Shanghai Tiandihui Supply Chain Management, China’s largest online road transport operator, has teamed with Italy’s Vailog to launch a CNY5 billion fund to build 20 logistics hubs in China. Xu Shuibo, Founder and Chief Executive of Tiandihui, said that the priority for the start-up was to turn profitable this year, adding that the company will use the funds to build facilities to better handle cargo flows for clients. “We are still focusing on network expansion to stay ahead of the competition,” he said.

For the first half of 2018, more than CNY100 billion of transactions were conducted via its platform matching lorries with cargo in 60 cities on 300 routes. The company plans to increase the number of routes to 1,000 over the coming few years. It expects to double its transactions value to more than CNY200 billion in 2018. The company collects fees for its services, which hit CNY5 billion in 2017. The CEO said the revenue would more than double this year to CNY10 billion. “Capital is needed to spur the growth of China’s logistics industry development,” said Cui Zhongfu, Vice Director of the China Federation of Logistics and Purchasing (CFLP). “The country has to build a complete ecosystem for road transport with an influx of capital.” Last year, about 80 Chinese transport businesses received a combined CNY100 billion of investment.

China’s logistics sector, known for its low efficiency, has more than 8 million transport firms, 90% of which are small-scale and individually owned. Tiandihui was established five years ago and uses the internet to slash redundant logistics costs for manufacturers. Earlier this year, it raised CNY500 million in the third round of financing led by CICC Jiacheng Investment Management, a subsidiary of investment bank China International Capital Corp (CICC). Xu also said the company’s plans for an initial public offering were on track. Tiandihui is valued at about CNY8 billion at present, the South China Morning Post reports.

The A-share market is ready to embrace further opening-up to international investors as the benchmark Morgan Stanley Capital International (MSCI) index starts a new round of inclusion of A shares. The MSCI will implement the second step of the partial inclusion of China’s A shares in the MSCI China Index and relevant composite indexes such as the MSCI Emerging Market Index. The inclusion will take effect when the market closes on August 31. The next half-year index review is scheduled on November 13.

A total of 10 companies will be added in the second step, with the total China A shares included in the MSCI China Index reaching 236. The constituents’ weight in the MSCI China index will rise to 5% from 2.5% in June and 0.75% in the MSCI Emerging Markets Index. The 10 newly added companies include industry heavyweights such as China Shenhua Energy, China Unicom, ZTE, software company Yonyou Network and consumer electronics giant TCL. Industry insiders said the second step inclusion will further bring an inflow of foreign capital following the one in late May. Analysts from China Merchants Securities wrote in a report that the A-share market’s 5% inclusion will hopefully bring another CNY40 billion of investment into the Chinese stock market.

Jack Lee, head of China A-share Research at asset management company Schroders, said that more overseas capital is sure to flow into the A-share market, especially focusing on the consumption sector, which is closely related to economic growth. MSCI is one of the most influential stock indices worldwide that is adopted by 97% of the world’s top asset management firms. Another major industry indicator FTSE Russell, based in London, said that it would include A shares in September, the China Daily reports.

China’s stocks dropped five days in a row last week, nearing the low of the 2015 market rout that erased USD5 trillion in market value, as Beijing vowed to clean up the health care sector in the wake of a vaccine scandal and deepening concerns about a slowdown in growth. The Shanghai Composite Index ending last week with a 4.5% decline.

Following a slump in June, China’s vehicle imports soared in July, mainly as a result of tariff cuts for models made in countries except the United States, and analysts said they expect an upward trend for the whole year. In July, China imported 165,000 automobiles, up 50% year-on-year, according to the General Administration of Customs. Almost all brands saw robust growth in July, with Japan’s Lexus seeing its best ever month in China. One of the few carmakers that have not localized models in China, Lexus sold 15,201 cars in July, up 37.5% year-on-year.

The surge came after China’s announcement in late May to slash tariffs on imported cars from 25% to 15% starting from July 1, which prompted carmakers to cut the price tags of their imports. Cars made in the U.S., however, are an exception, subject to a 40% tariff because of the Sino-U.S. trade tensions. Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), said Chinese customers delayed their purchases of cars in June to July in expectation of lower prices, which thus caused a slump in June and then a surge last month. He said the 15% fall in June was a major reason for the 5% dip in imported vehicle sales in the first half of the year, which totaled 496,000 units, but he expected China’s new tariff to drive up imports in the second half, resulting in a yearly growth figure.

China imported 1.22 million vehicles last year, around one-fifth made in the U.S. Li Yanwei, Analyst at the China Automobile Dealers Association, said a total of 20 premium car brands present in the Chinese market saw an average growth rate of 14.4% year-on-year in July. Sales of brands that were expected to be hit hard by Sino-U.S. trade tensions – Lincoln, BMW and Mercedes-Benz – have survived almost unscathed. Lincoln, which imports all its models from the U.S., saw its China sales in July edge up 2% to 4,500 units. BMW, whose imports Li said account for around 35% of China sales, sold 46,692 cars in the month, up 7.8% year-on-year, and Mercedes-Benz, which has a similar percentage of imports as BMW, delivered 52,616 cars, up 8.3%, the China Daily reports.

Many people outside China either still haven’t heard of WeChat or they think it is the country’s equivalent of WhatsApp or Facebook. For many people in China, WeChat is much more – it is not an overstatement to say it is an indispensable part of everyday live. WeChat, or Weixin as it is known in China, began life at the Tencent Guangzhou Research and Project center in October 2010. The inflection point for the WeChat team arrived in May 2011 when it was updated with voice messaging, enabling a user’s phone to work like a walkie-talkie. Since then, it has grown into the most popular mobile app in the country with over 1 billion monthly active users who chat, play games, shop, read news, pay for meals and post their thoughts and pictures. Today, you can even use WeChat to book a doctor’s appointment or arrange a time slot to file for a divorce at the civil affairs authority.

The seven-year-old app has also laid the foundations for stellar growth at Shenzhen-based Tencent Holdings, the tech giant behind WeChat, turning it into one of the most influential companies in China and grabbing the attention of global investors. Since the official launch of WeChat in January 2011, Tencent’s market capitalization has risen over tenfold. Yet, the company has hit a speed bump. Tencent has lost 29% since a peak of HKD476.6 a share in January this year to trade at HKD336 last week, erasing USD170 billion from its market value. Tencent reported a 2% drop in second-quarter profit on lower gaming revenue and investment-related gains. Net income fell to CNY17.9 billion in the second quarter. However, Tencent is still in the early stages of monetizing its WeChat user base. Cautious to avoid flooding user timelines with ads, WeChat currently allows a maximum of two ads a day to appear on its social platform Moments. WeChat also has a blog-like Official Accounts feature to help brands and content producers market themselves.

Mini programs – applications typically smaller than 10 megabytes that can run instantly on the main app’s interface – are also expected to start generating revenue, and moreover are keeping users within the WeChat ecosystem, at a time when short video apps are on the rise. WeChat added a payment feature to the platform in 2013, which can be used to pay for groceries or lunch at a restaurant, and also send virtual money to friends. Users can also tie their bank accounts to their WeChat mobile wallet, the South China Morning Post reports.

China is carefully selecting the products on which it intends to impose tariffs. It is also imposing lower duties on items that have lower levels of substitution. The highest 25% tariff would be imposed on imports such as liquefied natural gas (LNG), as well as consumer goods from fishing rods to cotton skirts, metals such as iron and copper ore, and all types of wood. The lowest 5% duties are to be imposed on goods such as aircraft and automobile parts, chemical wood pulp, and various medical instruments – substances which are needed for China’s industrial production. Chinese authorities avoided targeting key items it relies on the U.S. for, including integrated circuits, higher-end semiconductors, or large aircraft.

China will not be able to continue retaliating tit-for-tat – with similar scale and force – as it imports only about USD130 billion in U.S. goods, but U.S. President Donald Trump has signaled he is prepared to levy tariffs on all USD500 billion of Chinese products exported to the U.S.

The U.S. government published a list of more Chinese products to be taxed as part of a trade war President Donald Trump started on July 6 to force Beijing to address a record trade imbalance and give U.S. companies easier access to the country’s market. The latest move by the Office of the U.S. Trade Representative raises the value of Chinese imports facing punitive tariffs to USD50 billion from USD34 billion. The list of 279 additional items includes synthetic plastics and other industrial compounds, finished metal products such as bridge sections, pillars and beams, as well as machine parts, integrated circuits, tractors and agricultural equipment. The products will be hit with an additional 25% duty starting on August 23, the same levy placed on the first tranche of targeted products.

China’s Ministry of Finance has already announced it would impose tariffs ranging from 5% to 25% on an additional USD60 billion worth of American products, but that was in response to Trump’s threat on July 11 to slap duties on USD200 billion of Chinese products, and to raise those tariffs from 10% to 25%. The Chinese tariffs affect – among others – U.S. imports of liquefied natural gas (LNG); alcoholic drinks; diamonds, pearls, fashion accessories and clothes; and tablet computers. Subsequently it released another list for USD16 billion worth of American goods.

China’s trade surplus with the U.S. dropped slightly by about 3% in July to USD28 billion from the previous month, as tariffs started to bite. China’s exports to the U.S. in the month fell 2.5% from June to USD41.5 billion, while its imports of U.S. goods fell by 1.5% month-on-month to USD13.4 billion. On a year-on-year basis, the growth of China’s exports to the U.S. slowed to 11% last month from 12.5% in June, while import growth accelerated to 11% from 9%. Soybeans took one of the largest hits. Imports fell 8% month-on-month and 20% year-on-year to 8 million tons.

China’s growth in imports and exports, denominated in U.S. dollars, rebounded in July, with imports rocketing by 27.3% — nearly double the growth pace in June — and exports rising 12.2% from a year earlier. China’s exports to the U.S. rose 11.2% year-on-year in July, compared with an increase of 12.5% in June, while China’s imports from the U.S. grew by a faster 11.1% in July, up from June’s 9.6%. China’s global trade surplus narrowed by 40% from a year earlier to USD28 billion last month.

One product hit by reciprocal tariffs of 25% is beer. But this will not have much of an impact, as consumers in both China and the U.S. prefer local brands. The Chinese drank 45 billion liters of beer last year, compared to 24 billion liters consumed in the U.S., according to Euromonitor International. Chinese brewers exported a mere USD6.5 million of beer to the U.S. last year, not even 0.2% of the amount imported in 2017 by the U.S. The U.S. exports more beer to China, but its brands also have struggled to gain a following in China. Budweiser was the only Western brand in the top 15 sellers in China last year and it is brewed locally in Wuhan. On the Chinese side, Tsingtao is about the only Chinese beer to be sold anywhere globally. Foreign sales made up less than 2% of its revenue last year.

Chinese investments in the U.S. are falling rapidly. According to Real Capital Analytics and Cushman & Wakefield, they totaled USD81 million in the second quarter, a 93% drop for the first six months compared to a year earlier. Tighter U.S. investment rules targeting technology are also likely to have limited impact on the property market, further reducing Chinese purchases of U.S. real estate.

Meanwhile the People’s Bank of China (PBOC) is taking measures to stop the slide of the yuan in an indication that it would not allow a further devaluation of the currency, which could lead to capital outflows and higher inflation. The adjustment of the reserve requirement ratio (RRR) for purchases of foreign currency forwards was the third time since September 2015 that the central bank has used the RRR as a way to offset pressure on the yuan. The Chinese currency has weakened by about 9% against the U.S. dollar since its 2018 peak of 6.27 in March. If the currency resumes its fall, the central bank is likely to resort to stronger measures, including possible direct purchases of the yuan to bolster its value.