Here’s a look at the latest business news from China, the world’s second-largest economy.
China’s Movie Box Office Record
After a sluggish start, 2019 has turned out to be the biggest windfall in China’s movie history.
Annual box office receipts surpassed last year’s record of 60.7 billion yuan ($8.7 billion), reaching 61.4 billion yuan with more than a week left in the year, according to data provider Maoyan.
Perhaps even more notable, eight of the 10 top-grossing films were domestic productions—a stark change from years ago when Hollywood dominated the Chinese cinema landscape.
The biggest money-maker was animated adventure “Ne Zha,” followed by sci-fi epic “The Wandering Earth” and Marvel superhero blockbuster “Avengers: Endgame.”
China’s box office numbers still lag slightly behind the U.S., where $10.5 billion in sales were recorded so far this year. But the American market has been stagnant for the past decade, while China’s has seen a near 10-fold increase over the same period.
China’s Ailing Auto Market
The historic U-turn in China’s car market—in which sales have fallen for two straight years after three decades of boom times—will likely return to growth by 2022, according to the country’s leading auto association.
Though sales will continue to fall for the next few years, they will move back into the black by 2022 and should see 4% growth in 2023, the China Association of Automobile Manufacturers (CAAM) said this week.
The sector has been hit by a confluence of factors, including a slowing Chinese economy, saturation among car owners, the removal of generous government subsidies to electric-vehicle producers, and the rise of the shared-car industry.
CAAM said it expects sales of 25 million vehicles in 2020, a 2% year-on-year decline.
While it’s been an overall bad year for domestic car makers in China, sales have been mixed for foreign sellers. Sales by American car makers fell by 1.5 percentage points, while those of Japanese and German firms grew slightly, according to CAAM.
One effect of declining sales is the possible consolidation in the industry. While the U.S. has a handful of domestic car makers, China has more than 50, many of which are expected to be subsumed by larger rivals in the coming months and years.
Ant Financial and Vanguard Joint Venture
Users of China’s most popular mobile payment platform, Alipay, will now be able to receive government-approved financial advice through a new joint venture between Alipay owner Ant Financial and U.S. asset manager Vanguard.
“The joint venture will provide customized services for investors based on their investment objectives, time horizon, and risk preferences, with minimum investments of RMB 800 (about $113) and accessible through Alipay and Ant Fortune, a comprehensive wealth management platform operated by Ant Financial,” the companies jointly announced on Dec. 13.
The announcement added that, until now, “professional investment advisory services were only accessible to a small number of high-net-worth individuals in China.”
Details Emerge on U.S.-China Trade Deal
Though the so-called phase 1 trade deal between the U.S. and China was reached last week, details were slow to emerge. Here’s what we know so far.
The U.S. will reduce by half its 15% tariffs on $120 billion worth of Chinese goods, and pause the levies on additional imports that were scheduled to begin Dec. 15. Some $370 billion in Chinese goods will still face taxes ranging from 7.5% to 25%.
While China did not agree to tariffs cuts itself, it promised to significantly increase the purchase of American goods, and to crack down on intellectual property theft and forced technology transfers.
Specifically, Beijing agreed to increase its import of American goods by at least $200 billion over the next two years, which would more than double the amount it was purchasing before the trade war. Agricultural products will make up $40 billion to $50 billion per year of that increase, according to U.S. Trade Representative Robert Lighthizer.
Tanner Brown is a contributor to Barron’s and MarketWatch and producer of the Caixin-Sinica Business Brief podcast.
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December 20, 2019 at 12:00PM
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Box Office Record, Ailing Auto Market, and Other China News You May Have Missed - Barron's
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