At 40.3, China factory output at its worst as COVID-19 hurts economy: PMI

The findings, which focus mostly on small and export-oriented businesses, were backed by an equally grim official survey released on Saturday, which showed the steepest contraction on record.

China's factories were dealt a devastating blow in February as the coronavirus epidemic triggered the sharpest contraction in activity on record, a private survey showed on Monday, with the health crisis paralysing large parts of the economy.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) tumbled to 40.3 last month, the lowest level since the survey began in 2004, and down sharply from the 51.1 reading in January as well as the 50-mark that separates growth from contraction.

The headline number was well off a Reuters poll forecast at 45.7 and even worse than the depths of the financial crisis in 2008-09, underlining the crippling effects of the virus across the country where authorities have imposed tough travel curbs and public health measures to contain the outbreak.

The findings, which focus mostly on small and export-oriented businesses, were backed by an equally grim official survey released on Saturday, which showed the steepest contraction on record.

Both the official and private surveys provide the first official snapshot of the state of China's economy since the outbreak of the coronavirus epidemic which has killed almost 3,000 people in mainland China and infected about 80,000. The virus has also spread rapidly to dozens of countries.

"China's manufacturing economy was impacted by the epidemic last month. The supply and demand sides both weakened, supply chains became stagnant, and there was a big backlog of previous orders," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in comments on the survey.

The survey showed factory production and new orders collapsing to the worst levels on record, while employment also took a heavy blow. There was no respite for exporters either, with new export orders sinking at one of the sharpest rates in the series history.

The output gauge dived to 28.6 last month, from 52 in January, while that for new business plummeted to 34.9, from 51.9.

Coronavirus: China death toll now at 80; virus spreads to Beijing, Shanghai

The newly identified coronavirus has created alarm because much about it is still unknown, such as how dangerous it is and how easily it spreads between people.

BS : The death toll from China's new coronavirus grew to 80 on Monday as residents of Hubei province, where the disease originated, were banned from entering Hong Kong amid global efforts to halt the rapid spread of the outbreak.

The number of deaths from the flu-like virus in Hubei province climbed from 56 to 76 overnight, health commission officials said, with four deaths elsew here. The total number of confirmed cases in China had risen about 30% to 2,744.

U.S. S&P500 e-mini futures fell more than 1% in Asian trade on Monday on mounting worries the outbreak of the virus could severely disrupt the Chinese economy, an engine of global growth.

Kicking off the Asian trading day, New Zealand shares fell with travel and tourism-related stocks among the worst performers as the speed of the outbreak's spread raised alarm over its future impact on movement.

China's cabinet said it would extend the week-long Lunar New Year holiday by three days to Feb. 2 in a bid to slow the spread of the virus. The Hubei city of Wuhan, the epicentre of the outbreak, is already under virtual lockdown, with severe restrictions on movement in place in several other Chinese cities.

Beijing has called for transparency in managing the crisis, after public trust was eroded by a cover-up of the spread of SARS, a coronavirus that originated in China and killed nearly 800 people globally in 2002 and 2003.

The newly identified coronavirus has created alarm because much about it is still unknown, such as how dangerous it is and how easily it spreads between people. It can cause pneumonia, which has been deadly in some cases.

The virus, believed to have originated in a seafood market in Wuhan that was illegally selling wildlife, has already spread to cities including Beijing and Shanghai.

China's first high-speed rail company launches IPO to raise over $5 billion

The listing adds to signs that China is pushing to further open industries dominated by state-owned companies.

International News : The operator of China’s high-speed rail line between Beijing and Shanghai kicked off its initial public offering, which will for the first time allow investors to buy shares in what is the world’s largest such network.

Beijing-Shanghai High-Speed Railway Co., a unit of state-owned China Railway Corp., plans to sell as many as 6.3 billion new shares, or 12.8% of enlarged capital, through the listing in Shanghai, according to its prospectus released Wednesday. Book building for the IPO will begin Jan. 6, it said. The company didn’t say how much it aimed to raise through the sale.

The listing adds to signs that China is pushing to further open industries dominated by state-owned companies. Beijing on Sunday outlined plans to allow private-sector businesses to enter industries including energy, telecoms and rail, and on Tuesday, Premier Li Keqiang pledged to give foreign investors greater access to service sectors including finance and health care.

Those steps have come as a campaign to rein in China’s shadow banking industry has sapped financing for many non-state firms and the trade war with the US has led some multinationals to reassess their investments. With economic growth at the slowest since the early 1990s, Beijing has sought to reassure these contingents and spur more capital spending.

Proceeds from Beijing-Shanghai High-Speed Railway’s IPO will be used to help finance the acquisition of a 65.1% stake in a domestic railway operator for 50 billion yuan ($7.1 billion), according to the prospectus. Bloomberg News reported in late 2018 that the company was planning to raise 30 billion yuan. That amount would make it the largest domestic offering since Postal Savings Bank of China Co.’s $4.8 billion listing earlier this month, according to data compiled by Bloomberg.

China Securities Co. is the lead underwriter with Citic Securities Co. and China International Capital Corp. as joint sponsors. The IPO was approved in a record 23 days by the country’s securities regulator.

China’s high-speed railway network, at 35,000 kilometers, is by far the world’s largest. The route between Beijing, the country’s political center, and Shanghai, its financial hub, is one of the highest margin lines. Beijing-Shanghai High-Speed Railway reported more than a 30% net margin for 2018, with annual profit of 7.9 billion yuan, 9 billion yuan and 10 billion yuan for the past three years, its prospectus showed.

BMW to recall 360,000 cars in China over Takata airbags

Around 20 people have died in accidents linked to defects in Takata airbags since 2013, prompting a massive worldwide recall of at least 100 million cars from a wide range of manufacturers.

Germany's BMW will recall 360,000 vehicles in China as part of the worldwide effort to root out defective airbags made by now-defunct Japanese supplier Takata, regulators in Beijing said.

Around 20 people have died in accidents linked to defects in Takata airbags since 2013, prompting a massive worldwide recall of at least 100 million cars from a wide range of manufacturers.

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The recall will affect nearly 273,000 models built by BMW's joint venture with Chinese manufacturer Brilliance Automotive and more than 87,000 imported BMW cars, China's State Administration for Market Regulation said.

The agency said in statement posted on its website late Tuesday that a defect could cause the airbags to eject debris at passengers if deployed.

It did not mention any specific incidents caused by the BMW-installed airbags.

The China recall affects more than two dozen different BMW models built between 2000 and 2018, including several each in the i, X and M series, along with other models.

The suspect parts will be replaced for free, the notice said.

Founded in 1933, Takata went out of business in 2017 because of the airbag crisis.

The BMW announcement came as global carmakers were gathered for the Shanghai Auto Show amid a rare sales slump in the world's largest vehicle market.

Business Standard

We don't spy for China: Huawei founder breaks silence, praises Trump

Ren told a group of reporters on Tuesday that he missed his daughter very much, and that he would wait to see if President Trump intervened in her case.

To entrepreneurs in China, he is a legend akin to Steve Jobs.

To United States officials, he is the secretive mastermind behind a company that is extending the Chinese government’s ability to infiltrate computer systems and data networks around the world.

But for all his fame and power, Ren Zhengfei, the 74-year-old founder and chief executive of the Chinese technology giant Huawei, may no longer have the luxury of letting his company’s success speak for itself.

In his first public comments since United States authorities arranged for the arrest of his daughter Meng Wanzhou, who is also Huawei’s chief financial officer, Mr. Ren told a group of reporters on Tuesday that he missed his daughter very much, and that he would wait to see if President Trump intervened in her case. He called Mr. Trump a “great president,” and said that his tax cuts had helped American business.

Ms. Meng was arrested in Canada last month on accusations of defrauding banks to help Huawei’s business in Iran. Washington is seeking her extradition, but Mr. Trump has suggested that he might intercede if it would help China and the United States reach a deal to end their trade war. Huawei has said that it is unaware of any wrongdoing by Ms. Meng.

And last week, the Polish authorities said they had arrested a Huawei employee there on charges of spying for Beijing. The company fired the man on Saturday.

Mr. Ren insisted that his company had not spied for China.

“I love my country. I support the Communist Party. But I will never do anything to harm any country in the world,” Mr. Ren said on Tuesday. A company spokesman confirmed his remarks.

Huawei has 180,000 employees and has become the world’s largest maker of telecommunications equipment. It estimates that it generated more than $100 billion in sales last year, and it sells more smartphones around the world than Apple. Yet Mr. Ren seldom appears in public.

When he has spoken to the news media in the past, he has played down his achievements, attributing Huawei’s success to its employees’ hard work. He has said that his company has never spied for any government — an assertion that has not eased the concerns of American counterintelligence officials.

For most of its existence, Huawei was opaque to people in China, too.

It was founded in 1987, but it did not begin publishing the names and biographies of its board members until its 2010 annual report. Mr. Ren spoke to the news media for the first time in 2013. The next year, he told The Independent of London that he had no hobbies, prompting a colleague to lean in and suggest that he enjoyed reading and drinking tea.

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Bumpy ride ahead: Carmakers in China brace for zero growth after tough 2018

Automobile sales in China fell about 14% in November from a year ago, steepest in nearly seven years and the fifth straight decline in monthly numbers.

Car makers in China are bracing for zero to tepid growth in sales this year, after a tough 2018 when the world's top auto market probably contracted for the first time in two decades, as slowing economic growth drags on demand.

Companies from homegrown Geely to Britain's biggest automaker Jaguar Land Rover have in recent days flagged caution about China sales in 2019, hit also by Beijing's trade war with the United States.

"We should notice the big uncertainties among macro economy and trade tensions, which hit the auto market in China last year and may happen again this year," Yale Zhang, head of consultancy AutoForesight, told Reuters.

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China's top auto industry association expects the country to sell 28 million vehicles in 2019, steady versus 2018, while other government and industry bodies see a 0-2 per cent growth.

China's Association of Automobile Manufacturers is expected to announce later on Monday that China's car market contracted in 2018, the first time since 1990.

Automobile sales in China fell about 14 per cent in November from a year ago, steepest in nearly seven years and the fifth straight decline in monthly numbers.

The data adds to worries for investors, already spooked by signs of a broader drop in demand from the world's No.2 economy, especially after Apple issued a rare revenue warning citing weak iPhone sales in the country.

Analysts are, however, counting on measures promised by China to buoy spending for some relief.

For a graphic on monthly auto sales in China in 2018, see: https://tmsnrt.rs/2Omlt8r

Beijing boost

China's state planner has said it will introduce policies to lift domestic spending on items such as autos, without providing specifics. Beijing has also made changes to the income tax threshold to hike incomes and personal spending power.

This could help resolve the industry's current issues of unsold inventory, drive sales growth and provide relief to the economic pressures China is facing, said Patrick Yuan, Hong Kong-based analyst at Jefferies.

"With that, car sales growth could recover to as high as 7 per cent" this year, he said.

According to Alan Kang, an LMC Automotive analyst, demand could also draw support as consumers stop putting their buying decisions on hold in hopes Beijing will reintroduce purchase tax cuts on smaller cars - a policy it phased out last year.

Business Standard