Top 10 China News - Week 21, May 20

#1 German chipmaker Infineon Technologies AG said the throughput of its distribution center in Shanghai has returned to 50 percent of its normal level under closed-loop management. Infineon said in a statement to China Daily on Thursday it has been included in a "white list" greenlit to resume operations in Shanghai, and it has provided accommodation and subsidies for its employees resuming work. "The Distribution Center China in Pudong is expected to fully resume work in June, according to the local government's arrangement," Infineon said. According to the company, the transportation of chips and raw materials imported from other countries to Infineon's factory in Wuxi, Jiangsu province, as well as shipments of finished products from the factory to its distribution center in Shanghai, have also largely returned to normal. "China is the largest and fastest-growing semiconductor market in the world and the largest regional market for Infineon. We have always attached great importance to the Chinese market and have expanded investment through a series of localization measures to better serve local customers in China," Infineon said. According to the company, it is discussing risk prevention strategies with the local government and logistics providers to better cope with the impact of the epidemic on the supply chain and to ensure business continuity and supply stability.

#2 Membership stores that have targeted affluent urban consumers have kept their expansion plans this year as demand is on the surge for affordable and quality merchandise. Metro China, a high-end retail subsidiary of Beijing-based Wumart Group, said their scale-up plan is still on track this year both online and offline, following a new store opening on Wednesday in Beijing. The new store in the Sijiqing area in Haidian district in Beijing is the fourth store in the city, with an area of 7,500 square meters and houses more than 8,000 types of merchandise from 60 countries. Of them, more than 40 are imported or of private brands. Health, maternity, cooking and gifting are four major categories the new store is offering. To keep consumers coming back to the stores, about 20 to 30 percent of the merchandise in Metro's membership stores will be replaced with new products every three months, said the company.

#3 Guangdong ranks first in terms of total GDP in the first quarter of this year, with GDP exceeding 2.8 trillion yuan ($416.3 billion) according to Askci.com, a market research and consulting provider. The GDP of 10 Chinese provinces and one municipality surpassed 1 trillion yuan in the first quarter of 2022, three more than the same period last year. China clinched a GDP growth rate of 4.8 percent year-on-year to reach 2.7 trillion yuan in Q1, outperforming the 4 percent rate registered in the previous quarter according to data from the National Bureau of Statistics.

Top 10 Chinese provinces in terms of GDP for Q1

1. Guangdong

2. Jiangsu

3. Shandong

4. Zhejiang

5. Henan

6. Sichuan

7. Fujian

8. Hunan

9. Hubei

10. Anhui

#4 Chinese tech heavyweight Tencent Holdings Ltd reported on Wednesday its total revenue came in at 135.5 billion yuan ($21.3 billion) in the first quarter of this year, versus 135.3 billion yuan in the same quarter last year. Profit attributable to equity holders for the quarter was 25.5 billion yuan, down 23 percent year-on-year, marking a decline for three consecutive quarters. "During the challenging first quarter of 2022, we implemented cost control initiatives and rationalized certain non-core businesses, which would enable us to achieve a more optimized cost structure going forward," said Pony Ma, chairman and CEO of Tencent. The company has continued to invest in strategic growth areas, including enterprise software, video accounts and international games, Ma said.

#5 China's vehicle production and sales plummeted in April, primarily due to COVID-19 outbreak-related disruptions to supply chains and showroom traffic, but the country's leading industry association is optimistic about its 5 percent growth estimate for the year. Carmakers in the country produced 1.21 million vehicles last month, down 46.1 percent year-on-year and 46.2 percent from March, said the China Association of Automobile Manufacturers on Tuesday. Sales stood at 1.18 million units last month, marking a 47.6 percent slump year-on-year and a 47.1 percent fall from March. Chen Shihua, deputy secretary-general of the association, said it was the worst April in terms of both production and sales "in almost a decade" as the country's auto industry and its supply chains "saw the severest challenge in history" last month. He said plant stoppages crippled output and disrupted logistics affected dealership stocks, and COVID-19 also forced some dealerships to close, thus dampening potential buyer enthusiasm as well.

#6 China's medical industry is expected to play a bigger role globally in innovation with increasing applications of cutting-edge technologies like artificial intelligence and automation, especially when the sector has become hot for investment amid the COVID-19 pandemic, said renowned Chinese investor Kai-Fu Lee. "Life science and other medical sectors, which used to take the long term to grow, have been accelerated in their development amid the pandemic. With the help of AI and automation, they are reshaped and upgraded to be more intelligent and digitalized," said Lee, who is also chairman and CEO of venture capital firm Sinovation Ventures. Lee described the change as an era of medical plus X, which mainly refers to the increasing integration of forefront tech into the medical industry, for instance, in sectors including auxiliary drug development, precise diagnosis, individualized treatment and surgical robots. He said that the industry is getting extremely hot for investment due to the pandemic, but is now squeezing out bubbles to enter a more rational period. A bubble occurs when companies are overvalued by investors.

#7 Home prices in 70 designated cities in China reported slower or negative growth in April from a year ago, but industrial experts believe market stability remains achievable in the coming months as the current COVID-19 resurgence is being effectively contained and policies aimed at supporting rational demand will gradually take effect. Out of the 70 major Chinese cities tracked by the National Bureau of Statistics, 47 cities saw new home prices decline month-on-month in April, nine more than that in March, and the number of cities reporting year-on-year price declines increased from 10 to 39, said Sheng Guoqing, chief statistician with the National Bureau of Statistics' urban division. The four top-tier cities have shown more resilience in the housing market with average new home prices rising 0.2 percent from the previous month, though 0.1 percentage point less than that of March, according to data from the NBS published on Wednesday.

#8 More efforts are needed from the government to help China's little giant companies－innovative small and medium-sized enterprises－obtain more financing and support from private equity and venture capital investors to help the companies become future champions in a faster and more efficient way, according to industry insiders. "For many venture capitalists, being a little giant company is not a selection criterion but a bonus. The current criteria for little giant companies are very different from our investment logic," said Cheng Peng, partner of THG Ventures, an investment firm of Tsinghua University, during a recent conference. Dong Chuan, chief investment officer at SDIC Unity Capital, agreed by saying that investment decisions don't always line up with overall needs. "The pursuit of many venture capitalists is investing in companies with high growth and profit. Such a goal also resulted in the internet boom and a group of overvalued companies over the past decade." Little giant companies are classified as SMEs that specialize in niche sectors, boast strong innovative capacity and possess core technologies, according to the Ministry of Industry and Information Technology. Many of them don't necessarily generate high profits within a short period, Dong said.

#9 Inclusive loans to small and micro firms extended by major Chinese banks increased by 850.4 billion yuan (about $125.94 billion) in the first quarter, according to the nation's top banking regulator. At the end of March, six major State-owned banks saw their balance of such loans hit 7.3 trillion yuan, said the China Banking and Insurance Regulatory Commission. The commission said it will guide large banks to deepen financial services for small and micro firms, amid efforts to continue lending support and reasonably adjust the loan structure for such businesses. In the first quarter, major Chinese banks extended loans to a total of 91,000 new small and micro firms borrowing for the first time, an increase of 20,000 from a year ago, the commission's data showed.

#10 Amid high inflation, removal of additional US tariffs on China is in the fundamental interests of US consumers and businesses, and is beneficial to the United States, China and the world, Shu Jueting, spokeswoman of the Ministry of Commerce, said on Thursday. She made the remarks at a media briefing after being asked for comments on US Treasury Secretary Janet Yellen's statement on Wednesday she is advocating for eliminating some tariffs on Chinese imports, because they aren't strategic and are hurting US consumers and businesses.

News & Photo source: China Daily, Xinhua

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