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China’s Criticism of CK Hutchison Deal Increases Stakes for TikTok U.S. Sale

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China’s recent criticism of CK Hutchison’s (0001.HK) move to sell its ports business has raised the political stakes for major Chinese business divestments, particularly the potential sale of TikTok’s U.S. assets. This criticism is seen as a precursor to increased scrutiny of deals involving Chinese companies selling to American buyers, analysts suggest.

CK Hutchison’s decision to sell assets near the Panama Canal to a BlackRock-led consortium on March 4 has drawn attention from Beijing, which views the sale as a betrayal of Chinese interests. The Hong Kong and Macau Affairs Office reposted commentaries accusing CK Hutchison of neglecting national interests, with Chinese regulators launching an investigation into the deal. This follows previous concerns from U.S. President Donald Trump, who praised the transaction, calling it a “reclaiming” of the canal.

The political ramifications of CK Hutchison’s sale are seen as a significant indicator of how Beijing might respond to other high-profile sales, such as ByteDance’s potential divestment of TikTok’s U.S. operations. Chinese officials have made it clear that they do not want ByteDance to be forced to sell TikTok to U.S. investors, indicating a broader political sensitivity surrounding Chinese companies’ control over their operations and the potential for U.S. intervention.

China’s reaction to the CK Hutchison deal underscores its attempt to project a strong stance against U.S. pressure while also balancing the desire to maintain diplomatic relations with the United States. As tensions between the U.S. and China continue to escalate, the scrutiny of these high-stakes transactions highlights the complex political and economic dynamics at play.

Baidu Denies Data Breach Amid Controversy Over Executive’s Daughter

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Baidu, one of China’s largest search and cloud service providers, has denied allegations of an internal data breach after the teenage daughter of a senior executive was accused of posting personal information online. The controversy erupted when social media users alleged that the daughter of Baidu vice president Xie Guangjun had leaked private details, including phone numbers, during an online dispute.

In response, Baidu stated that neither employees nor executives have access to user data and that the leaked information originated from illegally obtained databases hosted on foreign platforms. The company also announced that it had filed a police report to counter misinformation, including claims that Xie’s daughter had access to Baidu’s databases.

Xie, a member of Baidu’s cloud division, apologized for his daughter’s actions, asserting that she had acquired the data from overseas social media sites. His statement, reported by Chinese media, was shared on his personal WeChat account.

The incident comes as China tightens data security laws to curb the sale of private information, an issue exacerbated by illicit data brokers. The controversy has impacted Baidu’s stock performance, with shares dropping over 4% in Hong Kong trading on Thursday morning.

CATL Reports Slowest Profit Growth in Six Years Amid Price War in China’s EV Market

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Contemporary Amperex Technology Co. Ltd. (CATL), China’s leading electric vehicle (EV) battery manufacturer, has reported a 15% increase in net profit for 2024, marking its slowest growth in six years. The company’s net profit reached 50.7 billion yuan ($7.01 billion), falling short of its projected growth range of 11.1%-20.1%. Meanwhile, revenue decreased by 9.7%, marking its first revenue decline since it began releasing operating figures in 2015.

CATL attributed the revenue drop to declining battery prices prompted by a price war in China’s EV market, which pressured EV makers to reduce component costs. Despite rising sales volumes, lower prices of raw materials like lithium carbonate resulted in a fall in operating income.

For the fourth quarter, CATL reported a 13.6% increase in net profit to 14.7 billion yuan, down from the 26% growth seen in the previous quarter. Revenue for Q4 shrank by 3.1% to 103 billion yuan, marking the fifth consecutive quarterly decline.

The price war in China’s EV market has forced CATL to adjust its battery prices to defend market share. However, the company benefitted from a 17.6% reduction in the cost of its power battery business, outpacing an 11.3% drop in revenue from this segment.

Globally, CATL solidified its position as the dominant player in the EV battery market, extending its market share to 38% in 2024, up from 36% in 2023, according to SNE Research. BYD followed with 15%, while LGES saw its share fall to 10% from 13%.

CATL experienced faster growth in the energy storage system battery market, which accounted for 22.4% of total shipments, up from 19.4% in 2023. The company has also expanded beyond batteries, unveiling a new EV chassis in December and seeking to enter the power grid sector.

Additionally, CATL is investing internationally, with a 7.3 billion euro battery plant in Hungary to supply automakers such as Mercedes-Benz and BMW, along with a jointly-owned battery plant with Stellantis in Spain. The company is also pursuing a listing in Hong Kong to raise funds for its Hungarian plant, aiming to secure at least $5 billion.