Finance

Chinese smartphones tout AI ahead of Apple Intelligence launch

Published

5 months ago

October 23, 2024

Chinese smartphone company Honor on Wednesday revealed new AI features. Pictured here is CEO George Zhao speaking in Shanghai on June 26, 2024.

Nurphoto | Nurphoto | Getty Images

Meta's revenue has room to run despite all their AI spending, says Jefferies' Brent Thill

Honor, a spinoff from Huawei that focuses on higher-end devices, revealed Wednesday the latest version of its Android-based Magic operating system would focus on AI as an assistant.

A company demo showed how even with a vague voice command — such as “I’m tired, order something” — the phone was able to automatically order coffee without requiring the user to touch the device. It used AI to mimic actions on a touchscreen. Human intervention was only needed to complete the payment.

The AI assistant could also identify documents and send them to contacts, or make calls via social media app WeChat, all without requiring the user to touch the phone.

For devices in China, Honor works with Baidu and other Chinese companies for some AI functions, while developing others on its own. Honor works with Google for devices sold overseas.

The new AI features are slated for release on Honor’s forthcoming Magic 7 smartphone, due for launch on Oct. 30. Honor plans to roll out AI capabilities to all its devices by the first few months of next year.

The Magic 7 will use Qualcomm‘s newly announced Snapdragon Elite 8 chip for phones. Honor on Monday had teased its new AI features at the chipmaker’s annual event.

Chinese home appliance and smartphone company Xiaomi will also launch a new phone this month that uses Qualcomm’s Snapdragon Elite 8 chip. Xiaomi has been less vocal about its AI features for smartphones.

The AI features have climbed to a new level, Toby Zhu, senior analyst, Canalys, said in a phone interview Wednesday after Honor’s event. He said the new features have greater potential to convince consumers to switch to another device.

“Apple faces challenges in China but from our data it won’t face a significant decline,” he said in Mandarin, translated by CNBC.

Apple’s falling China sales

Honor, Xiaomi and Huawei have all launched foldables, a category Apple has yet to enter.

About 17% of Apple’s revenue came from Greater China in the quarter ended June 29. That’s down from 19% in the year-ago period. Apple is scheduled to release quarterly results on Oct. 31 local time.

Apple CEO Tim Cook met with China’s Minister of Industry and Information Technology Jin Zhuanglong on Wednesday to discuss data security and cloud services, according to the ministry. Apple did not immediately respond to a CNBC request for comment.

Since launching on Sept. 20, Apple’s iPhone 16 Pro Max has dropped slightly in value on second-hand shopping platform Xianyu. The device was selling between 8,000 Chinese yuan ($1,122) and 10,000 yuan Wednesday, compared with 10,500 yuan to 16,300 yuan last month.

Huawei had launched its trifold Mate XT on the same day. As of Wednesday, second-hand prices for the device had dropped to the mid-20,000 yuan range, nearly half the price it was selling for on Sept. 20.

— CNBC’s Dylan Butts and Sonia Heng contributed to this report.

Finance

China’s response to U.S. tariffs will likely focus on stimulus, trade

Published

3 hours ago

April 3, 2025

Business Finance News

Chinese national flags flutter on boats near shipping containers at the Yangshan Port outside Shanghai, China, February 7, 2025.

Go Nakamura | Reuters

BEIJING — China’s reaction to new U.S. tariffs will likely focus on domestic stimulus and strengthening ties with trading partners, according to analysts based in Greater China.

Hours after U.S. President Donald Trump announced additional 34% tariffs on China, the Chinese Ministry of Commerce called on the U.S. to cancel the tariffs, and vowed unspecified countermeasures. The sweeping U.S. policy also slapped new duties on the European Union and major Asian countries.

Chinese exports to the U.S. this year had already been hit by 20% in additional tariffs, raising the total rate on shipments from China to 54%, among the highest levied by the Trump administration. The effective rate for individual product lines can vary.

But, as has been the case, the closing line of the Chinese statement was a call to negotiate.

“I think the focus of China’s response in the near term won’t be retaliatory tariffs or such measures,” said Bruce Pang, adjunct associate professor at CUHK Business School. That’s according to a CNBC translation of the Chinese-language statement.

Instead, Pang expects China to focus on improving its own economy by diversifying export destinations and products, as well as doubling down on its priority of boosting domestic consumption.

Watch for cascading tariffs as tariffs reroute trade within Asia, says economist

China, the world’s second-largest economy, has since September stepped up stimulus efforts by expanding the fiscal deficit, increasing a consumption trade-in subsidy program and calling for a halt in the real estate slump. Notably, Chinese President Xi Jinping held a rare meeting with tech entrepreneurs including Alibaba founder Jack Ma in February, in a show of support for the private sector.

The policy reversal — from regulatory tightening in recent years — reflects how Beijing has been “anticipating the coming slowdown or even crash in exports,” Macquarie’s Chief China Economist Larry Hu said in a report, ahead of Trump’s latest tariff announcement. He pointed out that the pandemic-induced export boom of 2021 enabled Beijing to “launch a massive regulatory campaign.”

“My view stays the same,” Hu said in an email Thursday. “Beijing will use domestic stimulus to offset the impact of tariffs, so that they could still achieve the growth target of ‘around 5%.'”

Instead of retaliatory tariffs, Hu also expects Beijing will focus on still using blacklists, export controls on critical minerals and probes into foreign companies in China. Hu also anticipates China will keep the yuan strong against the U.S. dollar and resist calls from retailers to cut prices — as a way to push inflationary pressure onto the U.S.

China’s top leaders in early March announced they would pursue a target of around 5% growth in gross domestic product this year, a task they emphasized would require “very arduous work” to achieve. The finance ministry also hinted it could increase fiscal support if needed.

About 20% of China’s economy relies on exports, according to Goldman Sachs. They previously estimated that new U.S. tariffs of around 60% on China would lower real GDP by around 2 percentage points. The firm still maintains a full-year forecast of 4.5% GDP growth.

Changing global trade

What’s different from the impact of tariffs under Trump’s first term is that China is not the only target, but one of a swath of countries facing hefty levies on their exports to the U.S. Some of these countries, such as Vietnam and Thailand, had served as alternate routes for Chinese goods to reach the U.S.

At the Chinese export hub of Yiwu on Thursday, businesses seemed nonchalant about the impact of the new U.S. tariffs, due to a perception their overseas competitors wouldn’t gain an advantage, said Cameron Johnson, a Shanghai-based senior partner at consulting firm Tidalwave Solutions.

He pointed out that previously, the U.S. had focused its trade measures on forcing companies to remove China from their supply chains and go to other countries. But Chinese manufacturers had expanded overseas alongside that diversification, he said.

“The reality is this [new U.S. tariff policy] essentially gives most of Asia and Africa to China, and the U.S. is not prepared,” Johnson said. He expects China won’t make things unnecessarily difficult for U.S. businesses operating in the country and instead will try harder to build other trade relationships.

Since Trump’s first four-year term ended in early 2021, China has increased its trade with Southeast Asia so much that the region is now Beijing’s largest trading partner, followed by the European Union and then the U.S.

The 10 member states of the Association of Southeast Asian Nations (ASEAN) joined China, Japan, South Korea, Australia and New Zealand in forming the world’s largest free trade bloc — the Regional Comprehensive Economic Partnership (RCEP) — which came into being in early 2022. The U.S. and India are not members of the RCEP.

“RCEP member countries will naturally deepen trade ties with one another,” Yue Su, principal economist, China, at the Economist Intelligence Unit, said in a note Thursday.

“This is also partly because China’s economy is likely to remain the most — or at least among the most—stable in relative terms, given the government’s strong commitment to its growth targets and its readiness to deploy fiscal policy measures when needed,” she said.

Uncertainties remain

The extent to which all countries will be slapped with tariffs this week remains uncertain as Trump is widely expected to use the duties as a negotiating tactic, especially with China.

He said last week the U.S. could lower its tariffs on China to help close a deal for Beijing-based ByteDance to sell TikTok’s U.S. operations.

But the level of new tariffs on China was worse than many investors expected.

“Unlike some of the optimistic market forecasts, we do not expect a US-China bilateral grand bargain,” Ting Lu, chief China economist at Nomura, said in a note Thursday.

“We expect tensions between these two mega economies to worsen significantly,” he said, “especially as China has been making large strides in high-tech sectors, including AI and robotics.”