FROM CHINA ECONOMIC REVIEW

The interesting story here is point 3. The development of the health and welfare state in China learns from our positives and our weaknesses. And the big profits of the drug makers is a key problem. Here we can see the government has taken a direct hit at these guys. This began with GSK a while back and now we can see how the big companies are falling into line

 

Stephen

 

TRADE TALKS

1.  China signals hope for trade deal despite US law supporting Hong Kong

China held off from retaliating against the US after President Trump signed a bill supporting protesters in Hong Kong, as both sides remained confident that they can sign a partial trade deal in the coming weeks, officials in the US and China said, reported the Wall Street Journal.

 

Chinese officials involved in economic policy-making stressed that the trade negotiations are still on track and as long as the US president doesn’t implement any of the law’s measures, Beijing still has strong incentives to move ahead with the trade deal.

 

“It does spoil the mood, but it shouldn’t interfere with the trade talks,” said Wang Yong, a professor of international relations at Peking University, of Trump’s move. “Both sides have enough reasons to keep trade, Hong Kong and political issues on separate tracks.”

 

PMI

2. China’s factory activity seen contracting for seventh month on trade pressure: Reuters poll

China’s factory activity is expected to have contracted for the seventh straight month in November amid sluggish domestic demand a Reuters poll showed, despite some optimism over chances for an interim deal to de-escalate a trade war with the United States.

 

The official Purchasing Managers’ Index (PMI) for November is expected to come in at 49.5, below the 50-point mark that separates expansion from contraction on a monthly basis, according to the median forecasts of 28 economists. The reading would be higher than October’s 49.3.

 

The continued downturn in manufacturing activity points to further weakness in the world’s second-biggest economy, fueling expectations the authorities will have to roll out more stimulus measures to avert a sharper slowdown and job losses.

 

China’s full-year economic growth is expected to slow to 6.2% in 2019 and cool further to 5.9% in 2020, according to a Reuters poll, underlining growing challenges faced by Beijing even as it steps up stimulus amid the bruising trade war.

 

DRUGS

3. Global drugmakers strike deal to slash prices in China

Western pharmaceutical companies have agreed to slash the prices of dozens of drugs in China, as the industry tries to strengthen its foothold in the world’s second-largest drug market, reported the Financial Times.

 

Anglo-Swedish drugmaker AstraZeneca, Gilead of the US, France’s Sanofi and Switzerland’s Roche are among the multinationals that have agreed with Beijing to cut the prices of 70 drugs by more than 60% on average in return for their inclusion in a state-run insurance scheme.

 

The cuts will affect several top-selling medicines, including Adalimumab, an arthritis treatment sold by US drugmaker AbbVie under the brand Humira.

 

In return for lower prices, the government in Beijing will add 70 drugs to its list of treatments eligible for co-payment. The imported drugs added to the insurance scheme will be sold at the “lowest prices worldwide” as a result of the latest round of negotiations, Xiong Xianjun, an official at China’s National Healthcare Security Administration, told reporters.

 

MARKETS

4. China soy, palm oil markets surge on swine fever spillover

Investors have stampeded into China’s edible oil markets, drawn by the volatility caused by the nation-wide outbreak of African swine fever that curbed oilseed crushing, slashed pork output and forced food courts and restaurants to change up menus, reported Reuters.

 

Open interest in Dalian Commodity Exchange soybean oil and palm oil futures hit a record this week, while traded volumes in the markets scaled multi-year highs. Prices for both commodities climbed to their highest since mid-2018.

 

“Soyoil and palm are getting a lot of interest. Fundamentally, since soybean crushing is slow due to (African swine fever), there isn’t much soyoil and that’s driving up prices for soyoil and palm oil,” said Darin Friedrichs, senior commodity analyst in Asia at brokerage INTL FCStone. “But now it’s gotten very volatile and there’s a lot of speculative trading.”

 

FINANCE

5. Lufax prepares for life after P2P lending

Lufax Holding, one of China’s largest peer-to-peer (P2P) lending platforms, has won regulatory approval to set up a consumer finance business as it restructures its operations amid a regulatory clampdown that has led to the implosion of the once-booming industry, reported Caixin.

 

Lufax, an associate company of financial conglomerate Ping An Insurance (Group) of China Ltd., was given the green light by the China Banking and Insurance Regulatory Commission last week, according to a statement on the watchdog’s website. A source close to Ping An told Caixin that the new company will take over Lufax’s online lending business.

 

The Shanghai-based fintech company, in which Ping An owns a stake of more than 40%, is calling time on P2P lending after a three-year campaign by financial regulators to rein in the industry in the wake of a string of scandals that left millions of investors nursing heavy losses.



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