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Next China: Xi gets serious

Next China
Bloomberg

Few skylines have sprung up as rapidly as Shenzhen's. The once-sleepy fishing village is now home to technology giants such as Huawei, Tencent and drone-maker DJI. 

This year, the Southern Chinese city marked the 40th anniversary of being turned into a Special Economic Zone, and President Xi Jinping came by this week to wish it a happy birthday. But more significantly, Xi used the occasion to get serious on one of his grandest economic goals yet.  

The Shenzhen skyline.

Photographer: Justin Chin/Bloomberg

Shenzhen is at the heart of Xi's plans for the Greater Bay Area, a region that would blend the city with neighboring Hong Kong and Macau to form a megalopolis resembling what would happen if the U.S. were to fuse Silicon Valley, New York and Las Vegas into one. Illustrating the importance of the event, Hong Kong Chief Executive Carrie Lam abruptly postponed her annual policy address to attend the birthday bash.  

Xi's speech was light on details — as is usually the case with these things — but it's clear that China's most powerful leader since Mao Zedong has given local authorities their marching orders to accelerate plans to make a technology hub (Shenzhen), a financial center (Hong Kong) and a gambling enclave (Macau) add up to something greater than the sum of its parts. So stay tuned for a barrage of policy announcements on this front in the coming months and years. 

$10 Trillion

China's stock market exceeded $10 trillion for the first time since 2015 after Beijing's success in taming the country's coronavirus epidemic. The strengthening yuan helped buoy the value of domestic equities by $3.3 trillion since March. To put this year's rally into context, that's more than the size of the U.K.'s economy. Meanwhile, the yuan steadied after investors shrugged off a freak tumble of the currency on Monday. Some traders, who initially suspected Chinese authorities were deliberately trying to weaken the renminbi, later blamed the move on poor liquidity and a dollar short squeeze. 

Ever-Shrinking?

Debt-Laden China Evergrande, fresh from overcoming a liquidity scare last month, continues to rattle investors. The developer's shares are on course for their worst weekly drop since March after the company raised only about half of what it intended in a share sale. Creditors are also showing signs of becoming increasingly nervous about their exposure to the group, though one of its units managed to complete a bond sale successfully. 

Evergrande's billionaire chairman, Hui Ka Yan

Photographer: Anthony Kwan/Bloomberg

The troubles faced by Evergrande, headed by billionaire Hui Ka Yan, evoke memories of other notorious Chinese empire builders that borrowed beyond their means to satisfy grand ambitions. The group accumulated more than

835 billion yuan ($124 billion) in debt as of June after Hui invested in everything from soccer clubs to spring-water companies and electric cars. That's 40% more than what HNA ever racked up during its spectacular rise and fall. 

Mulan Flops Again

China's Gold Valley Films accomplished the seemingly impossible by churning out a worse version of the Mulan classic than Walt Disney's $200 million remake. Gold Valley's animated film, called Kung Fu Mulan, was reportedly pulled from Chinese theaters within three days after the movie bombed at the box office and drew ridicule from online reviewers. The flop could serve as a small consolation for Disney, which may end up losing money on its controversial adaption of the 1,500-year-old poem. Though the entertainment giant hasn't disclosed how many people forked over $30 each to watch the film on the Disney+ streaming service, it appears to have fallen well short of breaking even. 

Disney's Mulan

Source: Disney

What We're Reading

And finally, a few other things that caught our attention:

 

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