A rundown of the news making headlines in and around China:
Tesla Megapacks: Tesla Inc.’s new battery factory in Shanghai has begun production. The plant, which manufactures its Megapack energy-storage batteries, is the company’s first such facility outside the U.S. The plant adds to its assembly plant for electric vehicles (EVs) in Shanghai and comes as the U.S. firm is trying to regain market share lost to local rivals recently. The factory has an annual capacity of 10,000 Megapack units, each with around 3.9 megawatt-hours of energy, and will supply the Chinese and overseas markets. The market is paying close attention to the Megapack facility and whether it will have a “catfish effect” in the energy storage industry, just as Tesla’s car plant was a catalyst for activity in the local EV market. Competition is already fierce in the domestic energy storage industry, with industry giants such as Contemporary Amperex Technology Co. Ltd. (CATL), BYD Co. Ltd. and Huawei Technologies Co. Ltd. having stepped up production of energy storage batteries and systems in the past two years.
Land buy up: Multiple cities in Guangdong province have announced plans to use the proceeds from special-purpose bonds (SPDs) to purchase idle land. Between Feb. 6 and 11, cities including Shanwei, Huizhou, and Chaozhou said they intended to acquire 96 parcels worth 28.3 billion yuan ($3.87 billion). The rush reflects competition for Guangdong’s limited SPD allocation. The province has set 303.5 billion yuan of SPD quota for 2025. Most purchases favor state-owned enterprises. Some land was acquired at a premium, but overall, prices averaged 87.5% of original costs.
Corruption probe: Defense executive Liu Weidong, vice president of China South Industries Group Corp. (CSGC), is under investigation for serious disciplinary and legal violations, the Central Commission for Discipline Inspection announced Wednesday. A veteran at Dongfeng Motor Group for 30 years before joining CSGC in 2018, Liu was instrumental in restructuring Shenlong Automobile, a joint venture with PSA Peugeot Citroën. He played a pivotal role in cost-cutting initiatives and in Dongfeng’s widely known $1 acquisition of a 25% stake in Siemens Automotive Electric, helping turn the struggling joint venture around.
Auto consolidation: There are signs of much-needed consolidation in China’s overcrowded auto market. Leading domestic carmakers including BYD, Geely Automobile Holdings Ltd., Chery Automobile Co. Ltd. and Chongqing Changan Automobile Co. Ltd. accounted for a combined 46% of domestic sales and exports in January, according to China Passenger Car Association data. This is up from 38% for the whole of 2024, indicating a rapid rise of the quartet as the dominate players. China’s auto industry has been dogged by a brutal price war post-pandemic, as scores of automakers compete over limited demand. The domestic market remains muted with overall car sales down 12.1% year-on-year in January, despite government initiatives such as trade-in programs fueling some buying.
SMIC earnings: China’s top chipmaker Semiconductor Manufacturing International Corp. (SMIC) (688981.SH) saw revenue increase 27% to $8.03 billion last year, according to its earnings results published Tuesday. It attributed the growth to Beijing’s consumer stimulus measures boosting sales of electronics such as personal computers that use its core mature process chips. SMIC also benefited from increased localization, with customers shifting to domestic production amid heightened geopolitical tensions. But the company also saw profit plunge 45% in 2024 to $492.7 million, “mainly due to the decrease in investment income and financial income.” In the fourth quarter, SMIC booked $2.2 billion in revenue, a year-on-year increase of 31.5%, and recorded a 38.4% drop in net profit to $107.6 million. For 2025, SMIC co-CEO Zhao Haijun expects stronger demand in the first six months as customers bring orders forward amid geopolitical uncertainty and a subsequent downward trend in prices in the second half.
Land sales: Since September, China’s real estate market has shown signs of arresting its decline, and some major cities have auctioned high-premium plots. Land auctions have long been a key source of revenue for local governments, especially during the property boom. Sales plummeted in 2022 following the collapse of the real estate market. Despite the positive signs recently, overall sentiment remains cautious. The transaction prices of most plots have not risen significantly, according to a China Real Estate Information Corp. report, indicating that the current bidding in the industry is still relatively rational.
Surveillance: China has released new rules to regulate the use of surveillance cameras for public security purposes and personal privacy protection. For a country that at conservative estimates has around half a billion surveillance cameras, managing the droves of data its surveillance network collects is a mammoth task. The draft of the rules, released in April 2024, stated that in recent years, cameras in public places had played an important role in combating crimes, strengthening public security, handling emergencies and optimizing urban management. However, there is also lax supervision of the installation of cameras and a problem of arbitrarily collecting and using data, which include billions of images captured using facial recognition software that enables authorities to easily track a person’s movements in an urban area. The Regulations on the Management of Public Security Video Image Information Systems, first drafted in 2016, aims to clarify issues including oversight, construction standards and individuals’ right to review video. The rules take effect April 1.
Compiled by the Caixin newsroom and edited by Jonathan Breen (jonathanbreen@caixin.com)
