China zero-Covid lockdowns, CNY vacation impression provide chains, ports

Streets in Tianjin, China, empty on January 10, 2022 as the city goes into partial lockdown following a surge in Omicron cases.

Geno Hou | Future Publishing | Getty Images

Covid lockdowns, quarantines and restrictions are causing a backlog at some of China’s major ports, causing “chaos” and increasing air freight by up to 50% in some cases, analysts tell CNBC.

Ahead of the extended Lunar New Year holiday in China, air freight rates have skyrocketed and some shipping companies have suspended services, putting a renewed spotlight on congested supply chains.

It comes as China presses ahead with its zero-Covid strategy – meaning a recent spike in infections has led to lockdowns and restrictions in major port hubs and major cities across the country.

“Although ports are still open, current restrictions — such as mandatory quarantines and testing — continue to slow transportation and cause delays,” Atul Vashistha, founder and chair of supply chain consultancy Supply Wisdom, told CNBC.

China’s top priority right now is to limit the spread of Covid cases ahead of next month’s Winter Olympics and the upcoming Lunar New Year, he added. However, the resulting curbs at the ports have also created a certain “chaos”.

“Products are piling up while ships are banned from entering. Between negative PCR test requests and last minute rerouting, 2022 starts as 2021 ended – chaos,” Vashistha said, referring to the polymerase chain reaction Covid tests.

Cases have been reported in the main port cities of Shenzhen, Tianjin and Ningbo, as well as in the United States Industrial center of Xi’an, spark arrestors and other curbs.

Infections were also reported in other cities, e.g Dalian and anyang.

The capital Beijing reported its first locally transmitted Omicron infection on January 15. On Sunday, less than two weeks before the Winter Olympics, Beijing authorities introduced new restrictions to stem a recent outbreak after nine locally transmitted cases were detected in Beijing the day before.

the Ningbo eruption in December also triggered some curbs and disrupted traffic in the world’s third busiest port, Ningbo-Zhoushan.

Operations have now largely resumed, but shipments have been diverted to Shanghai — the world’s busiest port — causing congestion and delays there too, Judah Levine, head of research at freight-booking platform Freightos Group, told CNBC.

Supply chain tech firm project44 said the shift from the Ningbo port to Shanghai “backfired on some carriers” as congestion mounted in Shanghai. As a result, Shanghai saw an 86% increase in empty runs year-over-year, it said, referring to an industry term for when an airline decides to skip a particular port or the entire journey altogether.

In an email to CNBC last week, Freightos’ Levine said all eyes are on China and the impact strict outbreak containment measures could have on logistics. “Steps have been taken to quell the spread of positive cases, which have been detected in multiple locations including Beijing, Shenzhen, Tianjin, Dalian and several others,” he said Jan. 19.

Rising air freight rates

Spot prices for ocean shipping en route from Asia to the U.S. West Coast were up 4%, Levine said, but they’re unlikely to rise much further because production is on hold as the Lunar New Year holiday approaches and factories shut down for a while be closed for a longer period of time.

However, air freight rates are still rising, he added.

“With enough time to still move cargo by air, the pre-holiday rush coupled with pandemic-constrained capacity is driving air freight rates higher,” he said, adding that the Freightos Air Index showed that the Rate from China to Northern Europe was $9.59 per kg in mid-January – up over 50% from under $6 per kg in early January.

The Lunar New Year is China’s biggest holiday, and hundreds of millions of people traditionally travel back to their hometowns from the cities where they work.

According to Vashistha, some major shipping companies such as Ocean Network Express and Hapag-Lloyd have suspended their services and operations even earlier than last year to celebrate the season. That puts a strain on already fragile supply chains, he said.

This latest shock comes at a bad time for global supply chains. They were already stressed out by the holiday season combined with the omicron variant, but port troubles in China take these complications to a new level.

John Ferguson

economic impact

Shipping costs have fallen in recent months as supply chain backlogs have reduced, but the recent Covid surge and possible port closures will dwarf any progress made, said Paul Gruenwald, chief economist at S&P Global Ratings.

“I would say that this will slow down the improvement that we’ve seen over the past few months,” he told CNBC’s Squawk Box Asia on Thursday.

Impact of China’s zero-Covid on the Winter Olympics

China’s zero tolerance for Covid will have a major impact on global supply chains, said John Ferguson, globalization, trade and finance practice leader at think tank Economist Impact.

“This latest shock comes at a bad time for global supply chains. They were already stressed out by the holiday season combined with the Omicron variant, but port issues in China are taking those complications to a new level,” Ferguson said.

“China’s zero-Covid strategy is critical as further outbreaks will lead to more closures or lockdowns in key areas,” he told CNBC. “With China approaching the Winter Olympics, as well as major political events later in the year, China is unlikely to abandon its Covid strategy in 2022.”

One bright spot is that many companies have already prepared for stressed supply chain scenarios and are now implementing their plans, he said.

Still, not everything will go smoothly.

“While global companies have become more nimble during this crisis, we should still expect some delays from this latest round of supply chain stress,” he added.

Supply Wisdom’s Vashistha summed it up: “Combine the closures with the increase in Covid-related port congestion, China’s zero-tolerance policy and reduced air transport capacity and the problem becomes even clearer: cargo continues to increase, without there being any way to move it or places to go.”

Chamath Palihapitiya says ‘no person cares’ about Uyghur genocide in China

WASHINGTON – Billionaire investor Chamath Palihapitiya triggered a backlash on social media after saying during a recent episode of his podcast that “nobody cares” about the ongoing human rights abuses against the Uyghurs in China.

During a 90-minute episode, Palihapitiya told co-host Jason Calacanis on their “All In” podcast that he would be lying if he said that he cared about the Uyghurs, an ethnic Muslim minority in China’s northwest region of Xinjiang.

“Every time I say that I care about the Uyghurs, I’m really just lying if I don’t really care. And so, I’d rather not lie to you and tell you the truth, it’s not a priority for me, ” said Palihapitiya, a venture capitalist who owns 10% of the NBA team the Golden State Warriors.

The team wrote in a statement on Twitter Monday that Palihapitiya “does not speak on behalf of our franchise, and his views certainly don’t reflect those of our organization.” The Golden State Warriors’ statement did not mention the Uyghurs or China.

Calacanis and Palihapitiya began talking about the Uyghurs when Calacanis praised President Joe Biden’s foreign policy approach to China.

The Biden administration has described the abuse of Uyghurs and members of other Muslim minorities in the region as “widespread, state-sponsored forced labor” and “mass detention.” The Biden administration has also warned businesses with supply chain and investment ties to Xinjiang that they could face legal consequences.

In July, that warning manifested as a joint advisory from the Departments of State, Treasury, Commerce, Homeland Security and Labor, along with the Office of the US Trade Representative. The most-pointed line from the Xinjiang Supply Chain Business Advisory states that “businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating US law.”

The Chinese government has previously denied any wrongdoing or human rights abuses in Xinjiang.

About 15 minutes into the podcast, Calacanis pointed to the Biden administration’s steps to curb and address China’s sweeping human rights abuses when the following conversation ensued:

Calacanis: His [President Biden’s] China policy, the fact that he came out with a statement on the Uyghurs, I thought it was very strong.

You know, it’s one of the stronger things he did, but it’s not coming up in the polls.

Palihapitiya: Let’s be honest, nobody, nobody cares about what’s happening to the Uyghurs, okay? You bring it up because you really care. And I think that’s really nice that you care but…

Calacanis: What? What do you mean nobody cares?

Palihapitiya: The rest of us don’t care. I’m just telling you a very hard truth.

Calacanis: Wait, you personally don’t care?

Palihapitiya: I’m telling you a very hard truth, okay? Of all the things that I care about. Yes, it is below my line. Okay, of all the things that I care about it is below my line.

Calacanis: Disappointing.

Palihapitiya went on to say that he cared about supply chain issues, climate change, America’s crippled health-care system as well as the potential economic fallout of a Chinese invasion of Taiwan.

He later clarified his remarks in a Monday evening tweet, saying he recognizes that he came across as “lacking empathy.”

“As a refugee, my family fled a country with its own set of human rights issues so this is something that is very much a part of my lived experience,” said Palihapitiya, who was born in Sri Lanka. “To be clear, my belief is that human rights matter, whether in China, the United States, or elsewhere. Full stop.”

Last month, the White House announced a diplomatic boycott of the 2022 Winter Olympics in Beijing, citing “ongoing genocide and crimes against humanity in Xinjiang and other human rights abuses.”

Governments, civil society groups and United Nations officials have previously expressed concern about Beijing’s harsh measures of repressing those who criticize the Chinese Communist Party.

China critic Sen. Tommy Tuberville once more purchased Alibaba inventory, choices

Senator Tommy Tuberville, R-Ala., conducts a press briefing on the Senate subway to propose a vote today on the Jan. 6 commission and the Endless Frontier Act and the Innovation and Competition Act by June, Friday, May 28, 2021.

Tom Williams | CQ Roll Call, Inc. | Getty Images

Alabama Senator Tommy Tuberville, who is an outspoken critic of China and companies there, has been buying and selling shares and options in the Chinese e-commerce giant since last summer Alibaba after asking questions about similar transactions, reveal disclosure reports.

Tuberville made three separate purchases with his wife Suzanne Tuberville as recently as December Alibaba shares valued at up to $300,000 in total, according to a financial report filed Wednesday.

Republican spokeswoman in July told CNBC that in mid-2020 he ordered his financial advisors to sell a small stake in Alibaba stock after learning it was in his portfolio.

That earlier stock sale, worth less than $5,000, came as the former Auburn University football coach was running for the Senate seat.

Tuberville was exposed in July for violating a federal financial transparency law, the STOCK Act, by failing to file disclosures of about 130 stock and stock option trades from January 2021 to May 2021 within a 45-day period.

These trades included a sale of shares on January 25, 2021 put options Per Alibaba Group Holding Limited.

The sale of the put options – which would give their holders the right to sell Alibaba at a share price of $230 by Sept. 19 – was valued at $15,001 to $50,000.

That sale came months after the sale of Alibaba shares that its spokeswoman described.

His spokeswoman at the time said Tuberville wasn’t even aware of the deals because they were being handled by his financial advisors.

Earlier that same month, on July 14, Tuberville and his wife had jointly purchased between $15,001 and $50,000 worth of put options in Alibaba, while on the same day selling put options from the company at a slightly lower strike price, the were rated the same height.

Those transactions were only disclosed in a report Tuberville filed in August, after the news reported his violation of the Stock Corporation Act.

On September 13, Tuberville and his wife sold Alibaba options with an exercise price of $230 in four separate trades, and bought Alibaba put options with the same strike price, another disclosure shows. Overall, these transactions were valued at between approximately $80,000 and $215,000.

On Wednesday, the spokeswoman again referred to his financial advisors when asked about his together the account’s recent Alibaba stock purchases.

“Senator Tuberville has long had financial advisors actively managing his portfolio without his day-to-day involvement,” she said in an email.

Asked if Tuberville now plans to tell those advisors not to trade shares in Alibaba or other Chinese companies, given his criticism of China, the spokeswoman said, “Of course.”

In his financial disclosure filed on Wednesday, Tuberville said he and his wife bought between $50,001 and $100,000 worth of American Depositary shares in Alibaba Group Holding Limited on Dec. 14 through their joint account.

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The next day, according to the disclosure, the Tubervilles bought Alibaba shares valued in the same value range, which allows lawmakers to report transactions in ranges rather than exact amounts.

On Dec. 21, the Tuberville account bought between $15,001 and $50,000 worth of Alibaba stock, the disclosure said.

The pair then conducted a “partial” sale of Alibaba stock on Dec. 23, valued at $50,001 to $100,000, which the senator described on the form.

The congresstrading.com Twitter account, which tracks the Legislature’s disclosure documents, updated CNBC on Tuberville’s purchases of Alibaba stock.

Tuberville in June had lauded President Joe Biden for issuing an executive order that would allow the United States to issue a ban US investments in Chinese companies that the White House said would undermine the security or democratic values ​​of the US and its allies.

In a statement at the time, Tuberville said, “Chinese companies routinely violate U.S. sanctions laws and actively facilitate the Chinese Communist Party’s military expansion and persecution of religious minorities.”

In May, Tuberville introduced the China TSP Investment Ban Act, which would permanently ban federal retirement savings plans from investing in a Chinese company.

In addition to Alibaba trades, Tuberville and his wife also bought shares in last month Stratasys Ltd. with a value between 15,001 and 50,000 US dollars and a partial sale or the likef apple Shares valued at $50,001 to $100,000, according to the disclosure.

The couple also bought stock options for Invesco QQQ Trust, Series 1, and for Cleveland Cliffs, and options sold for PayPal and ChannelAdvisor Corp.

The Tuberville individual account bought a commodity futures contract for the delivery of cattle in April ranging from $1,001 to $15,000.

China bookstore growth fueled by visible enchantment, social media visitors

Visitors take photos and read books in Shenzhen on November 13, 2021 at a Zhongshuge bookstore, a chain known for interior design.

VCG | Visual China Group | Getty Images

BEIJING – Social media is so important to Chinese consumer goods companies that visual appeal tends to be a priority for a number of new bookstores.

Elaborate interior designs – sometimes reinforced by mirrors – not only have caught the attention of “Architectural Digest” but also young Chinese looking for new experiences.

“The Chinese consumer, especially the post-90s [generation]”They want convenience, they want new things,” said Derek Deng, partner at Shanghai-based Bain & Co. who heads the company’s consumer goods practice in Greater China.

“They covet the products [that] not only satisfying their functional needs, but also addressing their emotional needs, “he said,” whether it is something you can show your colleagues, something you always find joy in, or something you simply need makes it easier for you to blend in. “

Shopping malls noticed. Instead of signing contracts with large department stores to make them the main draw for customers, malls have turned to coffee and tea shops, finely crafted bookstores, Showrooms for electric cars and other trendy stores, said Jacky Zhu, research director for western China at JLL.

“You can increase pedestrian traffic. You can increase pedestrian traffic for a specific customer, ”he said. This is so much the case, he added, that malls make bookstores pay a third or a quarter of the rent of a clothing or cosmetics store.

In addition to visually appealing interiors, many bookstores in China sell coffee, stationery and gift items. Nostalgia for the China of past decades is a popular topic.

One of Mia Huang’s favorite bookstores is a shop in a traditional four-walled Beijing courtyard. The shop displays a lot of historical items like bicycles and door signs, and has a public reading area, she said.

Huang, of the post-90s generation, said she quit her job at an internet tech company in 2019 to become a full-time travel blogger – and share comments, photos, and videos about her experience.

This building in Beijing, China, was built in 1907 as the city’s first Anglican church, but has long since lost its religious functions and was converted into a bookstore before this photo was taken on June 21, 2019.

Jason Fan | Barcroft Media | Getty Images

Another of Huang’s favorite bookstores is one converted from a church building in Beijing.

“A lot of people go there to ‘check in,’” she said in Mandarin, referring to a trend where people visit places they’ve seen on social media and then take their own photos to prove they are were there.

Going to bookstores isn’t really intended for buying books, she said, noting that many of the stores have turned into tourist attractions or cozy places to take a break.

Some bookstores in China have become so popular that thousands of people are ready to go hike to remote areas, according to a report by the state-run online publication Sixth Tone from 2019. A village location of the hipster bookstore Librairie Avant-Garde brought, according to a. revenue of 1.5 million yuan ($ 234,375) for the year ended mid-November Report from the state newspaper China Daily.

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What is less clear is whether the rising interest in visually appealing bookstores means that stores actually benefit from selling books.

Store stock selection often focuses on art and design, while non-book gift items can take up a significant portion of retail space, the reporter’s observations.

In China, tight government control means that titles published or sold in the country do not conflict with censorship. Books by or about Chinese President Xi Jinping are prominently displayed at many bookstore entrances, while the state operates its own nationwide chain of bookstores.

Locals read books at Xinhua Bookstore in Handan, Hebei Province, China on June 13, 2021.

Cost photo | Barcroft Media | Getty Images

Shops called bookstores are still open.

According to Qichacha, a company database, more than 40,000 new bookstore-related businesses have registered in the country every year since 2017. For that year through November, 39,000 new bookstores have registered – a 6% increase over the previous year, the data showed.

These new openings still outperform the annual closings of around 10,000 or more bookstore-related stores, the database shows.

A model walks the catwalk at the LEDIN collection show by Chinese designer Wang Dongyang during China Fashion Week 2020/2021 A / W Collection at Page One Bookstore on May 6, 2020 in Beijing, China.

Sheng Jiapeng | China Intelligence Service | Getty Images

However, in the digital age, bookstores have never been easy business, and the prestigious bookstore chain Yanyouji faced financial difficulties this fall Started an online discussion about the future of photogenic bookstores. It reflects the difficulty of running a business even after it has gained prominence on social media, and exemplifies a trend in the fast-growing Chinese consumer market.

Of the 46 Chinese consumer brands launched in 2018, only 17 are doing well this year, analysts at Bain and Kantar Worldpanel found in a report released earlier this month. In the makeup space, 30% of the brands launched in 2016 have been phased out, the report said.

China’s new consumer brands in recent years have tended to use online e-commerce and social media channels to make a first wave of traffic, Deng said. He found that digital data on consumer trends is helping new brands quickly test and customize their products.

A look inside TSUTAYA bookstore on March 29, 2021, Xi’an City, Shaanxi Province, China.

Cost photo | Barcroft Media | Getty Images

However, it is more difficult for these newcomers to find a second growth channel, which usually requires expansion into the more complicated world of physical business and local sales, Deng said.

“What has always been missing is once you’ve recruited [consumers] If they are first buying your product, how can you make sure they keep staying with you? “He said.” The repeat purchase rate has become a major factor for these insurgent brands on the first wave of successes to more sustained growth . “

For a novelty bookstore, that means the photographers will come back and spend money – even if they do Retail sales were sluggish.

Some are bringing in specialist supermarkets, hairdressers, and book authoring events to create a community that can cater to the needs of an entire family or a specific population group, said Zhu of JLL. “From my point of view, I believe the bookstore can survive,” he said. “They can survive because of their changing strategy to adapt to the changing retail market.”

China to take away overseas funding restrict passenger automotive manufacturing

New cars for export await shipment at a seaport in Yantai, China, on September 7, 2021.

Feature China | Barcroft Media | Getty Images

BEIJING – Chinese authorities will allow full foreign ownership of car production in the country from January 1, 2022.

This is after a release Monday from the Ministry of Commerce and the National Development and Reform Commission, the country’s leading economic planning agency. The document was one of the government’s regular publications on industries prohibited from foreign investment.

The version 2021 published on Monday did not contain any car production. The 2020 edition of the list had promised the change would take place in 2022.

China has gradually lifted foreign ownership restrictions in its domestic auto industry.

However, Monday’s release still covered 31 areas where foreign investment is prohibited or restricted, including rare earths, film production and distribution, and tobacco products. In industries such as medical facilities, foreign companies have to set up joint ventures with local partners, who usually hold a majority stake.

Read more about electric vehicles from CNBC Pro

Chinese language shoppers decide favourite electrical automobiles from China, US, Germany

Stephan Wollenstein, CEO of Volkswagen China, will present the new ID.6 Crozz electric car at the Shanghai International Automobile Industry Exhibition on April 19, 2021.

Hector Retamal | AFP | Getty Images

BEIJING – When it comes to their favorite electric car brand, Chinese consumers’ first choice is Warren Buffett WORLD, according to a survey by Bernstein.

Elon Musks Tesla Germany is in second and third place Volkswagensaid Bernstein. The company cited the latest results from a regular survey of Chinese consumers in the third quarter of recent years. This year’s survey, released on Thursday, had around 1,600 respondents.

Most of the respondents lived in China’s larger cities, with an average age of 32 and a monthly income of about 19,000 yuan (2,969), according to the research company.

Almost half of those surveyed said they would consider buying an electric vehicle for their next car purchase.

Intention to buy an electric car from a Chinese start-up like Nio or Xpeng doubled this year to around 9.5% of those surveyed, compared to around 5% in recent years.

Read more about electric vehicles from CNBC Pro

Chinese startups ranked first in the “Upper Mass & Premium” segment of the electric car market, which covers cars costing at least 150,000 yuan ($ 23,437). The next favorite in this segment was Tesla, followed by German premium brands like BMW and Audi, according to the survey.

But for cars of all categories, German premium brands ranked first, followed by Japanese brands Toyota, Honda and Nissan, and Chinese brands like BYD and Geely, the report said. Start-ups with electric cars took sixth place in this category.

China is the largest auto market in the world and many European auto companies make up the country Starting point for their foray into electric vehicles.

BlackRock responds to George Soros’ criticism over China investments

George Soros, billionaire and founder of Soros Fund Management LLC, pauses as he speaks at an event on the third day of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, January 23, 2020.

Simon Dawson | Bloomberg | Getty Images

LONDON – BlackRock, the world’s largest wealth manager, has responded to billionaire George Soros’ sharp criticism of the company’s investments in China.

Registered mail The Wall Street Journal On Tuesday, Soros described BlackRock’s initiative in China as a “tragic mistake” that would “harm the national security interests of the US and other democracies.”

The comment, titled “BlackRock’s China Blunder,” said the company’s decision to pour billions into the country was a “bad investment” that would likely lose money for its customers.

It comes soon after BlackRock launched a range of mutual funds and other investment products aimed at Chinese consumers. The initiative resulted in BlackRock becoming the first foreign-owned company to operate a wholly-owned company in the Chinese mutual fund industry.

The asset manager told CNBC on Wednesday that its Chinese mutual fund subsidiary launched its first fund in the country after raising 6.68 billion Chinese yuan ($ 1.03 billion) from more than 111,000 investors.

“The United States and China have a large and complex economic relationship,” said a BlackRock spokesman in response to Soros’ comments.

“Total trade in goods and services between the two countries exceeded $ 600 billion in 2020. Through our investment activities, US asset managers and other financial institutions contribute to the economic networking of the world’s two largest economies.”

BlackRock’s investment institution recommended In mid-August that investors even tripled their exposure to China. At the beginning of the year, CEO Larry Fink in a letter to shareholders described China’s market as “a significant opportunity to achieve the long-term goals of investors in China and internationally”.

A BlackRock Inc. sign hangs over their building in New York.

Lucas Jackson | Reuters

“The vast majority of assets BlackRock manages are for retirement. BlackRock’s customers around the world – including many US customers – are looking for a wide range of investments, including in China, to meet their retirement and other financial goals, ”the spokesman said.

BlackRock added that it believes it can help China cope with its growing pension crisis by providing expertise, products and services for pension systems.

“We believe that globally integrated financial markets will give people, businesses and governments in all countries better and more efficient access to capital that supports economic growth worldwide.”

“The situation is completely different now”

Soros said Tuesday that BlackRock’s investments in China showed that the company had “misunderstood” Chinese President Xi Jinping.

Beijing cracked down on several companies this year, resulting in a sharp sell-off in Chinese stocks. Soros warned that while the new rules target tech companies, they should also be seen as a sign that Xi will do whatever it takes to stay in power.

“Previous efforts could have been morally justified by claiming they were building bridges to bring countries closer together, but the situation is completely different now,” Soros said. “Today the US and China are in a life and death conflict between two systems of government: repressive and democratic.”

Write for the Financial Times In a separate comment posted Aug. 30, Soros said investors in Xi’s China are facing an “ominous awakening” before adding that Xi’s crackdown on private companies showed he “doesn’t understand the market economy.” .

BlackRock reported on July 14 that assets under management rose to a record $ 9.49 trillion in the second quarter, compared to $ 7.32 trillion a year earlier.

BlackRock’s shares are up over 28% since the start of the year.

Shang-Chi would not have a launch date in China, why that is an enormous deal

Simu Liu plays Shang-Chi in Marvel’s “Shang-Chi and the Legend of the Ten Rings”.

Disney

When “Shang-Chi and the Legend of the Ten Rings” hits theaters on Friday, it will be the first time since the pandemic began that a Marvel film will be shown exclusively in theaters, but it’s its absence on a major one international market, the box office analysts in conversation.

“Shang-Chi” is the first film in the Marvel Cinematic Universe not to be released in China and only the second not to be released in China. The underlying controversy seems to stem from the cast of the film and perception of the comic book series on which “Shang-Chi” is based.

The absence from the Chinese box office means that “Shang-Chi” is leaving a large sum of money on the table. China has been the second highest box office of all Marvel films since 2012, just behind the US and Canada.

With a theatrical-only release and connections to a 24-movie blockbuster franchise, There is no doubt that “Shang-Chi” will top the box office this weekend in the US and Canada. It could even claim to be the highest Labor Day weekend opening ever.

But China is a key market for its size. Before the pandemic, China was the second largest box office in the world, according to Comscore data, with annual ticket sales of $ 8.67 billion. In addition, delays in the release of popular films in China often expose a film to higher levels of piracy.

“Marvel is an immensely popular franchise practically everywhere, and these films owe a significant portion of their international box office success to the ticket sales that China generates,” said Shawn Robbins, chief analyst at Boxoffice.com. “Anywhere, 10 to 20% of the global gross sales of a Marvel film can come from the Middle Kingdom alone.”

Marvel has achieved this benchmark since 2013. In the early years of the Marvel franchise, China accounted for between 2% and 6% of total theatrical sales.

For the 2019 release of Avengers: Endgame Disney planned to debut for domestic and Chinese audiences on the same weekend. The result was that highest opening weekend in film history. During its lifetime, 22% of ticket sales came from China.

“The growth of the Chinese theatrical market over the past decade has been impressive; in essence, sales have tripled since 2012 and have become a major target for many American blockbusters, who often rely on the country’s box office earning power to help them to bring it to the next round. ” Level, “said Paul Dergarabedian, senior media analyst at Comscore.

“Shang-Chi” will not benefit from these ticket sales until its domestic debut as it has not yet been approved by government officials for release in China. The region does not operate a free cinema market and all films produced abroad have to pass the censorship in order to be distributed locally.

China has strict rules on the content and suppresses everything it believes violates his basic socialist values ​​or affects his nationalist image. The country recently stepped up crackdown on its own entertainment industry, urging broadcasters to ban artists with “wrong political positions” and effeminate styles from shows in order to create a “more patriotic atmosphere”.

“Black Widow” was allowed to display in the country, but the release date coincided with a lockdown period in China. In July, the country leaves cinemas open for local productions and shows foreign films. This year, the planning for non-Chinese films was additionally influenced by the 100th anniversary of the founding of the ruling Communist Party. The occasion led to months of censorship in all media.

Unfortunately, the rampant piracy of “Black Widow” after its release in domestic cinemas and via streaming means that it will never get a run in China.

“Having near-perfect pirated copies of a major motion picture floating around is never good for business and is understandably a concern for the entire film industry,” said Dergarabedian.

Box office analysts have speculated that “Shang-Chi” would be removed from the file because of its source material. The comics on which the film is based are considered racist and full of reductive stereotypes. While Marvel boss Kevin Feige has gone to great lengths to allay any concerns about the portrayals in the upcoming film, it may not be enough to get it working in Chinese theaters.

Marvel’s “Eternals” could suffer a similar fate, although the reason for the rejection is very different. The film is directed by Chloe Zhao, who recently became a persona non grata in China after previous remarks she made about the country surfaced online. The backlash resulted in her name and accomplishments being deleted from much of the Chinese internet.

That leaves “Spider-Man: No Way Home” as the next potential Marvel film to hit theaters in the country. The last two standalone Spider-Man films have done well in China, generating sales of $ 117.5 million in 2017 and 2019.

The pent-up demand to see a Marvel movie on the big screen could lead to audiences flocking to theaters when it is released in December.

Correction: Avengers: Endgame generated 22% of its $ 2.8 billion or $ 627.2 million in ticket sales from China. An earlier version of this story misrepresented the value of sales in China.

Downward Stress on Cash-Market Charges Continues; Delta Variant Hits China Companies Sector

Good day. The Federal Reserve’s primary tool for controlling economic dynamism is ticking down again, increasing the possibility that officials may need to take technical measures to get it going again. Meanwhile, China’s service sector suffered an unexpectedly severe blow in August when a wave of coronavirus infections across the country triggered new lockdowns and sent an official measure of non-manufacturing activity to a contraction area.

Now for today’s news and analysis.

Top news

Covid-19 Delta variant beats up China’s service sector

China’s official non-manufacturing purchasing managers’ index, which tracks activity in construction and services, slumped to 47.5 in August from 53.3 in the previous month, according to data released Tuesday by the National Bureau of Statistics. The value of 47.5 – which fell far short of what economists had forecast for a value comfortably above 50 – marks the measure’s first break into contracting territory since February 2020, at the height of the initial coronavirus explosion that led to the lockdown Hubei Province.

Derby’s Take: Funds rate is softening, adding to the specter of technical rate boosts

By Michael S. Derby

The effective key interest rate has been slipping since around mid-August after it was raised by the Fed at the beginning of summer following a technical rate hike. The key interest rate, which had been around 0.10% for most of the summer, fell to 0.9% on August 18 and again to 0.8% on Monday. If the key rate stays soft or softens and this shift proves to be sustained, the Fed may have to react by revoking the settings of its interest rate control toolkit. Continue reading.

Important developments around the world

Oil industry investigates damage after Hurricane Ida slam in Louisiana

Energy companies assessed the condition of refineries, pipelines, petrochemicals and offshore oil rigs along the central Gulf of Mexico on Monday, the day after Ida hit Louisiana as a powerful Category 4 hurricane.

Unfinished tractors and pickup trucks pile up as components become scarce

Manufacturers stack unfinished goods on factory floors and park incomplete vehicles in airport parking lots while waiting for missing parts, made scarce by supply chain problems that disrupt multiple industries.

New life and work choices enliven exurbs and bring new strains with them

Extra-urban areas have grown nearly twice as fast as domestic over the past decade, and there are signs that growth is accelerating as Americans prepare for a landscape where increased work from home means the need to commute decreased.

EU recommends stopping non-essential travel from the USA

The European Union recommended stopping non-essential travel from the US due to the increase in Covid-19 cases, diplomats said on Monday, ending a summer vacation break for American tourists.

Summary of the Financial Regulation

SEC chair warns against payment for order flow

Robinhood Markets Inc.’s shares plunged Monday after the chief of the Securities and Exchange Commission signaled he was ready to ban payments on the order flow, which makes up most of the online brokerage’s revenue.

Members Exchange urges regulators to fix stock prices for half a penny

Investors could see shares of Apple Inc. and Bank of America Corp. for $ 152.005 or $ 42.115 per share if regulators sign a proposal presented this week. Members Exchange, a startup exchange backed by major Wall Street firms, said in a proposal that the Securities and Exchange Commission should allow some heavily traded stocks to be valued in half-cent increments.

So far, direct listings have paid off for investors

Eyewear maker Warby Parker Inc. is the latest to file with the SEC for direct listing, demonstrating the persistence of the alternative path to public markets for companies that don’t need to raise money.

Foresight

Wednesday (all times ET)

9:30 p.m .: Bank of Japan’s Wakatabe speaks at a meeting with local leaders in Hiroshima

Thursday

8:30 a.m .: US Department of Commerce releases international trade data for July

research

Goldman Sachs says evictions threaten

Around 750,000 American households are now threatened with eviction from rental apartments in the wake of the latest political changes that protect the financially needy, Goldman Sachs said in a message to customers. The investment bank estimates that between 2.5 million and 3.5 million households are behind on rents and owe landlords up to $ 17 billion, while state aid to tenants is slow. “The strength of the housing and rental market suggests that landlords will try to evict tenants who are behind on rent unless they receive government support,” the note said. According to analysts at Goldman Sachs, this should not have a very negative impact on the economy. They say in the note that “Our literature research shows that an eviction episode of this magnitude is a small burden on consumption and employment growth.”

– Michael S. Derby

Basis points

Asking rents for homes rose nearly 13% year-to-date through July, the highest annual increase in five years, according to real estate data company Yardi Matrix.

US pending home sales declined for the second straight month in July, according to the National Association of Realtors, whose index of pending home sales fell 1.8% from June to 110.7. Pending home sales declined 8.5% year over year in July. (DJN)

Manufacturing output in Texas slowed in August, with the Dallas Fed’s Manufacturing Outlook Survey manufacturing index falling to 20.8 from July 31. The general business activity index, which rates general terms and conditions in the industry, fell from 27.3 to 9. (Dow Jones Newswires)

Aluminum forwards on the London Metal Exchange are up a third this year and prices are around 80% above their low in May 2020 when the pandemic restricted sales to the aerospace and transportation industries.

German inflation in August was 3.9% year-on-year, compared to 3.8% in July. (Dow Jones Newswires)

Business and household confidence in the euro zone fell slightly in August after hitting an all-time high in July, the European Commission said, noting that the economic sentiment indicator fell from 119.0 in July to 117.5. Economists polled by the Wall Street Journal expected an index of 118.0. (DJN)

Canada’s quarterly current account surplus rose to $ 3.58 billion or the equivalent of $ 2.84 billion in the second quarter as goods exports soared, Statistics Canada said. The data for the first quarter has been revised, Statistics Canada said, adding that the current account surplus for the first three months of the year was $ 1.82 billion, compared to an earlier estimate of $ 1.18 billion. (DJN)

(END) Dow Jones Newswires

Aug 31, 2021 9:35 AM ET (1:35 PM GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

China partially shuts down port after one Covid case

Heavy cranes in the port of Ningbo in China.

Philippfotograf | iStock | Getty Images

China closed a key terminal in its port of Ningbo-Zhoushan, the world’s third largest port, after a worker was discovered to be infected with Covid – a move that is likely to put further pressure on already congested utility networks.

It was the second time this year that the country ceased operations at one of its major ports.

Analysts say China’s “zero tolerance” approach to Covid will tighten already stressed supply chains this year. Some warn that this may not be the last port closure as long as Beijing takes this stance.

Dawn Tiura, CEO of the Sourcing Industry Group – an association for the procurement and procurement industry, said China’s stance will lead to “serious” ramifications for the supply chain.

“China has zero tolerance for COVID. One person who tests positive is enough to close (the) port, ”she told CNBC in an email.

Ningbo-Zhoushan is the third largest container volume in the world. According to the World Shipping Council, 27.49 million 20-foot equivalent units (TEU) of container handling were handled in 2019. The container volume rose in 2020 by almost 5% to 28.72 million TEU.

As long as the authorities adhere to this “zero covid” stance, there is still a risk of sudden disruptions due to tests or bans …

Nick Marro

Economist Intelligence Unit

All incoming and outgoing services at the Meishan Terminal in the port of Zhoushan were suspended until further notice on Wednesday. according to Chinese state media. The terminal is the key to processing shipments to Europe and North America.

Supply chains have already been through crises like the this year Lack of shipping containers, and the Incident in the Suez Canal. In June, Covid infections caused disruption Shipping centers in southern Chinaincluding major ports of Shenzhen and Guangzhou – the first time China has shut down ports due to Covid cases.

Effects of China’s “zero covid” stance

China’s zero tolerance for Covid suggests this latest port disruption may not be the last, said Nick Marro, head of global trade at the Economist Intelligence Unit.

“China’s ‘zero-covid’ approach means officials will prioritize containment of the pandemic above all else, especially given the highly contagious nature of the Delta tribe and the risks the current outbreak poses to future economic performance in the third quarter “He said in a note on Wednesday.

“As long as the authorities maintain this ‘zero covid’ stance, there is still a risk of sudden interference from tests or bans, which ties all hopes of normalcy closely to factors such as national vaccination deadlines,” he added.

China is experiencing a resurgence of Covid cases thanks to the highly transferable delta variant. The daily cases exceeded the 140 mark on Monday – the highest number of daily infections since January, according to Reuters. Chinese authorities have ordered Mass tests in some areas and widespread movement restrictions in big cities like Beijing.

The suspension of services at the Meishan Terminal comes as container shipping rates continue to rise this year. The container freight rates from China and East Asia to the west coast of North America have risen by over 270% to over 15,800 USD per TEU this year, according to the global container freight index from Freightos Baltic. Meanwhile, rates on the east coast have risen by over 220% to over USD 17,500 per TEU, according to the index.

Read more about China from CNBC Pro

Analysts warn of further delays and consumers will likely have to bear the cost as the holiday season approaches.

Tiura pointed out that the June Covid outbreak caused Shenzhen’s main Yantian terminal to cut 70% of its exports. The waiting time for processing shipments has been tripled from 3 days to 8 or 9 days.

Given that Ningbo-Zhoushan is the third largest container port in the world, this closure makes the already dire situation much worse.

Dawn Tiura

CEO, Sourcing Industry Group

“If we see something similar here, and the time it takes to move ships through port doubles or triples, we will have a significant and long-term impact on exports that will impact the holiday season and drive inflation,” she said.

“The shortage of containers was already affecting global supply chains. Given that Ningbo-Zhoushan is the third largest container port in the world, this closure will make an already dire situation much worse, ”said Tiura.

She said container capacity is likely to become more expensive and shippers are likely to pass the cost on to consumers, further fueling global inflation ahead of the all-important holiday season.

Mario Ciabarra, CEO of digital analytics company Quantum Metric, said retailers will face a lot of uncertainty before the holiday season and one of them will be inventory challenges.

“Inventories will be the primary concern of retailers as they face the decision to either have limited or no stocks of certain items, or instead face higher costs associated with air freight,” he told CNBC.

Marro from the EIU also pointed out disruptions that are exacerbated by the key demand before the Christmas season.

“Trade disruptions pose problems not only to shipping and consumers, but also to manufacturers who rely on critical import components,” he said.

– CNBC’s Iris Wang contributed to this report.