Google has suspended Pinduoduo, a popular Chinese budget shopping app, from its Play Store after finding malware in versions of the app.
In a Tuesday statement, Google said versions of the app that are not in the Play Store have been found to contain malware.
“We have suspended the Play version of the app for security concerns while we continue our investigation,” a Google spokesperson said.
It has also enforced Google Play Protect, which scans apps installed on Android phones for harmful behavior, on the allegedly malicious apps, according to the statement.
“Google Play Protect enforcement has been set to block installation attempts of these identified malicious apps. Users that have malicious versions of the app downloaded to their devices are warned and prompted to uninstall the app,” the spokesperson said.
In a statement to CNN, Pinduoduo said it was informed by Google Play on Tuesday morning that its app had been “temporarily suspended” because the current version is “not compliant with Google’s Policy.” It said Google Play did not share more details.
“We are communicating with Google for more information. We have been told that there are several other apps that have been suspended as well,” a Pinduoduo spokesperson said.
In a later statement Pinduoduo said it strongly rejects “the speculation and accusation that Pinduoduo app is malicious just from a generic and non-conclusive response from Google.”
It reiterated that “there are several apps that have been suspended from Google Play at the same time.”
CNN has asked Google for information on whether other apps have also been suspended.
Malware, short for malicious software, refers to any software developed to steal data or damage computer systems and mobile devices. When hidden in apps, it can be used to gain unauthorized access to information on a user’s phone.
Pinduoduo is one of China’s most popular e-commerce platforms, with approximately 900 million users. It made its name with a group buying business model, allowing people to save money by enlisting friends to buy the same item in bulk.
Riding on the domestic success of Pinduoduo, its US-listed parent company PDD last year launched Temu, an online shopping platform in the United States.
Temu, which runs an online superstore for virtually everything — from home goods to apparel to electronics — has quickly become the most downloaded app in the US for both iOS and Android.
Since its rollout in September, the app had been downloaded 24 million times as of last month, racking up more than 11 million monthly active users, according to Sensor Tower.
Google did not mention Temu in its statement. The app is still available to download on the Play Store.
BEIJING — Money is flowing into mainland Chinese and Hong Kong stocks in ways not seen since 2018, according to research firm EPFR Global.
Active foreign fund managers put $1.39 billion into mainland Chinese stocks in the four weeks ended Jan. 25, EPFR data showed. Active fund inflows into Hong Kong stocks were even greater during that time, at $2.16 billion.
“Active managers have never been this positive toward China markets in the past five years,” said Steven Shen, manager of quantitative strategies at EPFR.
“In the very short term we should be expecting more inflows from the active managers,” he said, pointing to factors such as China’s reopening from zero-Covid. EPFR says it tracks fund flows across $46 trillion in assets worldwide.
Active money managers are more involved with picking portfolio investments, while passive money managers tend to follow stock indexes.
The Shanghai composite gained more than 5% in January, the most since a surge of nearly 9% in November, according to Wind Information. The Hang Seng Index climbed by more than 10% in January, a third-straight month of gains.
The money is coming in faster than it did in early 2022, Shen said. At the time, a few institutional investors had said it was time to buy Chinese stocks due to Beijing’s emphasis on stability in a politically important year.
Back then, local investors had been more cautious. The highly transmissible omicron variant and China’s zero-Covid policy subsequently locked down the city of Shanghai for two months, while constraining business activity in much of the country. In 2022, GDP grew by 3%, one of the slowest paces in decades.
This year, local investor sentiment is also recovering.
“With the macro environment in China I think 2023 we’re going to see a lot more [mainland China] client money shifting back into the market, into the secondary market funds,” Lawrence Lok, chief financial officer of wealth management firm Hywin, said in early January. The secondary market refers to the public stock market.
Lok said those clients last year avoided taking risk due to the turbulent market. The Shanghai and Hong Kong stock indexes plunged more than 15% last year.
For Hywin’s clients with funds outside of China, Lok said they are looking for ways to invest in U.S.-listed Chinese companies or Hong Kong stocks, among other offshore funds.
Hywin had more than 40,000 active clients as of June 2022 and 4.5 billion yuan ($642.9 million) in assets under management.
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While real estate and renewable energy-related sectors are seeing interest, tech has been relatively quiet, EPFR’s Shen said. He said inflows were also less aggressive when it came to U.S.-listed Chinese stocks.
For passive money managers, cumulative net inflows into mainland Chinese, Hong Kong and U.S.-listed stocks stands at $7.05 billion for the four weeks ended Jan. 25, according to EPFR.
U.S.-based money managers who invest for the longer term bought a net $1.3 billion of U.S.-listed Chinese stocks last month as of Jan. 25 — the second-straight month of such inflows, according to Morgan Stanley.
“U.S.-based long-only managers shared that they just started to reduce their underweights on China, or were in discussion with investors to release mandate constraints on China exposure,” Morgan Stanley analysts said. “They expect inflows from asset owners to accelerate in 2Q23.”
Pinduoduo, Baidu and Bilibili were among the U.S.-listed Chinese stocks that saw the largest inflows, the report showed.
However, Bernstein analysts cautioned Chinese stock gains might not run much further if U.S. active investors — who have sat out the rally — and local investors don’t buy in.
The “extreme” inflows of the past three months threaten whether the market rally can continue for the next three months, Bernstein analysts said in a Jan. 27 report. “We believe in the short term, investors need to be more selective while picking China exposure.”
Recent enthusiasm about Chinese stocks also follows a rocky two years in which the abrupt suspension of Ant Group’s IPO, a crackdown on tech and real estate businesses and stringent Covid controls weighed on sentiment.
Bruce Liu, CEO of Esoterica Capital, said in January that while he’s been talking with some affluent Chinese about global diversification since 2019, they didn’t really start to act until the second half of last year. His firm manages under $50 million in assets.
“What happened in the past two years, that left a scar on their mind,” Liu said. “It’s a matter of confidence. I don’t see that confidence coming back yet. At least the people I have been talking to.”
“This is a strategic decision from their perspective,” he said. “Maybe they have enough Chinese assets. It’s more important for them to diversify [globally] rather than take advantage of this current, ongoing coming back.”
The China reopening story isn’t just for capital. Now that the borders are open, some in the investing business are even physically coming into the country.
Taylor Ogan, CEO of Snow Bull Capital, moved with his team of three to Shenzhen, China, in January to open a research office.
“The more we looked at it, we need to be in China simply just for research,” Ogan said. He said many Chinese companies don’t have much English-language material even if they are listed in Hong Kong, and that some giant Chinese public companies told them they hadn’t had any foreign analysts visit them since the pandemic.
“We started seeing that as an opportunity.”
— CNBC’s Michael Bloom contributed to this report.
The central China city of Taiyuan saw its GDP grow by 10.9% year-on-year in the first three quarters of 2022. Pictured here is a screen displaying details of a new factory in the city.
Vcg | Visual China Group | Getty Images
BEIJING — The Chinese economy of 2023 almost definitely won’t look like the Chinese economy of 2019.
In the last month, Beijing suddenly ceased many of the lockdown measures and Covid testing requirements that had weighed on economic growth over the last 18 months. Analysts warn of a bumpy road to full reopening, but they now expect China’s economy to bounce back sooner than previously forecast.
The elements underpinning that growth will almost certainly look different than they did three years ago, according to economists.
China’s growth model is moving from one highly dependent on real estate and infrastructure to one in which the so-called digital and green economy play greater roles, analysts at leading Chinese investment bank CICC said in their 2023 outlook released last month. They cited the ruling Chinese Communist Party’s 20th National Congress emphasis on innovation.
The digital economy category includes communication equipment, information transmission and software. Green economy refers to industries that need to invest in order to reduce their carbon emissions — electric power, steel and chemicals, among others.
Over the next five years, cumulative investment into the digital economy is expected to grow more than sevenfold to reach 77.9 trillion yuan ($11.13 trillion), according to CICC estimates.
That surpasses anticipated cumulative investment into real estate, traditional infrastructure or the green economy — making digital the largest of the four categories, the report said.
In 2021 and 2022, real estate was the largest category by investment, the report said. But the CICC analysts said that this year, investment into real estate fell by about 22% from last year, while that into the digital and green sectors grew by about 24% and 14%, respectively.
Beijing cracked down on developers’ high reliance on debt in 2020, contributing to defaults and a plunge in housing sales and investment. Authorities this year have eased many of those financing restrictions.
While much of the world struggled to contain Covid-19 in 2020 and 2021, China’s swift control of the virus helped local factories meet surging global demand for health products and electronics.
Now, demand is dropping. China’s exports started to fall year-on-year in October — for the first time since May 2020, according to Wind Information.
Next year, a reduction in net exports is expected to cut growth by 0.5 percentage points, Goldman Sachs Chief China Economist Hui Shan and a team said in a Dec. 16 note. Net exports had supported China’s GDP growth over the last several years, contributing as much as 1.7 percentage points in 2021, the analysts said.
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But China’s exports to the Association of Southeast Asian Nations have picked up, surpassing those to the U.S. and EU on a monthly basis in November, according to customs data.
“Exports to ASEAN countries may serve as a mild buffer to the pressures in EU and US markets,” Citi’s China economist Xiaowen Jin and a team said in a note Wednesday. They expect ASEAN’s GDP growth to rebound in 2023, while the U.S. and EU spend part of next year in recession.
Jin pointed out that China’s car exports, especially of electric cars and related parts, helped support overall exports this year.
Beijing has pushed hard to increase the development of the national electric car industry. Many brands from Nio to BYD have started to sell passenger cars to Europe and other countries.
“The rapid deceleration in exports also means China needs to tap into domestic markets for growth over the foreseeable future,” said Hao Zhou, chief economist at Guotai Junan Securities in a Dec. 15 note. “With the easing of Covid restrictions, consumption is likely to see meaningful and sustainable recovery from next year.”
He expects retail sales to rise by 6.8% next year, and national GDP to grow by 4.8%.
Central government policy announcements this month have prioritized boosting domestic consumption. Retail sales have lagged overall growth since the pandemic, while a record share of people have preferred to save.
Goldman Sachs analysts raised their 2023 GDP forecast from 4.5% to 5.2% on the economy reopening sooner than expected, with consumption as the main driver.
However, they cautioned that income and consumer confidence will take time to heal, meaning any release next year of “pent-up demand” may be limited outside of a few categories such as international travel.
Spending among poorer Chinese isn’t keeping pace with how much wealthy Chinese are spending — a contrast to greater uniformity between the groups prior to the pandemic, according to a McKinsey survey this year.
That trend has showed up in companies’ financial results.
In the quarter ended Sept. 30, budget-focused Pinduoduo said revenue from merchandise sales plunged by 31% from a year ago to 56.4 million yuan.
Alibaba‘s China commerce revenue, which include apparel sales, declined by 1% year-on-year to 135.43 billion yuan during that time.
Sales of more expensive items favored by the middle class, including electronics and home appliances, rose at JD.com, which said revenue from such products increased by about 6% to 197.03 billion yuan in the three months ended Sept. 30.
Longer term, McKinsey expects millions of urban households to become more affluent, while the number in the lower income category declines.
Chinese e-commerce giant Alibaba was one of the 100 over companies that had faced the risk of delisting in the U.S. in 2024 if it did not hand over the audits of their financial statements.
Investors could regain the confidence to put their money in Chinese tech stocks as these companies avoid delisting from U.S. stock exchanges and the Chinese government pledges policy support, according to one investment manager.
Investors often grapple with a lack of transparency into Chinese stocks.
“It will allow institutional investors to come back. Professional investors were very scared about this delisting risk which was why they have stayed on the sidelines,” Brendan Ahern, chief investment officer at U.S.-based investment manager KraneShares, told CNBC’s “Squawk Box Asia” on Wednesday.
As of Sept. 30, there were 262 Chinese companies listed on U.S. exchanges with a total market capitalization of $775 billion, according to the United States-China Economic and Security Review Commission.
“With that risk going away based on the PCAOB announcement, you are going to see investment dollars flow back into these names,” said Ahern.
“These internet giants are really where investors want to invest when it comes to China,” said Ahern.
But he also caveated that it is still “early days, weeks, months to see that capital return back into the space.”
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But he also noted policy support will help to boost growth for these companies. Last week, China pledged to raise domestic consumption next year, as the country moves toward boosting growth after exiting its zero-Covid policy.
“2023 is a year where we are going to have a lot of government policy support such as raising domestic consumption,” said Ahern. “About 25% of all retail sales goes through the companies.”
“The Chinese government actually needs these internet companies, which explains why we have seen a backing off on some of the regulatory scrutiny we experienced in 2021,” said Ahern.
Alibaba’s international e-commerce platform AliExpress has expanded in South Korea and Brazil, in addition to Europe. Pictured here is an AliExpress locker in Poland in July 2022.
Nurphoto | Nurphoto | Getty Images
BEIJING — Alibaba‘s international e-commerce business AliExpress is spending the equivalent of $7 million to reach consumers in South Korea, the unit told CNBC in an exclusive interview.
AliExpress said it launched three-to-five-day shipping to South Korea last year, allowing South Korean residents to buy some products, especially in fashion, from Taobao. That’s Alibaba’s main e-commerce site in China.
In all, the business unit said it spent 10 billion won this year in South Korea to lower product prices. The company wants to “make sure we have the best pricing,” said Gary Topp, European commercial and marketing director at AliExpress.
The investment looks to tap a market that’s valued at billions of dollars, and currently dominated by the U.S.
“Although in 2020, the United States was ranked number one, other countries such as China are expanding their presence in the Korean e-commerce market,” the report said, noting South Korean consumers are now buying from more than 30 countries.
From January to September this year, the number of AliExpress app users among South Koreans increased by 22%, Seoul-based independent data analytics company TDI said.
That brought monthly active users in South Korea to a record 2.72 million in September, TDI said.
AliExpress said it didn’t comment on third-party data.
In August last year, AliExpress was already one of the top five sites most-used by South Koreans for buying products directly from overseas sellers, according to the Korea Consumer Agency, a government agency. The other sites were Amazon, iHerb, eBay and Q0010.
In past years, AliExpress focused primarily on reaching the European market. Public disclosures about subsidies focused on making it cheaper and faster for consumers in Spain, France and other European countries to receive packages.
As the company geared up for its big November shopping festival — the Singles Day shopping event leading up to Nov. 11 — it said it will be offering two-day local delivery to customers inSpain and France. This fall, AliExpress began rolling out interest-free installment payment plans for customers in Europe.
During the same quarter, the company’s China commerce retail business saw a 2% year-on-year decline to $20.45 billion. The period was hit by Covid-related disruptions to logistics and supply chains.
