Germany’s car manufacturers again need to be strong when looking to China. Mobile phone manufacturer Xiaomi plans to launch its SU7 saloon in early 2024. Who cares about panel gaps when the new car looks good, has 663 HP, and presumably also a long range – at an absolutely competitive price? Although the vehicle data published by the Chinese Ministry of Industry and Technology does not yet include any exact details about the battery, the more expensive version is expected to have a Qilin battery from CATL, which promises particularly long ranges and very fast charging. Christian Domke-Seidel analyzes the new player’s chances of success in China’s car market. Xiaomi apparently rates them as very high – annual production capacities for 200,000 cars are available.
Positive news from the car market meets concerns about the financial sector. Zhongzhi is insolvent, the wealth manager can no longer repay much of the money entrusted to it. Investors are out of luck. After banks stopped lending money to property developers, Zhongzhi provided them with billions from its own portfolio to keep them solvent, reports Marcel Grzanna. Beijing tolerates this so-called shadow banking, but it could cause the crisis in the property sector to spread. Because if property companies are unable to repay their debts to the financial managers, there is a risk of a domino effect.
Another concerning report comes from the health sector: Respiratory diseases and, in northern China, pneumonia in children are being diagnosed very frequently. Hospitals are at capacity, and the WHO has already requested data from China. It is unclear whether China is simply catching up on its waves of colds after the years of lockdown, or whether something more serious is going on.
The news about the insolvency of Chinese financial conglomerate Zhongzhi probably came as a shock to many customers. Since Thursday, the wealth management company has officially been unable to repay large parts of its entrusted money.
“The resources available for debt repayment in the short term are much lower than the group’s overall debt scale,” it said. “The Zhongzhi group deeply apologizes for the losses caused to investors.” Zhongzhi’s almost 60 billion euros liabilities are offset by around 25 billion euros on the credit side.
Customers who closely followed the financial news could have realized a few months ago that the air was getting thin for Zhongzhi and, consequently, for their own capital. In the summer, one of the group’s trust fund providers missed payment deadlines. An alarm signal that heralded disaster for investors.
While customers mourn their lost investments, the supervisory authorities look at the financial group’s most recent default with growing concern. After all, it is closely linked to the property sector. Zhongzhi has provided developers with billions from its own portfolio to keep them solvent after the banks have stopped lending them money.
This practice is called shadow banking and is tolerated by Beijing. It is a kind of self-deception to avoid having to look the real risks directly in the eye. The fear that the crisis in the property sector will spill over into the stability of the financial system is correspondingly high. This is because the use of wealth managers as shadow bankers – in the true sense of the word – leaves much in the shadows. A domino effect could tear a deep hole in the state banking system if property companies cannot service their debts to fiscal authorities.
It was probably no coincidence that news leaked out on Thursday that Chinese banks are now allowed to issue unsecured short-term loans to property developers. Bloomberg reported this. The measure is part of a package to prop up the ailing property sector and prevent it from spreading to the banks.
“The finance sector’s fortunes are closely related to the property sector due to the big developers’ high gearing ratio,” said Ding Haifeng, a consultant at Shanghai financial advisory firm Integrity. “A collapse of the real estate sector will absolutely lead to a wave of bad assets in banks, trust firms and insurers,” Ding predicts.
The Standing Committee of the National People’s Congress has warned against false data published by small and medium-sized financial institutions. They could conceal potential problems when official figures do not “truly reflect the actual situation,” according to the minutes of the meeting published on Wednesday, which took place back in October. The Committee was concerned that the data could be “inflated.” The financial supervisory authority was asked to identify the existing risks immediately.
The cracks in the foundations grow ever wider. Last year, Beijing already identified the “prevention and resolution of financial risks” as a key priority at the Central Economic Work Conference. The insolvency of property developer Evergrande has shaken China’s self-image of its economic strength to its very foundation. The country is plagued by the fear of the consequences of a collapsing property market, as Japan experienced in the 1980s.
China’s financial regulator is well aware of the problem and has been counteracting it for years. In 2020, the central bank defined three “red lines” for the property sector. These defined the leverage ratio, net gearing and the ratio of liquid assets to current liabilities. So far, with limited success. Many developers continue to overstep the lines. The Zhongzhi case is now the next warning that things must change fast before the financial sector reaches a tipping point.
Xiaomi is the next billion-dollar manufacturer to enter China’s car market. The tech giant has big plans and is willing to invest a lot of money.
Xiaomi will launch its first EV, the SU7, in spring 2024. The vehicle’s key data and design show that (at least in China) car manufacturing is no longer an exclusive art that only OEMs can master. This is also because electric mobility is changing the demands on cars. However, this alone is no guarantee of success for tech giants with billions in their coffers. With its countless manufacturers and enormous overcapacity, the Chinese car market is facing consolidation.
The Chinese Ministry of Industry and Technology has published documents revealing Xiaomi’s first electric car. It is called the Beijing Xiaomi SU7 and will be manufactured by the state-owned Beijing Automotive Group (BAIC). What sounds like a leak to European ears is part of the approval process and likely part of the marketing strategy. After all, the documents came with professional photos.
The documents also reveal the key data of the Beijing Xiaomi SU7. The sporty-looking saloon will measure just under five meters in length. Depending on the variant – the “Pro” and “Max” versions are already known – it will have between 299 and 663 horsepower. The SU7 has an 800-volt on-board electrical system and an LFP battery from BYD for the cheaper versions, while the more expensive models have an NMC battery from CATL. There is still no concrete information about its capacity (market observers speculate around 100 kilowatt-hours) or range.
The data clearly shows that electromobility is turning the car market upside down. Just a few years ago, a company from outside the industry presenting realistic technical data that would also look good on an established manufacturer would have been unthinkable. Even Tesla had to spend years on research and invest enormous amounts of money to develop a car suitable for everyday use for mass production.
But that is precisely what Xiaomi has done. A plant with an annual capacity of 200,000 vehicles is already on standby in Beijing. Production will commence in December 2023, and 100,000 vehicles are expected to be sold by 2024. The fact that Xiaomi has received approval for all of this is at least a vote of confidence from the government. After all, the authorities have become more cautious. China’s car plants have a total annual capacity of around 43 million vehicles. However, last year, they were only operating at half capacity. Tesla, for instance, was not allowed to expand its Shanghai plant this year.
Xiaomi is currently in a strong position. Profits of China’s largest smartphone manufacturer soared by 183 percent in the third quarter of 2023 compared to the – admittedly difficult – previous year. Xiaomi plans on investing ten billion US dollars in the automotive business over the next ten years. Some analysts are enthusiastic. For example, the Japanese financial company Daiwa expects the share price to rise to around 15 Hong Kong dollars in the coming months – a 58 percent increase.
And the Chinese car market also appears to be slowly recovering. October 2023 was the third month in a row with growing sales figures. An increase of 10 percent compared to the previous year meant total sales of two million vehicles in October. An increase of 20 percent is even expected for November. This is because many manufacturers are trying to achieve their annual sales targets as the year nears its end.
However, many manufacturers are bogged down in a discount battle, highlighting problems in the Chinese car market, such as the aforementioned overcapacity. “The automotive sector was already in a very miserable state, with profit margins at a historic low of just 4.5 percent in September,” the German Manager Magazin quotes Cui Dongshu from the China Passenger Car Association (CPCA) as saying.
Xiaomi is by no means the first gold digger from outside the sector to hit the car market. Huawei cooperates with Chery to make money in the booming EV growth market. Baidu has founded a joint brand with Geely, and Alibaba is involved in a joint venture with SAIC. Start-ups such as NIO, Xpeng and BYD also focus on EVs. Around 100 brands are vying for customers – market consolidation is inevitable and politically desired. This does not even take European OEMs into account, who are making considerable efforts to catch up on electromobility.
Greek officials have apparently been urged in and outside the country to refrain from attending events hosted by Taiwan. Nikkei Asia reports this, citing an email from October 4 in which the Greek Foreign Ministry urges diplomats and officials to avoid a reception in Athens on the occasion of Taiwan’s National Day.
The memo from October 4 states, among other things, that “the participation of ministers, members of parliament and civil officials in receptions or events of the Representative Office must be avoided.” This would be “perceived as an indirect recognition of Taiwan’s independence” and could cause “serious problems” for relations between Greece and China. The memo, labeled “urgent” and signed by Deputy Foreign Minister Alexandra Papadopoulou, also warned against meetings with Taiwanese officials in Greek government buildings or de facto embassies, so-called Taipei Representative Offices.
The Greek Foreign Ministry and the Taipei Representative Office in Athens declined to comment. China is Greece’s largest trading partner after the EU and is economically highly active in the EU country. During a recent visit to Beijing, Greek Prime Minister Kyriakos Mitsotakis spoke out in favor of further expanding business relations and said that Greece could play a bridging role in EU-China relations.
The EU is divided in its stance towards Taiwan. Some countries openly support Taiwan, including Lithuania, which China has exerted enormous pressure on since it opened a Taiwan office in the country over two years ago. Countries such as Greece and Hungary are much more cautious to avoid angering Beijing. jul
Who wouldn’t want to find a centuries-old rhinoceros horn mug worth several thousand euros in a garage? British TV personality Charles Hanson does this sort of thing for a living, on camera, of course. He is particularly proud of his latest find: He calls the drinking vessel from the late 17th or early 18th century, which a couple had deposited in his garage, a “magical object.” In ancient Chinese mythology, the rhinoceros horn was said to have an aphrodisiac effect, and it was also believed to be able to detect poison and change color to warn of danger. The cup is now being auctioned off.
Germany’s car manufacturers again need to be strong when looking to China. Mobile phone manufacturer Xiaomi plans to launch its SU7 saloon in early 2024. Who cares about panel gaps when the new car looks good, has 663 HP, and presumably also a long range – at an absolutely competitive price? Although the vehicle data published by the Chinese Ministry of Industry and Technology does not yet include any exact details about the battery, the more expensive version is expected to have a Qilin battery from CATL, which promises particularly long ranges and very fast charging. Christian Domke-Seidel analyzes the new player’s chances of success in China’s car market. Xiaomi apparently rates them as very high – annual production capacities for 200,000 cars are available.
Positive news from the car market meets concerns about the financial sector. Zhongzhi is insolvent, the wealth manager can no longer repay much of the money entrusted to it. Investors are out of luck. After banks stopped lending money to property developers, Zhongzhi provided them with billions from its own portfolio to keep them solvent, reports Marcel Grzanna. Beijing tolerates this so-called shadow banking, but it could cause the crisis in the property sector to spread. Because if property companies are unable to repay their debts to the financial managers, there is a risk of a domino effect.
Another concerning report comes from the health sector: Respiratory diseases and, in northern China, pneumonia in children are being diagnosed very frequently. Hospitals are at capacity, and the WHO has already requested data from China. It is unclear whether China is simply catching up on its waves of colds after the years of lockdown, or whether something more serious is going on.
The news about the insolvency of Chinese financial conglomerate Zhongzhi probably came as a shock to many customers. Since Thursday, the wealth management company has officially been unable to repay large parts of its entrusted money.
“The resources available for debt repayment in the short term are much lower than the group’s overall debt scale,” it said. “The Zhongzhi group deeply apologizes for the losses caused to investors.” Zhongzhi’s almost 60 billion euros liabilities are offset by around 25 billion euros on the credit side.
Customers who closely followed the financial news could have realized a few months ago that the air was getting thin for Zhongzhi and, consequently, for their own capital. In the summer, one of the group’s trust fund providers missed payment deadlines. An alarm signal that heralded disaster for investors.
While customers mourn their lost investments, the supervisory authorities look at the financial group’s most recent default with growing concern. After all, it is closely linked to the property sector. Zhongzhi has provided developers with billions from its own portfolio to keep them solvent after the banks have stopped lending them money.
This practice is called shadow banking and is tolerated by Beijing. It is a kind of self-deception to avoid having to look the real risks directly in the eye. The fear that the crisis in the property sector will spill over into the stability of the financial system is correspondingly high. This is because the use of wealth managers as shadow bankers – in the true sense of the word – leaves much in the shadows. A domino effect could tear a deep hole in the state banking system if property companies cannot service their debts to fiscal authorities.
It was probably no coincidence that news leaked out on Thursday that Chinese banks are now allowed to issue unsecured short-term loans to property developers. Bloomberg reported this. The measure is part of a package to prop up the ailing property sector and prevent it from spreading to the banks.
“The finance sector’s fortunes are closely related to the property sector due to the big developers’ high gearing ratio,” said Ding Haifeng, a consultant at Shanghai financial advisory firm Integrity. “A collapse of the real estate sector will absolutely lead to a wave of bad assets in banks, trust firms and insurers,” Ding predicts.
The Standing Committee of the National People’s Congress has warned against false data published by small and medium-sized financial institutions. They could conceal potential problems when official figures do not “truly reflect the actual situation,” according to the minutes of the meeting published on Wednesday, which took place back in October. The Committee was concerned that the data could be “inflated.” The financial supervisory authority was asked to identify the existing risks immediately.
The cracks in the foundations grow ever wider. Last year, Beijing already identified the “prevention and resolution of financial risks” as a key priority at the Central Economic Work Conference. The insolvency of property developer Evergrande has shaken China’s self-image of its economic strength to its very foundation. The country is plagued by the fear of the consequences of a collapsing property market, as Japan experienced in the 1980s.
China’s financial regulator is well aware of the problem and has been counteracting it for years. In 2020, the central bank defined three “red lines” for the property sector. These defined the leverage ratio, net gearing and the ratio of liquid assets to current liabilities. So far, with limited success. Many developers continue to overstep the lines. The Zhongzhi case is now the next warning that things must change fast before the financial sector reaches a tipping point.
Xiaomi is the next billion-dollar manufacturer to enter China’s car market. The tech giant has big plans and is willing to invest a lot of money.
Xiaomi will launch its first EV, the SU7, in spring 2024. The vehicle’s key data and design show that (at least in China) car manufacturing is no longer an exclusive art that only OEMs can master. This is also because electric mobility is changing the demands on cars. However, this alone is no guarantee of success for tech giants with billions in their coffers. With its countless manufacturers and enormous overcapacity, the Chinese car market is facing consolidation.
The Chinese Ministry of Industry and Technology has published documents revealing Xiaomi’s first electric car. It is called the Beijing Xiaomi SU7 and will be manufactured by the state-owned Beijing Automotive Group (BAIC). What sounds like a leak to European ears is part of the approval process and likely part of the marketing strategy. After all, the documents came with professional photos.
The documents also reveal the key data of the Beijing Xiaomi SU7. The sporty-looking saloon will measure just under five meters in length. Depending on the variant – the “Pro” and “Max” versions are already known – it will have between 299 and 663 horsepower. The SU7 has an 800-volt on-board electrical system and an LFP battery from BYD for the cheaper versions, while the more expensive models have an NMC battery from CATL. There is still no concrete information about its capacity (market observers speculate around 100 kilowatt-hours) or range.
The data clearly shows that electromobility is turning the car market upside down. Just a few years ago, a company from outside the industry presenting realistic technical data that would also look good on an established manufacturer would have been unthinkable. Even Tesla had to spend years on research and invest enormous amounts of money to develop a car suitable for everyday use for mass production.
But that is precisely what Xiaomi has done. A plant with an annual capacity of 200,000 vehicles is already on standby in Beijing. Production will commence in December 2023, and 100,000 vehicles are expected to be sold by 2024. The fact that Xiaomi has received approval for all of this is at least a vote of confidence from the government. After all, the authorities have become more cautious. China’s car plants have a total annual capacity of around 43 million vehicles. However, last year, they were only operating at half capacity. Tesla, for instance, was not allowed to expand its Shanghai plant this year.
Xiaomi is currently in a strong position. Profits of China’s largest smartphone manufacturer soared by 183 percent in the third quarter of 2023 compared to the – admittedly difficult – previous year. Xiaomi plans on investing ten billion US dollars in the automotive business over the next ten years. Some analysts are enthusiastic. For example, the Japanese financial company Daiwa expects the share price to rise to around 15 Hong Kong dollars in the coming months – a 58 percent increase.
And the Chinese car market also appears to be slowly recovering. October 2023 was the third month in a row with growing sales figures. An increase of 10 percent compared to the previous year meant total sales of two million vehicles in October. An increase of 20 percent is even expected for November. This is because many manufacturers are trying to achieve their annual sales targets as the year nears its end.
However, many manufacturers are bogged down in a discount battle, highlighting problems in the Chinese car market, such as the aforementioned overcapacity. “The automotive sector was already in a very miserable state, with profit margins at a historic low of just 4.5 percent in September,” the German Manager Magazin quotes Cui Dongshu from the China Passenger Car Association (CPCA) as saying.
Xiaomi is by no means the first gold digger from outside the sector to hit the car market. Huawei cooperates with Chery to make money in the booming EV growth market. Baidu has founded a joint brand with Geely, and Alibaba is involved in a joint venture with SAIC. Start-ups such as NIO, Xpeng and BYD also focus on EVs. Around 100 brands are vying for customers – market consolidation is inevitable and politically desired. This does not even take European OEMs into account, who are making considerable efforts to catch up on electromobility.
Greek officials have apparently been urged in and outside the country to refrain from attending events hosted by Taiwan. Nikkei Asia reports this, citing an email from October 4 in which the Greek Foreign Ministry urges diplomats and officials to avoid a reception in Athens on the occasion of Taiwan’s National Day.
The memo from October 4 states, among other things, that “the participation of ministers, members of parliament and civil officials in receptions or events of the Representative Office must be avoided.” This would be “perceived as an indirect recognition of Taiwan’s independence” and could cause “serious problems” for relations between Greece and China. The memo, labeled “urgent” and signed by Deputy Foreign Minister Alexandra Papadopoulou, also warned against meetings with Taiwanese officials in Greek government buildings or de facto embassies, so-called Taipei Representative Offices.
The Greek Foreign Ministry and the Taipei Representative Office in Athens declined to comment. China is Greece’s largest trading partner after the EU and is economically highly active in the EU country. During a recent visit to Beijing, Greek Prime Minister Kyriakos Mitsotakis spoke out in favor of further expanding business relations and said that Greece could play a bridging role in EU-China relations.
The EU is divided in its stance towards Taiwan. Some countries openly support Taiwan, including Lithuania, which China has exerted enormous pressure on since it opened a Taiwan office in the country over two years ago. Countries such as Greece and Hungary are much more cautious to avoid angering Beijing. jul
Who wouldn’t want to find a centuries-old rhinoceros horn mug worth several thousand euros in a garage? British TV personality Charles Hanson does this sort of thing for a living, on camera, of course. He is particularly proud of his latest find: He calls the drinking vessel from the late 17th or early 18th century, which a couple had deposited in his garage, a “magical object.” In ancient Chinese mythology, the rhinoceros horn was said to have an aphrodisiac effect, and it was also believed to be able to detect poison and change color to warn of danger. The cup is now being auctioned off.
