In the news: China reacts to Brexit, issues new online search rules, denies Samsung SDI and LG Chem EV battery certifications and considers lifting caps on foreign carmakers

China issues new web search rules following Baidu probe

The Cyberspace Administration of China issued new rules for online search and advertising on Saturday, about six weeks after it opened an investigation of search giant Baidu Inc.'s practices. The agency now requires companies to provide “objective, fair and authoritative results” that shouldn't harm people's rights and interests, and urges service providers to identify and clearly label paid ads to distinguish them from regular results, as well as limit the number of paid ads on each page. It also demands timely reports and cache information from service providers whenever “illegal” contents are found in results. The regulator had ordered Baidu to implement these measures during the probe (following a student's death related to online medical ads) in early May, giving the company until the end of the month to comply. Baidu said it had done so before the deadline, and pledged to make its search results more reliable as it rebuilds customer trust. This is the latest move in China's efforts to regulate commercial conduct on the Internet, a global trend that appears to be slowly picking up steam. For instance, the U.S. Supreme Court this month rejected Google's appeal of a class action lawsuit involving claims that the company violated California fair advertising laws and misled advertisers.

Samsung SDI and LG Chem denied EV battery subsidies

Samsung SDI Co Ltd. and LG Chem Ltd. failed to get PRC government certification as electric vehicle battery makers, dealing a blow to potential sales volumes. Exclusion from the Ministry of Industry and Information Technology's list of 31 approved companies—mostly domestic—means that manufacturers of electric vehicles using these uncertified batteries will not be eligible for subsidies. Batteries can account for up to half of the total car manufacturing costs. LG Chem, which claims to be the world's largest battery maker, said it would revise its documents and reapply, while Samsung SDI said the move is aimed at strengthening the competitiveness of local companies. The two Korean producers use nickel manganese cobalt batteries, which are considered by some to be superior due to higher energy density and lower costs. Chinese competitors are working aggressively to enhance this technology, and delays in foreign companies getting official certification can prompt Chinese electric vehicle makers to turn to domestic suppliers.

China may lift cap on foreign carmaker stakes

The government may consider removing the 50% cap on stakes foreign car makers can own in joint ventures with Chinese partners, chairman of the National Development and Reform Commission Xu Shaoshi said at the World Economic Forum in Tianjin. The restriction, which has been in place since 1994, has been criticized as shielding state-owned companies from competition and building their own brands. Current policy requires foreign manufacturers to set up plants in China through joint ventures—Ford Motor Co. has partnered with Changan Group in Chongqing, Hyundai Motor Co. works with BAIC Group in Beijing, and Nissan Motor Co. and Tesla Motors Inc. have production bases in Wuhan and Shanghai, respectively. Those that back the idea of allowing foreign brands to control their operations in the world's largest auto market say the move would encourage competition and benefit consumers. But the China Association of Automobile Manufacturers warned that local firms would be “killed in the cradle” if foreign carmakers go independent, highlighting that the restriction is what helps keep domestic players afloat.

China promises stability after Brexit vote

Premier Li Keqiang said at the World Economic Forum in Tianjin on Monday that global uncertainties have increased after the U.K.'s vote to leave the European Union, and that China will be able to maintain medium- to high-speed growth rates with room to apply proactive fiscal measures. The country's minister of finance Lou Jiwei said at the Sunday AIIB annual meeting that the real repercussions of Brexit will emerge in the next five to 10 years. NDRC chairman Xu Shaoshi said that the incident will not have a big impact on China's economy and that government departments have contingency plans in place. Tsinghua University professor and former PBOC advisor Li Daokui also weighed in: “China is perhaps one of the least impacted economies in the world by Brexit.” Initial knee-jerk market reactions sent shockwaves around the world, battering currencies and equities. In comparison, the Chinese renminbi's moves—which are restricted by the central bank—have been relatively small, while stocks in Shanghai even surged 1.5% on Monday. The apparent determination of Chinese leaders to limit the Brexit vote's fallout bodes well for Chinese investors looking at British assets, but the long-term risk outlook will probably deter any massive purchases for now.

China issues new web search rules following Baidu probe

The Cyberspace Administration of China issued new rules for online search and advertising on Saturday, about six weeks after it opened an investigation of search giant Baidu Inc.'s practices. The agency now requires companies to provide “objective, fair and authoritative results” that shouldn't harm people's rights and interests, and urges service providers to identify and clearly label paid ads to distinguish them from regular results, as well as limit the number of paid ads on each page. It also demands timely reports and cache information from service providers whenever “illegal” contents are found in results. The regulator had ordered Baidu to implement these measures during the probe (following a student's death related to online medical ads) in early May, giving the company until the end of the month to comply. Baidu said it had done so before the deadline, and pledged to make its search results more reliable as it rebuilds customer trust. This is the latest move in China's efforts to regulate commercial conduct on the Internet, a global trend that appears to be slowly picking up steam. For instance, the U.S. Supreme Court this month rejected Google's appeal of a class action lawsuit involving claims that the company violated California fair advertising laws and misled advertisers.

Samsung SDI and LG Chem denied EV battery subsidies

Samsung SDI Co Ltd. and LG Chem Ltd. failed to get PRC government certification as electric vehicle battery makers, dealing a blow to potential sales volumes. Exclusion from the Ministry of Industry and Information Technology's list of 31 approved companies—mostly domestic—means that manufacturers of electric vehicles using these uncertified batteries will not be eligible for subsidies. Batteries can account for up to half of the total car manufacturing costs. LG Chem, which claims to be the world's largest battery maker, said it would revise its documents and reapply, while Samsung SDI said the move is aimed at strengthening the competitiveness of local companies. The two Korean producers use nickel manganese cobalt batteries, which are considered by some to be superior due to higher energy density and lower costs. Chinese competitors are working aggressively to enhance this technology, and delays in foreign companies getting official certification can prompt Chinese electric vehicle makers to turn to domestic suppliers.

China may lift cap on foreign carmaker stakes

The government may consider removing the 50% cap on stakes foreign car makers can own in joint ventures with Chinese partners, chairman of the National Development and Reform Commission Xu Shaoshi said at the World Economic Forum in Tianjin. The restriction, which has been in place since 1994, has been criticized as shielding state-owned companies from competition and building their own brands. Current policy requires foreign manufacturers to set up plants in China through joint ventures—Ford Motor Co. has partnered with Changan Group in Chongqing, Hyundai Motor Co. works with BAIC Group in Beijing, and Nissan Motor Co. and Tesla Motors Inc. have production bases in Wuhan and Shanghai, respectively. Those that back the idea of allowing foreign brands to control their operations in the world's largest auto market say the move would encourage competition and benefit consumers. But the China Association of Automobile Manufacturers warned that local firms would be “killed in the cradle” if foreign carmakers go independent, highlighting that the restriction is what helps keep domestic players afloat.

In the news: China reacts to Brexit, issues new online search rules, denies Samsung SDI and LG Chem EV battery certifications and considers lifting caps on foreign carmakers

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