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China Insights

SwedCham China Insights for the week of August 9-13, 2021

Top news of the week:

  • Alleged assault at Alibaba sparks social media storm
    August 9, 2021

    Over the weekend, a scandal at Alibaba was exposed related to the alleged rape and sexual assault of a female employee. The female employee published an 8000-word statement alleging that she was assaulted while on a business trip with her direct supervisor. It quickly led to a storm on Chinese social media. The incident involved the Ali Taoxianda North China business team. Despite reporting the incident immediately to the local police and HR on 27 July, the alleged assailant was not suspended for over a week. The scandal triggered discussion of Alibaba’s corporate values and China’s business dinner drinking culture. Alibaba’s stock price dropped over 3% when the Hong Kong market opened on 9 August.

  • PBOC releases second quarter monetary policy review
    August 10, 2021

    On 9 August, People’s Bank of China published the second quarter’s monetary policy execution report of China. The report proposed that the central bank should insist on implementing normalised monetary policy while designing a through-the-cycle policy. The report urged the PBOC and Ministry of Finance to ensure general stability of prices and continue to strengthen building basic rules for the capital market, better protecting the interest of investors, and promoting stable and healthy development of the capital market.

  • MOFCOM urges high quality development in business logistics
    August 11, 2021

    On 10 August, Ministry of Commerce (MOFCOM) along with 8 other ministries and departments published an action plan to urge high quality development in business logistics for 2021-2025. The plan specified that the government supports and encourages qualified trade and business logistics companies to optimise resources, expand business operations, encourage innovation through merge and acquisition, listing, and cooperation through alliances.

  • 2021 negative list dropping soon
    August 12, 2021

    Amendment of the 2021 negative list for foreign capital entrances is reaching an end and expected to be published soon. Experts believe the negative list will be further shortened, especially in the service sector. Analysts commented that China has been shortening the negative list for foreign investors for the past four years from 2017 to 2020, with two thirds of the limitation measures removed in sectors including finance, automobile, and manufacturing. Experts believe that culture, medical services and aviation may become major areas to further open up to foreign investors through shortening of the negative list.

  • Focus on data security remains in MIIT opinion
    August 13, 2021

    The Ministry of Industry and Information Technology (MIIT) published an opinion on 12 August, aiming to strengthen management for artificial intelligence enabled cars for both manufacturing and market entry. The opinion requires companies to enhance capabilities for data and internet security. This is yet another regulatory change in the name of data security released in the past few weeks.

Insight of the week:

The Ministry of Industry and Information Technology (MIIT) published an opinion on 12 August, aiming to strengthen management for artificial intelligence enabled cars for both manufacturing and market entry. The opinion requires companies to enhance capabilities for data and internet security, emphasising that all personal and key data collected and generated in China must be kept within China’s national border, and specified that all data going abroad is required to pass evaluation for data export security. On top of specified requirements regarding data security, the opinion applied stricter requirements for driver assistance systems and auto pilot systems, forbidding unapproved online upgrades or add-ons of auto pilot systems, and laid out specific additional specifications for qualified systems while encouraging usage of the Beidou navigation system. This is yet another regulatory change in the past few months for data security and the application of cutting-edge technology in the consumer market. Market observers say that foreign investors are divesting from Chinese companies and the market due to increased regulatory uncertainty, citing SoftBank pausing its investment in China and BlackRock divesting from Alibaba as examples to support this claim. Chinese media, however, has started to highlight foreign investors who increased their investments in China this year with conclusion that more foreign investors remain confident in Chinese market. One way or the other, many believe regulatory changes will continue in China, but possibly with more predictability after cracking down on some key sectors that relates to public interest, national security, and social stability.

About Kreab

Founded in Stockholm, Sweden, in 1970, Kreab is a global strategic communications consultancy with offices in 25 countries, serving over 500 global clients. Kreab advises on communication issues of strategic importance in business, finance, and politics, helping clients solve complex communications challenges and achieve their strategic goals. The Kreab Beijing team is well known for its track record of helping clients manage and strengthen their reputation through services spanning corporate communications, financial communications, public affairs, and social media. Contact Kreab at kchina@kreab.com, follow Kreab on WeChat (ID: KreabChina), or visit Kreab’s website at https://www.kreab.com/beijing.