiang, the fintech group will have a big say on how the new JV operates,” said a former official at the People’s Bank of China. “But the new set-up will also make sure that Ant listens to the party when it comes to critical decision-making.” A person close to Ant said that for the time being Ma’s team would be at the helm of the new venture. “What does Zhejiang Tourism Investment Group know about credit scoring — nothing,” the person said, while noting Ant executives were still concerned they could lose control in the future. Recommended News in-depthAnt Group Ant’s huge lending business powers $30bn IPO Reuters first revealed the make-up of the joint venture reporting that Ant and Zhejiang Tourism Group would each take 35 per cent stakes with other state-owned and private partners allocated smaller shares.  The new venture will apply for a consumer credit scoring licence, which Ant has long coveted. China’s central bank has issued only three licences — all to state-run operations — preventing Ant from fully monetising the vast reams of data it has collected on Chinese citizens. But under the plan being considered, Ant will lose its ability to independently assess borrowers’ creditworthiness. For example, a future Alipay user in need of credit would see their request first routed to the new joint venture credit scoring company where their credit profile is held and then on to the new Huabei and Jiebei lending app to issue the credit. Currently the process is entirely integrated within Alipay and Ant said it made “credit decisions within seconds” in its prospectus for its suspended IPO. The company did not respond to an emailed request for comment.  Ant will not be China’s only online lender affected by the new rules. This summer the central bank told industry players that lending decisions must be made based on data from an approved credit scoring company rather than proprietary data, one of the people said. A senior executive at a different online lender said this could translate into a “moderate” cut in their margin since the firm could no longer use its own data to make lending decisions.

• 09/08/2021 – 中国政府加大反垄断监管力度，查处不正当竞争行为，维护市场公平竞争秩序，不仅有法可依，而且有例可循，是许多国家管理经济活动的惯常做法。这有利于从根本上促进中国经济实现公平、有序、可持续的增长与发展，对于世界经济发展也是长期利好。广大中外投资者、经营者和消费者最终必将受益。

美方称中国加强市场监管举措可能加剧市场风险，外交部回应

9月8日，外交部发言人汪文斌主持例行记者会。有记者提问：美方一些人士表示，中国政府加强市场监管举措可能加剧市场风险。你对此有何评论？

汪文斌表示，中国政府加大反垄断监管力度，查处不正当竞争行为，维护市场公平竞争秩序，不仅有法可依，而且有例可循，是许多国家管理经济活动的惯常做法。这有利于从根本上促进中国经济实现公平、有序、可持续的增长与发展，对于世界经济发展也是长期利好。广大中外投资者、经营者和消费者最终必将受益。对此，越来越多的国际机构和经济界人士表达了理解与支持。

对外开放是中国基本国策，任何时候都不会动摇。事实上，中国打造高水平对外开放的步伐越来越大。近期，习近平主席宣布在全国推进实施跨境服务贸易负面清单，支持北京等地开展国际高水平自由贸易协定规则“对接”先行先试。国务院印发《关于推进自由贸易试验区贸易投资便利化改革创新的若干措施》，提升贸易、投资、国际物流和金融服务实体经济便利度。《横琴粤澳深度合作区建设总体方案》、《全面深化前海深港现代服务业合作区改革开放方案》公开发布，为建设高水平对外开放新体制、提升营商环境提出了新的目标。

中方将一如既往为外国投资者来华投资兴业提供更好保障，同各方一道坚持开放合作、互利共赢，共享发展机遇，共促世界经济复苏和增长。

• 09/06/2021 – another warning from Soros on risk in investment in China. Soros also ask Congress to pass legislation empowering the Securities and Exchange Commission to limit the flow of funds to China. The effort ought to enjoy bipartisan support.

BlackRock’s China Blunder – WSJ
Pouring billions into the country now is a bad investment and imperils U.S. national security.

BlackRock, the world’s largest asset manager, has begun a major initiative in China. On Aug. 30 it launched a set of mutual funds and other investment products for Chinese consumers. The New York-based firm is the first foreign-owned company allowed to do so. The launch came just weeks after BlackRock recommended that investors triple their allocations in Chinese assets. This will push billions of dollars into China. “The Chinese market represents a significant opportunity to help meet the long-term goals of investors in China and internationally,” BlackRock Chairman Larry Fink wrote in a letter to shareholders.

BlackRock is only the latest company trying to engage with China. Earlier efforts could have been morally justified by claims that they were building bridges to bring the countries closer, but the situation now is totally different. Today, the U.S. and China are engaged in a life and death conflict between two systems of governance: repressive and democratic.

The BlackRock initiative imperils the national security interests of the U.S. and other democracies because the money invested in China will help prop up President Xi’s regime, which is repressive at home and aggressive abroad. Congress should pass legislation empowering the Securities and Exchange Commission to limit the flow of funds to China. The effort ought to enjoy bipartisan support.

• 09/06/2021 – be aware of the VIE tougher rule or delisting

Shanghai Suspends Key Approval on Route to Offshore Listings

Officials in China’s financial capital of Shanghai are closing a route used for decades by companies operating in the technology sector to draw foreign investment.

Startups that have recently applied to Shanghai’s National Development and Reform Commission for permission to inject money into affiliated entities incorporated in places like the Cayman Islands are being turned away, according to people familiar with the matter. Such outbound direct investment is one common way Chinese companies have established and then put money into so-called variable interest entity structures — a process used to attract foreign investment and list overseas.

Firms that approached Shanghai’s NDRC are being told the process for outbound investment into VIE structures is being halted, the people said, asking not to be named speaking on a sensitive issue. The changes follow a directive from Beijing, one person said.

Shanghai’s Municipal Development and Reform Commission said in a statement that it has not rejected requests for outbound direct investment by companies because of their use of VIEs.

Regulators are discussing tougher oversight of VIEs nationwide, though the rules have yet to be finalized, the people said. It’s unclear what these will mean for existing VIEs, many of which trade on exchanges in Hong Kong and New York.

An explainer on the legal twist Didi and Alibaba used to list overseas

The changes threaten a lucrative line of business for Wall Street banks, which have helped Chinese firms raise about $78 billion through first-time share sales in the U.S. over the past decade. They also add to concerns of a decoupling between China and the U.S. in sensitive areas like technology.

China’s recent crackdowns on a slew of technology companies have rattled global investors and triggered warnings from the U.S. Securities and Exchange Commission. Gary Gensler suspended new initial public offerings of China-based companies in August until they provided more details on risk disclosures, including information about their VIE structures.

• 09/03/2021 – JD is still allowed for large acquisition and Didi is invested by the city government of Beijing – China is moving in the direction to have more state control for private companies

JD.com, Didi stand out among Chinese tech stocks ahead of the weekend

1. Before the market opened, JD (NASDAQ:JD) subsidiary JD Property said it reached a deal to acquire China Logistics Property Holdings for $2.1 billion. JD, one of China’s biggest e-commerce companies, is seen as making the deal in order to improve and build up its own delivery infrastructure operations.
2. Didi Global (NYSE:DIDI) climbed by more than 6% following a report that the city government of Beijing is working on a deal to take control of the Chinese ride-sharing leader.

• 09/03/2021 – I need to be aware of the political risk in China -commentary from Soros

Xi’s Dictatorship Threatens the Chinese State – WSJ
In his quest for personal power, he’s rejected Deng Xiaoping’s economic reform path and turned the Communist Party into an assemblage of yes-men.

Mr. Xi realized that he needs to remain the undisputed ruler to accomplish what he considers his life’s mission. He doesn’t know how the financial markets operate, but he has a clear idea of what he has to do in 2022 to stay in power. He intends to overstep the term limits established by Deng, which governed the succession of Mr. Xi’s two predecessors, Hu Jintao and Jiang Zemin. Because many of the political class and business elite are liable to oppose Mr. Xi, he must prevent them from uniting against him. Thus, his first task is to bring to heel anyone who is rich enough to exercise independent power.

I consider Mr. Xi the most dangerous enemy of open societies in the world. The Chinese people as a whole are among his victims, but domestic political opponents and religious and ethnic minorities suffer from his persecution much more. I find it particularly disturbing that so many Chinese people seem to find his social-credit surveillance system not only tolerable but attractive. It provides them social services free of charge and tells them how to stay out of trouble by not saying anything critical of Mr. Xi or his regime. If he could perfect the social-credit system and assure a steadily rising standard of living, his regime would become much more secure. But he is bound to run into difficulties on both counts.

• 09/02/2021 – Details of new regulation laws

On Wednesday, a new data security law took effect. A personal data privacy law is set to take effect on Nov. 1.

中华人民共和国数据安全法

《个人信息保护法（草案二次审议稿）》公开征求意见（附全文及对比文件）

China’s Personal Information Protection Law and Its Global Impact
China first dedicated law on personal data protection will have a global impact.

China passes major data protection law as regulatory scrutiny on tech sector intensifies

https://www.iflr.com/article/b1sx4yq13xr3g0/primer-chinas-draft-personal-information-protection-law

• 09/02/2 latest target of china tech regulation blitz: algorithms. But the implementation of the law is quite complex.

The latest target of China’s tech regulation blitz: algorithms

1. China’s increasingly powerful cybersecurity regulator on Friday released sweeping draft rules for regulating use of so-called recommendation algorithms.
2. That’s the technology that has helped China’s largest tech companies from e-commerce giant Alibaba to TikTok-owner ByteDance build up their multibillion dollar businesses.
3. The world is watching. The proposed rules, if passed, might require companies to restructure their businesses and give regulators access to proprietary information, Kendra Schaefer, Beijing-based partner at Trivium China consultancy, told CNBC.

Here are some of the key points in the draft rules:

1. Companies must not set up algorithms that push users to become addicted or spend large amounts of money.
2. Service providers need to notify users in a clear way about the algorithmic recommendation services they provide.
3. Users need to have a way to switch off algorithmic recommendation services. Users should also have a way to choose, revise, or delete user tags used for the recommendation algorithm.
4. When algorithms are used to market goods or provide services to consumers, the company behind it must not use the algorithm to carry out “unreasonable” differentiation in terms of prices or trading conditions.
5. Any violations of the rules could land companies with fines between 5,000 yuan and 30,000 yuan ($773 and $4,637).

On Wednesday, a new data security law took effect. A personal data privacy law is set to take effect on Nov. 1.

The latest rules could have the potential to force companies to change their business models, but it’s unclear as to what extent. “The jury is still out on the implications for operations and profits,” said Ziyang Fan, head of digital trade at the World Economic Forum. “It depends on a number of factors, such as the level of enforcement, and market reactions — how many users would choose to ‘turn off’ [the] recommendation algorithm if that’ll lead to a suboptimal user experience, such as getting cat videos pushes when you are a dog person?” he said in an email.

• 09/02/2021 – BABA is pleasing CCP. And might be good for the country and so for BABA too

阿里巴巴集团将投入1000亿助力共同富裕

9月2日，记者从阿里巴巴集团获悉，阿里已启动“阿里巴巴助力共同富裕十大行动”，将在2025年前累计投入1000亿元，助力共同富裕。为促进十大行动落地，阿里将成立一个专门的常设机构。

据了解，阿里助力共同富裕十大行动将围绕五大方向展开，分别是科技创新、经济发展、高质量就业、弱势群体关爱和共同富裕发展基金，行动将包括：

一是加大科技投入，扶持欠发达地区数字化建设。如设立科技产业基金，推动欠发达地区数字化建设以及与实体经济深度融合，设立科技人才基金和奖励计划等。

二是扶持中小微企业成长。降低中小微企业日常运营成本，提供经营补贴等，推动中小微企业健康发展。

三是助推农业产业化建设。如联合地方政府，建设农产品(5.880, 0.00, 0.00%)集采中心，打造一批区域公用品牌等。

四是支持中小企业出海。如推动“跨境贸易绿色通道”建设等。

五是助力高质量就业。启动年轻人创业扶持计划，提供多样化的职业技能培训等。

六是帮助提高灵活用工群体的福利保障。如提高快递员、骑手、网约车司机等商业保险的保障等。

七是促进城乡数字生活均等化。如探索共建智慧社区、美丽乡村等。

八是缩小数字鸿沟，加强弱势人群服务与保障。如推动更多特殊人群“云上就业”，优化老年人数字生活体验，建立儿童重疾救助基金等。

九是支持基层医疗能力提升。专项投入建设村级医疗站，打造云上“医共体”等。

十是成立200亿共同富裕发展基金。用以助推共同富裕示范区建设，为全国实现共同富裕进行探索示范。

• 09/02/2021 – Xi wants more trading and more opening in economy, not the opposite. Maybe all these new regulations are aim to open more. 支持北京等地开展国际高水平自由贸易协定规则对接先行先试

习近平：深化新三板改革，设立北京证券交易所，打造服务创新型中小企业主阵地

今晚，2021年中国国际服务贸易交易会全球服务贸易峰会举行，习近平发表视频致辞。习近平表示：“我们将提高开放水平，#在全国推进实施跨境服务贸易负面清单#，探索建设国家服务贸易创新发展示范区；我们将扩大合作空间，加大对共建‘一带一路’国家服务业发展的支持，同世界共享中国技术发展成果；我们将加强服务领域规则建设，支持北京等地开展国际高水平自由贸易协定规则对接先行先试，打造数字贸易示范区；我们将继续支持中小企业创新发展，深化新三板改革，设立北京证券交易所，打造服务创新型中小企业主阵地。”

习近平：扩大合作空间，同世界共享中国技术发展成果

9月2日晚，国家主席习近平在2021年中国国际服务贸易交易会全球服务贸易峰会上发表视频致辞。习近平说，我们将扩大合作空间，加大对共建“一带一路”国家服务业发展的支持，同世界共享中国技术发展成果

第1视点｜习近平纵论破解发展问题的“金钥匙”

• 09/01/2021 – Targeting health-care sector might drag down the whole market down

China’s health-care sector could be Beijing’s next regulatory target, analysts say

1. Chinese President Xi Jinping emphasized this week the need to support moderate wealth for all — or the idea of “common prosperity.” That has been behind the spate of crackdowns on companies, say analysts.
2. The healthcare sector is one of the country’s “three big mountains,” with the other two being education and property.
3. Green of TS Lombard says the firm predicts that the MSCI China index could dive another 10% to 15%, in a worst-case scenario.

• 09/01/2021 – all things about Ant’s and Ma

Ant gets nod to restart overhauled consumer finance business

Jack Ma under pressure to sell control of Ant, sources claim

Chinese banks return to popularity after crackdown on fintech firms

China pushes Ant Group overhaul in latest crackdown on Ma 

• 09/01/2021 – relevant news

海外网评：共同富裕不是要削弱市场经济

中央财经委员会第十次会议研究了扎实促进共同富裕问题，对促进共同富裕的方向、路径和重要任务等作出更为明确的阐释和部署，引发海内外高度关注。共同富裕是搞平均主义吗？是“劫富济贫”吗？是削弱市场经济吗？为澄清谬误，海外网推出“读懂中国的共同富裕”系列评论，此为二评。—————————————

8月30日，中央全面深化改革委员会第二十一次会议审议通过了《关于强化反垄断深入推进公平竞争政策实施的意见》等文件。习近平总书记在主持会议时强调，强化反垄断、深入推进公平竞争政策实施，是完善社会主义市场经济体制的内在要求。要从构建新发展格局、推动高质量发展、促进共同富裕的战略高度出发，促进形成公平竞争的市场环境，为各类市场主体特别是中小企业创造广阔的发展空间，更好保护消费者权益。这一重要论述进一步明确了强化反垄断、深入推进公平竞争与促进共同富裕的关系，为促进共同富裕提供了重要遵循。

对于中国促进共同富裕推出的一系列举措，个别外媒存在一些误读与误解。比如，英国广播公司（BBC）在8月20日的报道中声称，“国家对市场经济的干预越来越强，经济控制的迹象和趋势越来越强”。美国之音在8月23日的报道中将中国促进共同富裕的举措，描述为“优待国企、歧视私企的经济发展计划”。

归结起来，这些报道往往将共同富裕曲解为“中国要削弱市场经济”。但实际上，中国促进共同富裕始终强调加强完善社会主义市场经济体制。所谓“共同富裕就是要削弱市场经济”的观点，不仅在理论上是错误的，也不符合中国发展的具体实践。把逐步实现全体人民共同富裕摆在更加重要的位置，是中国共产党人不忘初心、牢记使命的体现，是按既定目标、发展方向和战略部署采取的行动，不是要改变发展方向，也不存在否定原有发展方向的问题。

实际上，市场机制具有优化资源配置、激励创新、提高经济效率和发展质量、促进生产力发展的优势，可以为实现共同富裕奠定物质基础。实现共同富裕就像做蛋糕，既要“做大蛋糕”，也要“分好蛋糕”。“做大蛋糕”就必须要充分发挥市场机制的作用和优势。在计划经济体制下，资源配置完全依靠行政指令，不仅会造成生产协调和组织成本巨大、官僚机构膨胀，还会让企业失去市场竞争的压力，扼杀企业的创新能力和活力，失去技术进步的驱动力。改革开放后，中国果断地从计划经济向市场经济转轨，创造了大国经济长期增长的奇迹，为消除绝对贫困、实现共同富裕创造了基础。

据统计，从1978年至2020年，中国国内生产总值（GDP）从大约3678亿提高到破百万亿，人均GDP已超1万美元。改革开放40多年可以说是中国综合国力增强最显著、人民得到实惠最大的时期。这个发展事实充分说明，实行社会主义市场经济体制，发挥市场在资源配置中的决定性作用，能够为发展生产力、消除贫困、实现共同富裕创造条件。一些研究表明，市场化程度越高的地区，是目前中国经济最具活力的地区，也是地区差距和城乡差距最小的地区。

以浙江省为例，改革开放前，浙江省经济总量属于全国的中游位置。改革开放后，浙江省加快市场化改革，大力发展民营经济，市场活力催生出一个个有竞争优势的产业集群，区域块状经济迅速成长。2020年，民营经济增加值占浙江全省生产总值的比重预计为66.3%，民营经济创造的税收占浙江税收收入的73.9%。更为可喜的是，2020年，浙江省城镇居民人均可支配收入为62699元，农村居民人均可支配收入为31930元，连续第20年和第36年居全国各省（区）第一。浙江省城乡收入比为1.96，远低于全国城乡收入比2.56的水平。浙江省40多年的发展实践表明，坚持社会主义市场经济体制，既有利于激发各类市场主体活力、解放和发展社会生产力，又有利于促进效率和公平有机统一、不断实现共同富裕。2021年6月，《中共中央 国务院关于支持浙江高质量发展建设共同富裕示范区的意见》的发布清楚地表明，中国实现共同富裕，不是要削弱市场经济，而是要在社会主义市场经济基础上探索实现共同富裕的新路径。

要看到的是，当市场在调节收入分配方面存在“失灵”现象时，就需要更好发挥政府的作用，通过反垄断、反腐败等手段，营造公平竞争的市场环境，创造机会公平；通过实施第二次、第三次收入分配、推进基本公共服务均等化等政策措施，减少财富和收入差距，扎实推进共同富裕。近期出台的一系列反垄断、反不正当竞争以及规范培训机构的举措，并非是否定市场经济的行为，而是完善社会主义市场经济体制、促进社会公平、推动高质量发展的具体举措，也是各国市场监管者通行的做法。

• 09/01/2021 – Ant’s financial gives big share to state firms in order to revive IPO in Oct. Is this real? If it is real, what Chinese state firms want from the IPO and company – huge profit and long term growth prospect?

EXCLUSIVE-Chinese state firms to take big stake in Ant’s credit-scoring JV -sources

1. Ant to form JV with Zhejiang Tourism, Transfar, others -sources
2. Ant, partners aim to establish JV as soon as October -sources
3. Plan comes as Ant revamps business following botched IPO
4. JV could help revive Ant’s IPO -sources (Adds context)

Ant Group reportedly teams with Beijing-backed investors to rescue IPO

1. Ant Group (NYSE:BABA) will reportedly form a personal credit scoring joint venture with Zhejiang Tourism Investment Group and other Chinese state-backed firms as soon as October, the latest step in meeting regulator restructuring demands to get the pulled initial public offering back on track.
2. Reuters sources say Ant and Zhejiang Tourism will each own 35% of the joint venture. Other state-backed participants will include Zhejiang Electronic Port and Hangzhou Finance and Investment Group. The only investor not backed by the state will be Transfar Group, parent of logistics and financial services company Transfar Zhilian, which will hold a 7% stake.
3. Late last year, Ant was preparing for a record-setting $34.5 billion dual-listed IPO when regulators pulled the offering days before the listing. Beijing was concerned about tech company overreach and the lack of regulations surrounding their financial products.
4. In January, reports emerged that regulators would require Ant Group to restructure its business into a financial holding company. 

• 08/30/2021 – more news to read

The More It Falls The More I Buy: 4 Reasons Alibaba Is Set To Fly

How China Is Cracking Down on Its Once Untouchable Tech Titans

受权发布）中共中央 国务院印发《法治政府建设实施纲要（2021－2025年）》

China Plans to Ban U.S. IPOs for Data-Heavy Tech Firms
China’s stock regulator plans to propose new rules that could thwart internet companies’ plans to list in the U.S.

China’s Tech Sector Is Too Big To Fail—That’s Why Beijing Is Cracking Down on It

Data security law: China orders state firms to migrate to government cloud services

中央召开重磅会议！防止资本无序扩张初见成效，释放什么信号？两大方向被重点提及

习近平主持召开中央深改委会议 释放哪些改革信号？

习近平主持召开中央全面深化改革委员会第二十一次会议强调 加强反垄断反不正当竞争监管力度 完善物资储备体制机制深入打好污染防治攻坚战

市场监管总局关于公开征求
《关于修改〈中华人民共和国电子商务法〉的决定（征求意见稿）》意见的公告

China Threatens to Ban E-Commerce Sites That Flout IP Laws

Masayoshi Son’s SoftBank invests in Chinese driverless delivery van start-up Neolix

• 08/30/2021 – two major landmark legislations are completed so far, there are still some risks ahead

TECH
China’s regulatory crackdown has wiped billions off tech stocks — here are the risks ahead

1. China has introduced a slew of regulation in the past few months, in part aimed at the tech sector — a move that’s spooked investors and wiped out billions of dollars in market value from the country’s internet giants.
2. But with most of the landmark legislation (anti-monopoly law and passed and major data privacy law – called the Personal Information Protection Law (PIPL)) visibility increasing on the requirements of companies, investors are now wondering if it’s time to jump into Chinese technology stocks.
3. Experts who spoke to CNBC flagged a number of risk including continued regulatory scrutiny, geopolitics and uncertainty on the impact of business models. The following podcast is a great discussion on the subject. – The actions of CCP are sort of response to potential US government’s actions on Chinese companies. The expert from Hongkong does not know when the regulatory action will end. Tech development will face lots of pressure. More actions will come to business of property development, over-invested EV businesses, etc.

• 08/30/2021 – Son pauses for investment in China for a year or two until regulatory is clear

Hints by SoftBank’s Masayoshi Son at pause from China tech investment stirs unease in the industry

1. After tech stocks turned volatile amid Beijing’s crackdown, SoftBank’s founder said he might pause investments in the country for a year or two
2. The comment spurred debate among Chinese investors concerned about the tech crackdown in China pushing out a committed investor like Son

• 08/30/2021 – Currently, the market is severely discounting many Chinese companies, based on the fear that the heavy hand of the regulatory state will suppress growth and strand capital. My view: This is a rare moment when beachfront property is going on sale. Xi may have rapped the knuckles of Jack Ma and the tech entrepreneur class, but it’s difficult to imagine he’ll cut off their fingers. Xi needs the engine of economic growth to keep humming, as there are still 300 million people living on less than $5.50 a day in China. This economic miracle is only half complete.

Seeing Red

As well as being interconnected, we face many of the same challenges. In both countries, powerful corporate interests suppress competition and skirt regulatory control. Both countries wrestle with the corrupt influence of social media on education, productivity, and happiness. Both countries have birthed an economic elite that’s looking to pull up the ladder and ensconce its descendants in dynastic wealth. More than a few issues of this newsletter could have been written in Chinese without much amendment.

The government facing these challenges in Beijing is profoundly different from the one in Washington. A one-party state can’t be voted out of office, only overthrown. If you lose reelection in a democracy, you can procure a speaking agent and sleep through board meetings. If you get ousted in a one-party state, you usually get shot. Chinese leaders, with singular control and no exit strategy, have the ability and motivation to think long term. China has been playing the long game for generations, and it shows. The U.S. has been governing via Twitter (TWTR) and also, it shows.

This is not a post defending China’s system of government. Mass surveillance, genocide, and shitty vaccines are not an acceptable trade for economic success. But you don’t have to like a competitor to learn from it. And some of China’s recent actions are worth considering as we begin to repair/improve our system.

Currently, the market is severely discounting many Chinese companies, based on the fear that the heavy hand of the regulatory state will suppress growth and strand capital. Last month, SEC Chairman Gary Gensler announced that the regulator was applying additional scrutiny to Chinese IPO listings and strengthening disclosure requirements around the risks of government interference. These are significant headwinds, and as a result both Baidu and Alibaba trade at lower multiples to earnings than their U.S. counterparts. The market likes Uber’s revenue 6x more than that of Chinese ride-share company Didi.

My view: This is a rare moment when beachfront property is going on sale. Xi may have rapped the knuckles of Jack Ma and the tech entrepreneur class, but it’s difficult to imagine he’ll cut off their fingers. Xi needs the engine of economic growth to keep humming, as there are still 300 million people living on less than $5.50 a day in China. This economic miracle is only half complete.

Whatever Xi does, there’s the real possibility that the Chinese system, as morally flawed as it is, might produce greater prosperity than the U.S. model. And shareholder returns are a product of opportunity and execution. If China in 2040 is the dominant power and a 2-billion-person economic success story, all the regulatory overhang in the world won’t cut into the wealth its corporate shareholders will enjoy.

Who can say? My money is still on the U.S., as I’m hopeful we will look east and learn.

• 08/29/2021 – Good valuation of BABA, increased buyback, possible IPO for Ant Financial by end of 2021. Biggest potential risk: VIE

Alibaba: Mr. Market Serves Up A Bargain

1. Alibaba stock has been beaten down severely over the last several months, to the point where it trades at a rock bottom valuation.
2. Despite this, the stock is still growing revenue and earnings at a fast pace.
3. In the most recent quarter, Alibaba beat on EPS but missed on revenue.
4. In this article, I will develop a bullish thesis on BABA arguing that the stock is a bargain at today’s prices

Alibaba Boosts Share Buyback to US$15B; Q1 Revenue Surges 34% YoY Powered by Multiple Growth Engines

1. Upsizes ADS buyback program to US$15 billion from US$10 billion
2. Q1 revenue jumps to US$31.9 billion; +34% YoY
3. Invested in areas such as Community Marketplaces, Taobao Deals and Taobao Live

—— Ant’s IPO

Ant Group IPO: When Will it Happen?

A source told the Financial Times that “[The] Ant [Group] is still looking for an IPO and it wants to improve its valuation that has taken a hit from the regulatory overhaul,” so, in theory, it seems like Jack Ma is still focused on taking the Ant Group public. But in order to do that, the group first needs to refill its coffers, as the Ant Group lost about $315 billion in valuation after its IPO was abruptly halted. The subsequent restructuring has seen Simon Hu step down from the Chief Executive Officer role, and Executive Chairman Eric Jing step up to the plate. The company has a new financial services division which it is looking to investors to help fund so that it can be compliant with the new regulations. Jack Ma’s fintech titan is certainly not down and out, and Ant Group has received revised valuation estimates recently from the likes of Warburg Pincus LLC, who valued it at about $220 billion based on its 2020 earnings. The Wall Street Journal saw a memo to employees within the Ant Group which stated that the company would “certainly” go public. When this could happen remains unclear, but it seems as though the company is taking steps to comply with the new regulations, which could mean that a future IPO is on the radar.

Chairman of Alibaba’s Ant Group insists IPO is still on the cards
Published: March 2, 2021 at 4:02 p.m. ET

The head of the Chinese fintech company Ant Group, which was prevented from listing in November by the country’s central bank, said in a memo to employees seen by The Wall Street Journal that the company will “certainly” become public.

“I’m fully confident in that,” wrote Ant’s executive chairman Eric Jing, however adding that the company would first work to comply with authorities’ requirements.

Ant Group Boss Tries to Quell Employee Discontent With Promise of Eventual IPO – WSJ

Alibaba’s Ant Group Should Forget an IPO
GuruFocus.com
April 18, 2021·2 min read

Jack Ma’s Ant Group Bows to Beijing With Company Overhaul – WSJ
China’s central bank said Ant will apply to become a financial holding company, subjecting it to regulations similar to those governing banks

In a statement, Ant said it “will spare no effort in implementing the rectification plan, ensuring that the operation and growth of our financial-related businesses are fully compliant.”

In addition to applying to become a financial holding company, the company said it would set up a licensed personal credit reporting company. It plans to fold Jiebei and Huabei, its two popular online personal lending services, into a regulated consumer finance company. Ant said its payment business will remain committed to serving consumers and small businesses.

“We will put our growth proactively within the national strategic context,” Ant said, adding it will “strive to create societal value.”

—– Risks

China Plans to Ban U.S. IPOs for Data-Heavy Tech Firms – WSJ

• 02/04/2021 – great achievement for Ant and BABA. catalyst for BABA: An official announcement on the overhaul could come before the start of China’s Lunar New Year holiday next week

Ant Reaches Agreement With China Regulators on Overhaul

1. Ma’s fintech giant will become a financial holding company
2. Ant is still exploring a potential IPO, but timeline unclear

Ant Group Co. and Chinese regulators have agreed on a restructuring plan that will turn Jack Ma’s fintech giant into a financial holding company, making it subject to capital requirements similar to those for banks.

The plan calls for putting all of Ant’s businesses into the holding company, including its technology offerings in areas such as blockchain and food delivery, people familiar with the matter said. One of Ant’s early proposals to regulators had envisioned putting only financial operations into the new structure.

An official announcement on the overhaul could come before the start of China’s Lunar New Year holiday next week, the people said, asking not to be identified discussing private information

Bloomberg Intelligence analyst Francis Chan estimates Ant’s valuation could drop to $108 billion. Ant fetched a $280 billion pre-money valuation before its IPO was halted.

As part of the overhaul plans, Ant and at least a dozen banks are paring back their years-long cooperation on consumer lending platforms that fuel the spending of at least 500 million people in China.

China’s Corporate Crackdown Is Just Getting Started. Signs Point to More Tumult Ahead. – WSJ
Regulators are pushing companies to do more to serve the Communist Party’s goals, rattling markets

In recent months, China has blown up what would have been the world’s largest initial public offering, launched probes into some of its biggest technology companies, and wiped out more than $1 trillion in market value while investors scramble for cover.

There are many signs it isn’t over yet.

“This round of governance storm has not yet reached the stage of calming down,” said Fang Xingdong, a former internet entrepreneur and founder of Beijing-based think tank China Labs.

Since November, Chinese regulators have taken more than 50 actual or reported actions spanning antitrust, finance, data security and social equality, a July 29 roundup by Goldman Sachs Group Inc. shows—more than one move a week.

Chinese authorities have sent mixed signals about whether they intend to keep going.

The government has offered few details about the various investigations it now has under way, or when they will be completed. In some cases, detailed policies have yet to be implemented.

The latest threat to Chinese stocks could come from U.S. regulators, experts warn – MarketWatch

China Plans to Ban U.S. IPOs for Data-Heavy Tech Firms – WSJ

Under the new rules, China would also establish a mechanism that requires companies to obtain formal approval for overseas IPOs from a cross-ministry committee that would be set up in the coming months, they said.

The new rules have yet to be finalized. The CSRC plans to implement them around the fourth quarter, and have asked some companies to hold off on overseas IPOs until then, the people said.

It isn’t clear whether the new rules would affect companies that are already listed on a foreign market under the VIE structure. In recent years, some New York-listed Chinese companies like search-engine operator Baidu Inc. have done secondary listings in Hong Kong amid rising tensions between Beijing and Washington.

In late July, the Communist Party’s Politburo said in a meeting chaired by President Xi Jinping that the system for approving overseas listings by companies will be improved to “prevent and resolve related risks,” state media reported. The report didn’t offer further details.

• 02/04/2021 – positive for BABA since affiliate Ant Group and Chinese regulators agreed on a restructuring plan

Alibaba’s $38 Billion Bond Sale Shows Jack Ma Fans Still Believe

Alibaba Group Holding Ltd. drew robust orders for a $5 billion bond sale, demonstrating investor confidence in the e-commerce giant’s long-term prospects amid easing tensions with Chinese regulators.

The four-tranche offer received more than $38 billion in orders at the peak, according to people with knowledge of the matter. The notes comprising 10-year, 20-year, 30-year and 40-year maturities were priced at 30 basis points to 40 basis points lower than initial guidance, as measured in yields above comparable Treasuries, said the people, who aren’t authorized to speak publicly.

Alibaba’s existing dollar notes and its shares rose Thursday after Bloomberg News reported that affiliate Ant Group and Chinese regulators agreed on a restructuring plan that will turn Jack Ma’s fintech giant into a financial holding company. While this would make Ant subject to capital requirements similar to those for banks, analysts say the agreement suggests it’s now less likely to have to spin off portions of its businesses. Meanwhile, Reuters reported that Ant may hive off its consumer data operations, a concession to regulators that may enable the company to revive plans for an initial public offering that had been abruptly halted in November.

• 01/06/2021 – political risk is imminent on BABA, will Biden admin revoke it? Wait to see more to come in the new admin

U.S. Considers Adding Alibaba, Tencent to China Stock Ban
Agencies debate impact of ban on U.S. financial markets

U.S. officials are considering prohibiting Americans from investing in Alibaba Group Holding Ltd. and Tencent Holdings Ltd. , said people familiar with the matter.

In recent weeks, State Department and Department of Defense officials have held conversations on expanding a blacklist of companies that are prohibited to U.S. investments because of claimed ties to China’s military and security services. The U.S. government announced its original blacklist in November with 31 companies.

In the latest episode, Chinese regulators are trying to get Ant to share the troves of consumer-credit data it has amassed with the central bank’s credit-reporting system, The Wall Street Journal reported.

Tencent operates the hugely popular WeChat app, which has become one of the most powerful tools in Beijing’s arsenal of tools for monitoring the public. Tencent also owns stakes in several U.S. videogame companies.

Major U.S. asset managers including T. Rowe Price Group Inc., BlackRock Inc. and Vanguard Group are among the top public shareholders of Alibaba and Tencent through funds, according to FactSet data.

• 01/05/2021 – Jack Ma will be back soon? Ant and BABA will pop?

Alibaba founder Jack Ma is lying low for the time being, but he’s not missing

1. Alibaba founder Jack Ma is lying low, but not missing, CNBC’s David Faber reported Tuesday, according to a person familiar with the matter.
2. Multiple outlets published reports on Ma’s elusive whereabouts this week.
3. An IPO for Ma’s Ant Group was suspended by stock exchanges in Shanghai and Hong Kong after Ma appeared to speak critically about Chinese regulators.

• 12/29/2020 – China state reins in Ant in order to open a door for big state banks to buy into the firm. And the  deputy central-bank governor for the separate financial holding company has a pro-market reputation. So it is not negative for Ant, but rather positive. State has more skin in the game.

China Eyes Shrinking Jack Ma’s Business Empire
The state could take a bigger stake in the billionaire’s businesses as regulators beef up oversight of the powerful tech sector

Beijing is seeking to shrink Jack Ma’s technology and financial empire and potentially take a larger stake in his businesses, according to Chinese officials and government advisers familiar with the matter, as regulators zero in on the billionaire in a campaign to strengthen oversight of an increasingly influential tech sphere.

Under a restructuring road map that China’s financial regulators laid out this week, financial technology giant Ant Group Co. would return to its roots as an online-payment provider akin to PayPal Holdings Inc., while its more profitable investment and loan businesses would be curtailed.

• 12/27/2020 – BABA raise buyback plan, good time get in now?

Alibaba raises stock buyback plan to $10 billion, but shares continue to sink

Alibaba Group Holding Ltd. increased its stock repurchase program late Sunday from $6 billion to $10 billion, but shares still sank in Hong Kong trading amid an antitrust investigation by Chinese regulators.

In a statement Sunday, Alibaba said its board of directors had approved the larger repurchase, to last through 2022. The stock repurchase program began earlier this quarter.

• 12/27/2020 – If BABA stays in core payment business, it would affect its profit potential and market valuation. But it might rise again. And the cloud above Ant Group is gone.

China Tells Ant Group to Refocus on Its Payments Business
Public rebuke is latest step by Beijing to rein in large companies after they took on what financial regulators regarded as excessive risk

Chinese financial regulators moved to rein in Ant Group Co., the financial-technology giant controlled by billionaire Jack Ma, telling it to switch its focus back to its mainstay payments business and rectify problems in faster-growing areas such as personal lending, insurance and wealth management.

For Ant, the order from regulators means one of the world’s most valuable startups will have difficulty making further inroads into lucrative areas it previously targeted for growth. The company could scale back some of its businesses, which would affect its profit potential and market valuation when it tries to go public again.

Regulators have found this business problematic because most of the loans Ant facilitates are funded by commercial banks—including many small lenders and trust companies—that bear nearly all the risk of borrower defaults. Ant, on the other hand, was collecting fees while assuming little risk. In the first half of this year, Ant’s digital-lending business accounted for 39% of the company’s 72.5 billion yuan, equivalent to $11.1 billion, in revenues, according to its IPO prospectus.

The central bank’s statement on Sunday said that in spite of Ant’s transgressions, it recognizes the company’s financial and technological innovations, and its provision of inclusive financial services.

As a company with “significant influence” in these areas, Ant needs to consciously abide by national laws and regulations and integrate its corporate development with national goals, the statement added.

In the meeting, regulators made several other demands of Ant, the central bank said. These included telling it to safeguard personal data in its credit business, to improve corporate governance, and to act prudently in its financial-services businesses.

Separate draft rules would also force companies like Ant to cough up more of their own capital to support online-lending operations.

• 12/26/2020 – need to watch out the development of antitrust investigation of BABA. Get ready to get in at low point

China’s Antitrust Probe Zeroes In on Vendor Claims of Alibaba Pressure
Chinese tech companies face both increasing political pressure at home and intensified scrutiny in the U.S.

A Chinese antitrust probe into whether Alibaba Group Holding Ltd. BABA -13.34% abused its dominant market position casts a spotlight on longstanding contentions from merchants and rivals that the e-commerce giant pressures some sellers to operate only on its platforms.

• 12/02/2020 – this law is not good for BABA and all other Chinese companies in US

US Congress passes bill that could delist Chinese stocks from US markets
The measure passed by unanimous voice vote

The U.S. House of Representatives passed a law to kick Chinese companies off U.S. stock exchanges if they do not fully comply with the country’s auditing rules, giving President Donald Trump one more tool to threaten Beijing with before leaving office.

The measure passed the House by unanimous voice vote, after passing the Senate unanimously in May, sending it to Trump, who the White House said is expected to sign it into law.

“The Holding Foreign Companies Accountable Act” bars securities of foreign companies from being listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting Oversight Board’s audits for three years in a row.

While is applies to companies from any country, the legislation’s sponsors intended it to target Chinese companies listed in the United States, such as Alibaba , tech firm Pinduoduo Inc and oil giant PetroChina Co Ltd. .

• 11/13/2020 – good buying opportunity? it seems like Ant’s fall is temporary by Xi’s political act, not due to apparent fraud. Because the support Mr. Ma has had from individuals in China’s top political and business echelons, and the country’s top investment bank, all have large unrealized profits on their investments in Ant, there might be nobody wants Ant to fall. BABA owns 1/3 of Ant, Mr. Ma controls 50.5% of Ant’s voting rights. keep in mind: Ant could try again to go public. Ant will embrace the regulation.

China’s President Xi Jinping Personally Scuttled Jack Ma’s Ant IPO
Senior government leaders were furious about wealthy entrepreneur’s criticisms of regulators; rebuke was the culmination of years of tense relations

Chinese regulators have long wanted to rein in Ant, according to the Chinese officials with knowledge of the decision-making. The company owns a mobile payments and lifestyle app, called Alipay, that has disrupted China’s financial system. Alipay is used by roughly 70% of China’s population, has made loans to more than 20 million small businesses and close to half a billion individuals, operates the country’s largest mutual fund and sells scores of other financial products.

Ant largely focused on serving people and companies that traditional banks long ignored, and it has emerged as an important cog in Chinese finance. It has long been spared from the tough regulations and capital requirements that commercial banks have been subject to.

Regulators earlier met with strong resistance to efforts to rein in Ant from the company’s financial backers, reflecting the support Mr. Ma has had from individuals in China’s top political and business echelons, according to a person familiar with the matter. Ant’s shareholders include Boyu Capital, a private-equity fund whose partners include Alvin Jiang, the grandson of former Chinese leader Jiang Zemin. China’s national pension fund, China Development Bank and China International Capital Corp. , the country’s top investment bank, all have large unrealized profits on their investments in Ant.

Ant’s roots trace back to 2004, when Alipay was started as an escrow service to facilitate payment transactions on Taobao, Alibaba’s online marketplace. Mr. Ma split off Alipay from Alibaba in 2011, a move that sparked an outcry from some of Alibaba’s big foreign investors and later resulted in a settlement with them.

• 11/11/2020 – I need to see more infor on China’s regulation change

Chinese Internet Stocks Tumble Because Regulatory Risk Is Back

Shares of Alibaba Group (ticker: BABA) and JD.com (JD) were among those down as much as 6% Tuesday morning. The KraneShares CSI China Internet exchange-traded fund (KWEB) was down almost 4% at $72.98.

• 11/10/2020 – wait for further dip and watch out

Alibaba shares plunge after more Chinese regulatory threats

• 10/27/2020 – Baba owns 33% of Ant. Ant might have an amazing growth future

Inside Ant, the Company Behind the World’s Biggest IPO
Chinese fintech giant is about to make history with record-breaking IPOs in Hong Kong and Shanghai

What Is Ant and What Is It Worth?

Ant Group Co. ’s initial public offering is poised to break global records for total funds raised. The company became the world’s most valuable startup after a fundraising round in mid-2018 that valued it at $150 billion, and could raise more than $34 billion with its coming listings and earn a valuation well in excess of $300 billion. That would place it among the world’s most valuable technology companies.

Ant says it isn’t primarily a financial company, but a technology-solutions provider that connects individuals and small businesses with banks, asset managers and other financial-services providers. Alipay sits between individuals and businesses and facilitates a range of financial transactions.

• 11/09/2019 – Alibaba Singles’ Day sales hit $23 billion in first nine hours

1. Chinese e-commerce giant Alibaba on Monday said sales for its annual Singles’ Day shopping blitz hit 158.31 billion yuan ($22.63 billion) in its first nine hours, up 25% from the same point last year.
2. Akin to Black Friday and Cyber Monday in the United States, Singles’ Day has been promoted as a shopping fest by Alibaba.
3. Alibaba saw sales worth $30 billion on its platforms on Singles’ Day last year, dwarfing $7.9 billion U.S. online sales for Cyber Monday.

• 11/09/2019 – Alibaba Readies Up to $15 Billion Hong Kong Listing
  Chinese retail giant expects to seek approval from Hong Kong’s stock exchange next week and launch the share sale shortly afterward

The online-retailing giant, which is already listed in New York and is China’s most valuable company by market capitalization, plans to launch the share sale after its Nov. 11 “Singles Day” shopping festival, the Chinese equivalent of Black Friday. Alibaba expects to seek approval from Hong Kong’s stock exchange next week and launch the share sale shortly afterward, the people said.

A listing of $10 billion or more would surpass Uber Technologies Inc. as the biggest stock offering so far this year, although it could quickly be overtaken by oil producer Saudi Aramco’s initial public offering.

• 06/05/2019 – 软银：将出售阿里7300万股获利111亿 为首次公开出售; softbank to sell 10% of its shares (still it owns 26% of the shares after the sale, still the biggest owner). – does this mean that Baba is going into trouble soon?
• 06/05/2019 – You Can’t Trust a Chinese Audit
  A new bill would ensure that U.S.-listed companies comply with American financial reporting rules. – think about shorting BABA since it is possible that it will be delisted from US stock market
• 01/25/2019 – This Alibaba business could be its next big moneymaker
• 01/24/2019 – Alibaba Gains An Upper Hand Against Key Rival
• 01/24/2019 – Alibaba: Too Cheap Going Into Earnings
• 01/21/2019 – Alibaba Earnings: What to Expect Amid China’s Economic Slowdown

Alibaba (NYSE:BABA) may be the biggest online retailer in the world’s most populous country, but even it’s not immune from a slowing economy in its core market. In fact, Alibaba announced in November that it was lowering its fiscal-year revenue forecast to account for macroeconomic uncertainties.

With that in mind, here’s what to expect from the e-commerce giant’s fiscal third-quarter earnings report, expected out Jan. 30, 2019.

Alibaba is expected to report revenue of $17.7 billion and earnings of $1.68 per share, based on the average estimate of 29 analysts polled by Yahoo! Finance. This estimate would represent a 38.3% year-over-year increase in revenue and 19.2% growth in earnings. That’s a significant deceleration from the fiscal Q3 2017, when it reported 56% year-over-year growth in revenue and 33% growth in earnings.

Revenue growth below 40% would be a dramatic outlier for Alibaba, which has delivered a stunning eight straight quarters of revenue growth over 50%. Even in fiscal Q2, when the economic headwinds first intensified, it managed to grow revenue by 54% to $12.4 billion. However, that result still fell short of estimates.

But while Alibaba’s revenue isn’t expected to increase quite so dramatically this quarter, 38% growth would still be nothing to scoff at, especially amid today’s less-than-ideal macroeconomic conditions.

 

• 12/27/2018 – Alibaba just gave Chinese youth another reason to never leave their desk
• 11/14/2018 – Why Alibaba Stock Still Has Plenty of Better Days Ahead
• 11/13/2018 – Alibaba Group Holding Limited 2019 Q2 – Results – Earnings Call Slides
• 11/11/2018 – Alibaba sets new Singles Day record with more than $30.8 billion in sales in 24 hours
• 11/08/2018 – Alibaba’s on-demand online services unit valued at $30 billion: sources
• 11/08/2018 – The Trade War With China May End Soon: You’ll Wish You Bought Alibaba Before Then
• 11/06/2018 – Earnings Review: Alibaba Falls Short Of High Expectations
• 11/06/2018 – Alibaba In Driver’s Seat
• 11/02/2018 – Alibaba Cuts Revenue Forecast, Citing Uncertain Economy
  Chinese e-commerce giant cuts its full-year revenue forecast

BEIJING—Chinese e-commerce giant Alibaba Group Holding BABA -0.10% Ltd. cut its full-year revenue forecast by 4% to 6%, citing growing doubts about the economy as China’s expansion recently slowed to its weakest pace in nearly a decade.

• 11/06/2018 – Alibaba says it will help China buy $200 billion in goods in the next five years
• 10/30/2018 – Jack_Ma_farewell_letter_Oct_2018
• 10/23/2018 – Jack Ma sticks to his goals by repeating 3 questions to himself

Speaking at the annual meetings of the International Monetary Fund and the World Bank, Ma shared how he remains focused in his pursuit of success.

“Whether young people, old people, ask three questions,” the billionaire told a packed conference hall in Bali, Indonesia.

“I keep asking myself these three questions,” he said. “What do you have? What do you want? What will you give up?”

Many people usually fail to ask themselves what they are willing to give up because they tend to think they don’t have much to start with, Ma said. But it’s inevitable that sacrifices must be made in the long run, said the teacher and entrepreneur. And recognizing that helps people to commit to their ambitions over the long term, which is often what’s needed to produce results, he said. “Don’t think you will succeed next year, you have to prepare for 10 years,” he said, pointing out that Alibaba didn’t take just a year or two to get to where it is today.

• 10/09/2018 – Alibaba Shares Sink to a 52-Week Low

• 12/06/2017 – Detailed study (Study_of_BABA_Dec_2017)

Spin off Alipay is one of the main reason investors want to own BABA. So eiethr at the end of 2018 or 1st half of 2019, Ant’s IPO will start. It is good to buy before this IPO.

Alibaba’s $60bn payments arm stalls planned IPO

According to one banker, Ant’s IPO has been pushed back to late 2018 or the first half of the following year because of the need to secure regulatory approval and to focus on building the business.

Alibaba later settled with Yahoo and SoftBank, the Japanese technology group that is its other major shareholder. The agreement guarantees Alibaba 37.5 per cent of the total equity value of Alipay or a payment of at least $2bn and up to $6bn, if the spun-off company goes public or another “liquidity event” takes place.

It also requires Alipay to pay Alibaba royalties for software services and 49.9 per cent of its consolidated pre-tax income, and it must continue to service Taobao, the group’s consumer ecommerce unit and other group businesses, under preferential terms.

Why This Fund Owns Alibaba: Alipay Is Huge

Is Alibaba’s Growth Coming to an End?

Alibaba & Alipay: A Mobile Future

Six Reasons Alibaba Can Keep Rallying

• First, they call it the “category killer” in China ecommerce, with its two core retail platforms, Taobao and Tmall, claiming 75% market share in China, which is bigger than the U.S. and much less penetrated.
• Secondly, they write that its advertising business will certainly ramp up, given that at the moment monetization is quite low, and Alibaba has “unmatched” user data that can be used for personalization and targeting. “We model Taobao and Tmall ad revenue growth of 45% for fiscal 2018 (decelerating three points from fiscal 2017) and 30% for fiscal 2019 with upside as likely.”
• Their third point is that Alibaba recently bought leading Southeast Asia e-commerce platform Lazada, heralding a boost in its business in other nations–to the point that they estimate 78% year-over-year growth for its international retail segment next year.
• Fourth is Alibaba’s digital media strategy, with its valuable assets UCweb (the #1 mobile browser for one-third of the world’s population, they write) and Youku (which is often called the Netflix (NFLX) of China), which should bring new users and keep them in the ecosystem, while providing new opportunities for monetization.
• Fifth on their list is Alicloud, which already has a 40% market share in Chin’a public cloud, despite being about half a decade behind Amazon’s (AMZN) AWS in scaling.
• sixth and final point–that Alibaba can grow revenue more than 40%, with margins of 40% or more over time, making it “the best way to play the secular growth of the Internet in China,” with a multiple that should expand to match.
• videos of BABA

Crocodile in the Yangtze Full – Story of Alibaba & Jack Ma Full Documentary

official Documentary about Jack Ma 马云《Dream Maker》 Alibaba Group “追梦者阿里巴巴”

Alibaba will beat Amazon to become the first trillion-dollar internet company, analyst says

A Browser You’ve Never Heard of Is Dethroning Google in Asia

Negative news

MoneyGram and Ant Financial Halt Merger Deal