1. The Swiss Connection
Break out the celebratory fondue.
It’s about to get easier to buy shares of Chinese-listed companies abroad.
That’s how we understand these comments by Cai Jianchun, general manager of the Shanghai Stock Exchange (SSE) at the Boao Forum Tuesday (SCMP):
- “We are preparing to make important efforts in Switzerland going forward and we believe that the first batch of the trial will succeed this year.”
What Cai’s talking about: An MOU signed in 2019 by the SSE and Zurich-based SIX Swiss Exchange in which the two sides agreed to investigate the feasibility of listing global depository receipts (GDRs) on each other’s exchanges.
Why this matters: It’s not easy to invest in China’s capital markets from overseas. If a deal gets inked, it would be only the SSE’s third connect program, along with the Shanghai-Hong Kong and Shanghai-London connects.
Get smart: Cai’s comments come as US-listed Chinese companies come under increasing scrutiny, prompting many to seek back-up listings on Chinese bourses.
Get smarter: As US regulators tighten the screws on Chinese listcos, Beijing is seeking alternate sources of foreign financing for Chinese firms.
Get real smart: Sales generated through connect programs with foreign exchanges are drops in the bucket compared with the financing opportunities presented by US bourses.
2. Vax pacts
Vaccine diplomacy is heating up.
On Tuesday, Xi Jinping rang up Indonesia’s president, Joko Widodo, and promised to help Indonesia overcome the “vaccine divide,” by:
- Supplying Chinese COVID-19 vaccines
- Helping Indonesia build a regional vaccine production center
Some context: Back in January, Widodo kicked off Indonesia’s COVID-19 vaccination drive by televising his first injection of Sinovac’s vaccine (see January 15 Tip Sheet)
Then Xi got all passive aggressive (Xinhua 2):
- “China, Xi added, has included foreign citizens on its soil, including those from Indonesia, in its inoculation plan, and hopes that Indonesia will also provide active support for Chinese nationals in the Southeast Asian country.”
Our take: Xi was signalling to Chinese nationals abroad (and their families at home) that he is thinking about them. Many Chinese nationals have been effectively stuck outside the country since the pandemic began over a year ago.
Get smart: With advanced countries hoarding vaccines, China has a golden opportunity to boost its global image by supplying vaccines to other countries.
The bigger picture: Indonesia is rich in natural resources and controls critical shipping routes. Xi wants to keep Widodo in his corner.
3. Li Keqiang woos foreign busines
China is open for business.
That was Li Keqiang’s message to foreign businesses on Tuesday when he visited the Business Innovation Centre for China-Europe Cooperation (CCEC) in Chengdu, Sichuan.
Some context: The CCEC was established in 2017 to facilitate investment in China by European SMEs.
More context: The CCEC building is pretty cool.
Li met with representatives from 14 companies from Germany, France, Holland, Hungary, Japan, South Korea, Singapore, and India.
Li’s mission (Gov.cn):
- “To understand what difficulties the companies face, and to enquire about what kind of policy support [the companies] need.”
- “[Our] open door will open wider and wider.”
- “[We will] treat companies from all countries the same, and ensure fair competition.”
Get smart: Top leaders have been making every effort to reach out to foreign businesses of late. They see the foreign business community as an important stabilizing force in increasingly fraught relations with developed economies.
The bigger picture: China doesn’t want relations with advance economies to deteriorate too much because they fear being cut off from key economic inputs – like high-end chips – that are only available from those countries.
4. State Council expands service sector openings
Craving some new market openings?
The State Council’s got you covered.
On Tuesday, the State Council approved Shanghai, Tianjin, Chongqing, and Hainan to further open up their service sectors.
Hold up: There were no specifics on what services would be included.
What to watch: The four localities will release specific plans to operationalize these openings over the next few weeks.
Some context: This is the second batch of pilots to trial more openings in the service sector.
- Beijing began opening its service sector in 2015.
- Since 2015, the Beijing government has rolled out over 300 openings measures.
Two of the more interesting measures from Beijing (Beijing Gov):
- Lowering the bar for foreigners to set up investment holding companies
- Allowing multinational companies to set up wholly foreign-owned finance companies
Get smart: Expanding service sector openings to only four localities may seem like small beans at first glance. But Shanghai, Chongqing, and Tianjin are huge regional service sector markets.
5. Tesla drives into regulators’ crosshairs
Tesla is in trouble.
What happened: A Tesla owner protested at the Shanghai auto show on Monday.
Her beef: That her Tesla’s brakes didn’t work, causing her to have an accident.
- Video of the woman be dragged out of the auto show went viral on social media.
- Netizens were overwhelmingly supportive of the woman – and vociferously critical of Tesla, which already had a reputation for bad customer service.
Then things got worse.
Since Monday, state media and Party organs have criticized Tesla, with some openly calling for regulatory investigations, including:
- The Central Political and Legal Affairs Commission
- The Party’s disciplinary watchdog (CCDI)
Of particular concern: Tesla denied the woman access to backend driving data after the accident. Local regulators have now asked provincial authorities to step in and compel Tesla to hand over the data.
Get smart: There were already concerns in China around Tesla’s data collection, security, and storage. Now it looks like the company will come under even more scrutiny.
The bigger picture: The government is still in the process of developing a framework for regulating data. How they treat Tesla should tell us something about their evolving approach.