Chinese tech giant Baidu Inc on Wednesday reported better-than-expected financial results for the 2023 fiscal year, with a rise in total revenue and non-GAAP (generally accepted accounting principles) net income.
For the 2023 fiscal year, Baidu generated total revenue of 134.6 billion yuan ($18.96 billion), an increase of 9 percent year-on-year, and non-GAAP net income totaled 28.7 billion yuan ($4.04 billion), up 39 percent year-on-year.
Both revenue and non-GAAP net income beat market expectations, according to the Securities Times.
For the final quarter of 2023, Baidu generated revenue of about 35 billion yuan, up 6 percent year-on-year. Non-GAAP net income during the period reached about 7.76 billion yuan, representing a year-on-year increase of 44 percent.
The company said ERNIE, Baidu's generative artificial intelligence (Gen-AI) product, has already started to contribute to Baidu's revenues. In 2024, incremental revenue will increase to billions of yuan, mainly from AI applications and a growing advertising business.
The remarks came after figures showed that AI has become a new growth driver for Baidu. Baidu AI Cloud's total revenue in the fourth quarter was 8.4 billion yuan, and AI large language models brought in approximately 660 million yuan in incremental revenue to the cloud business, Robin Li Yanhong, co-founder and CEO of Baidu, said during a conference call on Wednesday.
According to Li, the company has made great strides in advancing ERNIE and ERNIE Bot, reinventing its products and services, and achieving breakthroughs in monetization. "Meanwhile, our core business has maintained its resilience and realized a healthy growth momentum," he said.
"Looking ahead, our commitment to generative AI and foundation models remains unwavering, paving the way for the gradual creation of a new growth engine," said Li.
Baidu Core also reported another solid quarter, with revenue growing 7 percent year-on-year to 27.5 billion yuan, boosted by the AI cloud business. Online marketing revenue reached 19.2 billion, up 6 percent year-on-year.
After the financial results were released, Morgan Stanley called Baidu the "best AI player in China," saying the company's generative AI will become a mid-term growth driver. China Merchants Bank predicted that the operating margin of its cloud business could continue to expand in 2024.
The allegation of "forced labor" in Northwest China's Xinjiang Uygur Autonomous Region is a huge lie, the Chinese Foreign Ministry said on Tuesday, urging the US to immediately stop smearing China, stop intervening in China's internal affairs, and stop politicizing and weaponizing trade issues.
Chinese Foreign Ministry spokesperson Mao Ning made the remarks at a regular press briefing in Beijing, responding to media reports saying that the US Department of Homeland Security is intensifying scrutiny of supply chains of American solar companies as the Biden administration mulls to tighten a ban on products assembled in Xinjiang.
The Chinese side has repeatedly pointed out that the allegation of "forced labor" in Xinjiang is a huge lie. The US uses the so-called "forced labor" issue, which does not exist in Xinjiang, which often results in "forced unemployment" in Xinjiang, Mao said.
US' move has severely undermined the basic human rights of the people of all ethnic groups in Xinjiang, violated international trade rules and disrupted international industrial and supply chains, the spokesperson said.
Mao said the US must immediately stop smearing China, stop intervening in China's internal affairs under the pretext of human rights, and stop politicizing and weaponizing trade issues.
The consumption made during China's traditional Lantern Festival, which is seen as a conclusion to the two-week celebration of the Chinese Lunar New Year, extended the buying fever seen in the Spring Festival holidays, data from various Chinese platforms showed.
The holiday spending fever together with a stock market rally mark a strong start of the country's economic growth for the year. The robust data is expected to strengthen expectations, boost market confidence, and further support China's economic growth for the year, experts said.
Consumption fever
The Lantern Festival which falls on Saturday this year saw people from all over the country enthusiastically engaged in attending lantern fairs, enjoying night tours, having short-distance travel, continuing the strong consumption momentum that has been seen during the Chinese New Year holidays.
As of Friday, the booking volume of hotels nationwide during the Lantern Festival period has increased by 2.6 times compared to 2023, and the sales volume of tickets for national scenic spots also increased by 90 percent, according to domestic travel platform Qunar.com.
Data on Trip.com showed that over the weekend the booking for domestic travel increased by over 140 percent compared to last year, with bookings for nearby trips seeing growth of over 200 percent.
The search for yuanxiao, a festive sweet-favored glutinous rice ball to celebrate the Lantern Festival, has soared more than 425.6 percent from a year ago, according to online retail platform Meituan. Innovative items such as chocolate-filled yuanxiao and coffee-flavored yuanxiao are particularly trendy this year.
Apart from yuanxiao, the search for lantern fairs has grown by 720 percent compared to a year ago, according to Meituan.
The rising cultural and tourism consumption and demand for innovative products showed an increasing trend in China's consumption market, Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Sunday.
It is expected that this trend will lead to an increase in China's consumption volume and quality in 2024, Cong said.
The spending fever during the Lantern Festival extended the momentum of the Chinese New Year holidays which saw record travel data and holiday spending.
During the eight-day Chinese Lunar New Year holidays, 474 million domestic trips were made, up 34.3 percent year-on-year, and total domestic tourism spending jumped by 47.3 percent year-on-year to about 632.69 billion yuan ($87.95 billion), according to data released by the Ministry of Culture and Tourism.
The spokesperson for China's Ministry of Commerce (MOFCOM) He Yadong said at a regular press conference held on Thursday that China has seen a boom in consumption during the Spring Festival holidays, making a good start to 2024.
During this year's Spring Festival holidays, the sales of key retail and catering enterprises nationwide increased by 8.5 percent year-on-year on a comparable basis. It is expected that the consumption market will maintain a stable growth trend in the first quarter, He said.
The consumption boom during the Spring Festival period showcases the vitality unleashed by the Chinese economy and also serves as a rebuttal to some foreign media's negative portrayal of the Chinese economy, experts said.
The surge in consumer spending during Chinese New Year holidays and the Lantern Festival signifies a growing optimism among consumers about the future economy, leading to an increase in their willingness to spend, Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, told the Global Times on Sunday.
China's stock market also witnessed a strong rally during the period, boosted by warming consumption and regulatory measures aimed at reviving the market.
The Shanghai Composite Index rose for eight consecutive days as of Friday closing, recovering all losses in the year 2024 and surpassing the 3000-point mark. Around 300 stocks saw gains of over 30 percent last week, the Securities Times reported.
"The sustained upward trend in the stock market will attract more capital inflows, which will support corporate financing and facilitate expansion of production capacities, further stimulating economic growth in the coming months,'' Wang said.
Bright outlook
The surge in consumption during the Spring Festival is expected to have a significant impact on China's GDP growth in the first quarter of 2024, setting the stage for a strong economic recovery throughout the year and beyond.
The consumption is expected to grow by 6 percent in the first quarter, leading the nation's GDP to grow at above 5 percent in the first quarter, Tian Yun, a veteran economist based in Beijing, told the Global Times.
In order to further spur economic growth, Chinese officials have convened meetings and rolled out various pro-growth measures days after the Spring Festival, with the focus on issues such as boosting market confidence and improving efficiency.
Right after the Chinese New Year holidays, China's central bank on Tuesday cut its five-year-plus loan prime rate by 25 basis points, the largest one-time rate reduction in years, adding fuel to the hot consumer spending during the holiday and injecting sustainable momentum into the consumer market.
Chinese Premier Li Qiang on Friday chaired a State Council executive meeting and called for greater efforts to attract and utilize foreign investment.
On the same day, the MOFCOM said that in January, foreign investors set up 4,588 new foreign-funded enterprises, a year-on-year increase of 74.4 percent against the backdrop of last year's sustained growth.
More measures to stabilize economic growth, including increasing infrastructure investment, creating jobs, improving the business environment, and promoting industrial innovation could be expected, Wang said.
While a national GDP growth target will not be released until the national two sessions scheduled to be held in early March, major provincial-level economic powerhouses, including Shanghai and South China's Guangdong, eye a growth rate of about 5 percent or higher.
Anchoring the goal of building a financial powerhouse, China on Tuesday reiterated its determination to strengthen financial regulation with “teeth and thorns” and enhance the “regulation of the regulators.”
In an article published on the People’s Daily on Tuesday, the Office of the Central Financial Commission and the Central Financial Work Commission, two crucial bodies in China’s financial policymaking, jointly emphasized the need to ensure financial stability through stringent and solid regulation and to enhance regulatory capabilities.
It is crucial to strengthen regulation with “teeth and thorns”, push for strict enforcement of laws, and to establish a sound regulatory accountability mechanism, enhancing the “regulation of the regulators.”
The article emphasizes the need to safeguard financial security through prudent and effective risk prevention and control. It advocates adhering to the principle of “maintaining overall stability, coordinating policies, implementing targeted measures, and precisely defusing risks.”
This approach involves handling existing risks prudently, strictly preventing new risks, and effectively preventing and defusing financial risks in key areas in a powerful, orderly, and effective manner.
Enhancing regulation with “teeth and thorns” is of great significance. Through continuous supervision of financial institutions and markets, potential risks can be detected and resolved in a timely manner, thus preventing the occurrence of financial crises, Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, told the Global Times on Tuesday.
It is also beneficial for maintaining market order and protecting consumer rights, Wang said.
Currently, it is imperative to enhance financial regulation. On the one hand, with the continuous emergence of financial technology and innovative products, traditional regulatory measures may be difficult to cope with new risks; while on the other hand, some financial institutions may exploit regulatory loopholes or differences between different regulatory systems to engage in arbitrage, thus circumventing regulatory requirements, Wang noted.
Additionally, as global financial markets become more interconnected, China needs to strengthen regulatory measures to enhance the stability and international competitiveness of its financial system, Wang said.
Over recent months, China’s financial regulatory authorities have repeatedly mentioned the need to focus on strong and strict supervision, and resolutely aiming for regulation with “teeth and thorns.”
The National Financial Regulatory Administration held a work conference on January 30, vowing to enhance regulation, firmly safeguard the bottom line of preventing systemic financial risks, solidly promote high-quality financial development, and steadfastly follow the path of financial development with Chinese characteristics.
The article on Tuesday also noted that it is essential to deeply understand that the fundamental purpose of building a financial powerhouse is to serve the goal of achieving Chinese modernization.
China called on cities to implement and adjust policy tools in real estate sector based on local conditions, China's Ministry of Housing and Urban-Rural Development (MOHURD) announced on Friday, in order to achieve positive results effectively and a steady development of the sector.
Officials from the ministry made the remarks during a meeting held on Friday, which aimed to deploy a coordination mechanism targeting urban real estate financing, a move to promote the collaboration between developers and financial firms, according to a report by China Construction News.
The meeting was held following the National Financial Regulatory Administration (NFRA) announcing on Thursday plans to step up efforts to support the real estate sector and meet the reasonable financing demand of developer companies.
During the meeting, officials from MOHURD flagged granting cities autonomy to adjust local real estate sector, and implement different policies that are suitable to local market condition, according to the report.
In addition, the meeting also vowed to support real estate developing programs by the coordination mechanism, treat developers in various ownerships equally by approving their reasonable financing demand.
China's policymakers have been making efforts in addressing financing issues among real estate developers, which was mentioned during a central economic work conference held last December.
Xiao Yuanqi, a deputy director of the NFRA, said during the press conference on Thursday that the financial sector has an undeniable responsibility to provide support to the real estate industry, which has a long supply chain and wide-ranging implications for the national economy, as well as being intertwined with people's lives.
MOHURD vowed to accelerate the issuance of loan to developers and enhance supervision to ensure the utility of the loan, adding that a first issuance of real estate programs will be finalized by the end of January.
The reported visit to China by a delegation of senior Japanese business leaders, led by Shindo Kosei, head of the Japan-China Economic Association, comes in time to strengthen communication and coordination in order to stabilize bilateral economic relations. According to Japanese media outlets, this is Japanese business leaders' first visit to China in approximately four years.
Given the complex geopolitical situation where the "decoupling from China" theory continues to cloud regional supply chains, especially regarding cooperation in high-tech industries like semiconductors and electric vehicle batteries, enhanced communication itself is a positive sign for bilateral cooperation.
As a restructuring of the Asian industry chain seems to have accelerated amid global economic uncertainty, some challenges constrain the development of bilateral trade and investment. China's overall exports to Japan dropped 8.4 percent year-on-year in 2023 while imports from Japan declined 12.9 percent.
The Japanese Chamber of Commerce and Industry in China recently published figures showing 48 percent of Japanese companies surveyed in China said that they had reduced their investment in China in 2023 compared to the previous year, or had not invested any further.
It is necessary to analyze the potential problems facing bilateral economic cooperation and maintain high-level exchanges, dialogue and communication between China and Japan. Hopefully, the delegation led by Shindo Kosei could help stabilize bilateral economic relations.
China and Japan have recently encountered some setbacks in their economic relationship, and the Japanese side should be held responsible. For instance, it is reasonable for China to suspend imports of aquatic products originating from Japan to prevent risks from Japan's dumping of nuclear-contaminated wastewater. Some Japanese people may want to turn China's ban on aquatic product imports into an issue of geopolitics and pressure China to resume imports, but it's impossible to solve problems by politicizing economic issues.
In another example, Japanese restrictions on exports of advanced chipmaking equipment reportedly took effect in July, 2023, in line with US-led efforts to stymie China's ability to develop high-end semiconductors. Clearly, this has a negative impact on Japan's exports to China. Japan should shoulder more responsibility in stabilizing trade, investment and economic cooperation with China.
Chinese officials have repeatedly stressed that China will always welcome foreign companies, including Japanese firms, to invest and operate in China. However, it seems that some Japanese companies are still skeptical about China's sincerity in attracting foreign investment. China's revised counter-espionage law took effect in July to safeguard national security, but some media reports raised unnecessary concerns about "arbitrary enforcement."
In the face of domestic and external uncertainties, it is normal that China's plan to make itself a better investment destination is unlikely to be realized as smoothly as we imagined. Japan and China should make a concerted effort to manage bilateral economic relations with great care, strengthen communication and eliminate misunderstandings.
Economic complementarity between China and Japan is likely to be enhanced as China steps up efforts in technological innovation and moves up the value chain. With China's technological advancement, there is great potential for China-Japan economic cooperation in high-end manufacturing industries such as semiconductors and electric vehicle batteries. Hopefully, such cooperation won't be affected by geopolitical issues and unnecessary concerns about China's counter-espionage law.
Undoubtedly, efforts to stabilize China-Japan economic relations are in line with the interests of Japanese enterprises. The report by the Japanese Chamber of Commerce and Industry in China showed that about half of the companies surveyed still thought China was the most important market globally or among the top three most important in 2024.
China is Japan's largest trading partner, and one of the biggest investment destinations for Japanese companies. China and Japan could complement one another in economic modernization despite their differences. Hopefully, the Japanese business delegation led by Shindo Kosei could give a boost to economic cooperation.
While electricity trade between India and Nepal appears to give the former a commanding advantage against China in Nepal's hydropower sector, there is also growing concern as to whether India's geopolitical game of edging China out could jeopardize Nepal's power projects and energy supply ambitions.
Due to a strategic policy change that India implemented in 2018, India has outpaced China in securing hydropower contracts in Nepal, BNN Breaking reported on Monday.
Media attention to the competition for influence in Nepal's hydropower sector came a few days after Nepal and India reportedly signed a power trade agreement for Kathmandu to export 10,000 megawatts of hydroelectricity to India over the next 10 years, according to Reuters.
Since the hydropower sector in the Himalayan nation has been considered a crucial arena for geopolitical tussles between India and China, the development was touted by some Indian and Western media outlets as evidence of India's growing influence in the region.
Objectively speaking, it is a welcome development that India and Nepal are moving toward strengthening their power trade, which is in the interests of both sides, but that doesn't necessarily mean that Nepal's development should fall victim to India's geopolitical maneuvers.
Indeed, India's power trade policy, which prohibits the purchase of electricity produced by projects invested by Chinese companies, has cast a shadow on the investment dynamics of Nepal's energy infrastructure.
In 2018, India changed its electricity buying policy to prevent the purchase of power produced via the investment of nations with which it does not have a "bilateral agreement on power sector cooperation." Although it didn't explicitly mention China, hydropower produced by Chinese-funded or Chinese-built plants is actually excluded in power trade with Nepal. As a result, Nepal has removed Chinese developers from six hydropower projects and given four hydro contracts to Indian companies, Reuters reported in May 2023, citing an industrial official in Nepal.
Indian companies have contracts to build and operate 10 hydropower plants in Nepal, while Chinese developers have such contracts for five of them, according to media reports.
The reason why India's power purchase policy can have such great influence on Nepal is because its power supply has undergone dramatic changes over the past decade, and its generation capacity is now enough to meet domestic needs.
This also means that Nepal needs to find overseas markets for its surplus electricity during the rainy season, with India and Bangladesh being the target markets. Because of its geographical location, even the power trade between Nepal and Bangladesh requires India's participation.
But such trade needs should not be tools used to exclude other participants for geopolitical interests. It is nothing but narrow-minded for a regional power to be obsessed about the geopolitical significance of its neighbors while neglecting their development needs.
This approach won't gain positive regional influence for India. Specifically, given the past and current situation of Indian companies' hydropower projects in Nepal, it is questionable whether India has the ability to support Nepal's hydroelectric development, which reportedly has the potential to produce 72,000 megawatts of hydroelectricity.
By comparison, Chinese companies' contributions to Nepal's hydropower development are evident. With the participation and support of Chinese companies, Nepal has turned into a net exporter of electricity.
China has not only invested in hydropower projects in Nepal, but it has also discussed a cross-border transmission line with Nepal, which may be a solution to Nepal's export needs.
Still, it is our sincere hope that India can have a more open-minded attitude toward Chinese investment in Nepal. If geopolitics is set aside, it will find that there is cooperation space between China and India on this issue, which is beneficial for all parties in the region.
China has construction and technological advantages in hydropower projects, and Nepal's hydropower development, if smooth, will benefit India and Bangladesh.
In addition to hydropower projects, China and Nepal also have cooperation involving other infrastructure projects, which are also beneficial for regional development, such as the China-Nepal railway that is intended to greatly improve connectivity in South Asia. It would be a pity if India only saw these developments as part of its geopolitical competition with China.
If India is really concerned about its influence in the region, it is advised to invest more and help Nepal and other regional countries with infrastructure development, promoting regional economic prosperity.
The development of South Asia now hinges to a large extent on whether India can adopt a cooperative attitude in the face of the regional needs. This is also the common wish of many countries in the region.
China's Ministry of Commerce (MOFCOM) has approved graphite export applications from multiple entities, a ministry spokesperson said on Thursday, reiterating that its export control mechanism is not a ban.
Exercising exports control measures on certain graphite products is of common international practice and the China's export control rules are aimed at fulfilling international non-proliferation obligations and safeguarding China's national security and interests, ministry spokesperson He Yadong told a press briefing on Thursday.
He made the remarks in response to reports that some Chinese graphite exporters are cleared to export their products to major South Korean battery companies.
China in October announced plans to optimize export controls on some categories of graphite, a key material in making electric vehicle battery, with new rules taking effect on December 1. The export of artificial graphite materials and related products with high purity, high strength and high density, as well as natural flake graphite and associated products, are subject to the new rules.
Due to China's critical role in the global graphite supply chain, the export control measures received immediate attention abroad.
He emphasized that China's export control measures should not been seen as outright export ban and the ministry has approved a number of graphite export applications that that comply with relevant regulations.
The ministry will continue to review other license applications and make decisions in accordance with legal procedures, He said.
Experts said China's export control rules on certain graphite items are restrained and professional and are in line with international practice.
Earlier, the ministry said that China remains committed to maintaining the security and stability of the global industrial and supply chains.
A judge who has just decided that an AI-generated image in an intellectual property dispute was an artwork protected by copyright laws said she is in favor of the innovative development of generative AI and encourages people to use AI tools to be creative.
The remarks were made after the ruling by the Beijing Internet Court in order to encourage the creation of new works, said Zhu Ge, the presiding judge at a public event held in Beijing.
The essentials of people using AI models to generate images are that people use tools to make a creation. In this sense, the creators have the copyright over the generated images and they are protected by copyright law, she said, domestic media outlet thepaper.cn reported on Monday.
The court recognized in December 2021 that pictures generated via AI image generators should be considered artworks and can be copyrighted based on the originality and intellectual input of their human creators, in this case, the plaintiff surnamed Li.
The court therefore required the defendant to issue a public apology and pay the plaintiff 500 yuan ($70.16) in compensation.
The ruling, the country's first case of its kind, is believed to show Beijing's fresh support for AI-driven creativity. It has also responded to questions about whether an AI-generated image is an artwork protected by copyright law, and whether it is regarded as the intellectual output of its human creator.
Against this backdrop, Zhu said the court considered the impact it is likely to have on the development of the AI industry.
Zhu said that the court has fully discussed issues related to the legal attributes and ownership of the AI image generator under the framework of Chinese law, hoping that the case will provide a reference for judgments in similar cases, as well as subsequent AI-related legislation, although it doesn't necessarily mean that all the generative AI-related cases can resort to the same judgment.
Whether AI-generated work can be protected by copyright should be decided on a case-by-case basis, she said.
