Finance

The world’s second-largest economy has remained under pressure from a real estate slump and tepid consumer confidence.
“We believe the risk that China will miss the ‘around 5%’ full-year GDP growth target is on the rise, and thus the urgency for more demand-side easing measures is also increasing,” Goldman Sachs analysts said in a report.
“The current policy to stabilize the property market is clearly not enough,” said Xu Gao, Beijing-based chief economist at Bank of China International.

Local residents with umbrellas walk out of a metro station in rain during morning rush hour on September 20, 2024 in Beijing, China. 
China News Service | China News Service | Getty Images

BEIJING — More economists are calling for China to stimulate growth, including those based inside the country.
China should issue at least 10 trillion yuan ($1.42 trillion) in ultra-long government bonds in the next year or two for investment in human capital, said Liu Shijin, former deputy head of the Development Research Center at the State Council, China’s top executive body.

That’s according to a CNBC translation of Liu’s Mandarin-language remarks available on financial data platform Wind Information.
His presentation Saturday at Renmin University’s China Macroeconomy Forum was titled: “A basket of stimulus and reform, an economic revitalization plan to substantially expand domestic demand.”
Liu said China should make a greater effort to address challenges faced by migrant workers in cities. He emphasized Beijing should not follow the same kind of stimulus as developed economies, such as simply cutting interest rates, because China has not yet reached that level of slowdown.

After a disappointing recovery last year from the Covid-19 pandemic, the world’s second-largest economy has remained under pressure from a real estate slump and tepid consumer confidence. Official data in the last two months also points to slower growth in manufacturing. Exports have been the rare bright spot.
Goldman Sachs earlier this month joined other institutions in cutting their annual growth forecast for China, reducing it to 4.7% from 4.9% estimated earlier. The reduction reflects recent data releases and delayed impact of fiscal policy versus the firm’s prior expectations, the analysts said in a Sept. 15 note.

“We believe the risk that China will miss the ‘around 5%’ full-year GDP growth target is on the rise, and thus the urgency for more demand-side easing measures is also increasing,” the Goldman analysts said.
China’s highly anticipated Third Plenum meeting of top leaders in July largely reiterated existing policies, while saying the country would work to achieve its full-year targets announced in March.
Beijing in late July announced more targeted plans to boost consumption with subsidies for trade-ins including upgrades of large equipment such as elevators.
But several businesses said the moves were yet to have a meaningful impact. Retail sales rose by 2.1% in August from a year ago, among the slowest growth rates since the post-pandemic recovery.

Real estate drag

China in the last two years has also introduced several incremental moves to support real estate, which once accounted for more than a quarter of the Chinese economy. But the property slump persists, with related investment down more than 10% for the first eight months of the year.
“The elephant in the room is the property market,” said Xu Gao, Beijing-based chief economist at Bank of China International. He was speaking at an event last week organized by the Center for China and Globalization, a think tank based in Beijing.
Xu said demand from China’s consumers is there, but they don’t want to buy property because of the risk the homes cannot be delivered.
Apartments in China have typically been sold ahead of completion. Nomura estimated in late 2023 that about 20 million such pre-sold units remained unfinished. Homebuyers of one such project told CNBC earlier this year they had been waiting for eight years to get their homes.
To restore confidence and stabilize the property market, Xu said that policymakers should bail out the property owners.
“The current policy to stabilize the property market is clearly not enough,” he said, noting the sector likely needs support at the scale of 3 trillion yuan, versus the roughly 300 billion yuan announced so far.

Different priorities

China’s top leaders have focused more on bolstering the country’s capabilities in advanced manufacturing and technology, especially in the face of growing U.S. restrictions on high tech.
“While the end-July Politburo meeting signaled an intention to escalate policy stimulus, the degree of escalation was incremental,” Gabriel Wildau, U.S.-based managing director at consulting firm Teneo, said in a note earlier this month.
“Top leaders appear content to limp towards this year’s GDP growth target of ‘around 5%,’ even if that target is achieved through nominal growth of around 4% combined with around 1% deflation,” he said.
In a rare high-level public comment about deflation, former People’s Bank of China governor Yi Gang said in early September that leaders “should focus on fighting the deflationary pressure” with “proactive fiscal policy and accommodative monetary policy.”
However, Wildau said that “Yi was never in the inner circle of top Chinese economic policymakers, and his influence has waned further since his retirement last year.”

Local government constraints

China’s latest report on retail sales, industrial production and fixed asset investment showed slower-than-expected growth.
“Despite the surge in government bond financing, infrastructure investment growth slowed markedly, as local governments are constrained by tight fiscal conditions,” Nomura’s Chief China Economist Ting Lu said in a Sept. 14 note.
“We believe China’s economy potentially faces a second wave of shocks,” he said. “Under these new shocks, conventional monetary policies reach their limits, so fiscal policies and reforms should take the front seat.”
The PBOC on Friday left one of its key benchmark rates unchanged, despite expectations the U.S. Federal Reserve’s rate cut earlier this week could support further monetary policy easing in China. Fiscal policy has been more restrained so far.
“In our view, Beijing should provide direct funding to stabilize the property market, as the housing crisis is the root cause of these shocks,” Nomura’s Lu said. “Beijing also needs to ramp up transfers [from the central government] to alleviate the fiscal burden on local governments before it can find longer-term solutions.”
China’s economy officially still grew by 5% in the first half of the year. Exports surged by a more-than-expected 8.7% in August from a year earlier.
In the “short term, we must really focus to be sure [to] successfully achieve this year’s 2024 growth goals, around 5%,” Zhu Guangyao, a former vice minister of finance, said at the Center for China and Globalization event last week. “We still have confidence to reach that goal.”
When asked about China’s financial reforms, he said it focuses on budget, regional fiscal reform and the relationship between central and local governments. Zhu noted some government revenue had been less than expected.
But he emphasized how China’s Third Plenum meeting focused on longer-term goals, which he said could be achieved with GDP growth between 4% and 5% annually in the coming decade. More

A major exchange-traded fund and mutual fund manager finds the winning gold trade isn’t talked about as much as the artificial intelligence trade — but maybe it should be.
VanEck CEO Jan van Eck thinks the best investment this year is “the hedge against political cycles.” To him, that means investing in gold. 

“It is quietly the best performing asset this year,” Van Eck told CNBC’s “ETF Edge” from the Future Proof conference in Huntington Beach on Monday.
Gold hit another record on Friday, its 37th record this year. As of Friday’s market close, it is up 28% since the start of the year.
Van Eck, whose firm runs the VanEck Gold Miners ETF, expects foreign investments in bullion will continue to give the commodity a boost. It should also help in lifting gold miners higher, which started the year lagging the commodity. But as of Friday, the VanEck Gold Miners ETF has started to outperform, up 31% this year.
“I think you own both because the miners, if they catch up at all, it’s going to rip,” he said.
As for the AI trade, van Eck says it’s “amazing” how investors refuse to give up on it.

“It’s like part of people’s model portfolios, or core portfolios, is to have this tactical overweight to semis. And some of our biggest clients actually bought on the dip over the last week or two,” the VanEck CEO said.
Last month, his firm launched the VanEck Fabless Semiconductor ETF. It’s a companion to its VanEck Semiconductor ETF that excludes companies that run their own foundries, such as Intel.
FactSet reports the new ETF’s top holdings as Nvidia, Broadcom and Advanced Micro Devices as of Friday.
“Why spend billions of dollars on building the chips if you don’t have to?” van Eck said. “Nvidia doesn’t build its own chips. So that’s another kind of investment strategy.”
Since launching on Aug. 28, the VanEck Fabless Semiconductor ETF is up a half percent.
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Fed Reserve Governor Christopher Waller told CNBC that he supported a 50 basis point rate reduction at this week’s meeting because inflation is easing faster than he had expected.
Waller indicated there are a number of scenarios that could unfold relative to future cuts, with each depending on how the economic data runs.

Federal Reserve Governor Christopher Waller said Friday he supported a half percentage point rate cut at this week’s meeting because inflation is falling even faster than he had expected.
Citing recent data on consumer and producer prices, Waller told CNBC that the data is showing core inflation, excluding food and energy, in the Fed’s preferred measure is running below 1.8% over the past four months. The Fed targets annual inflation at 2%.

“That is what put me back a bit to say, wow, inflation is softening much faster than I thought it was going to, and that is what put me over the edge to say, look, I think 50 [basis points] is the right thing to do,” Waller said during an interview with CNBC’s Steve Liesman.
Both the consumer and producer price indexes showed increases of 0.2% for the month. On a 12-month basis, the CPI ran at a 2.5% rate.
However, Waller said the more recent data has shown an even stronger trend lower, thus giving the Fed space to ease more as it shifts its focus to supporting the softening labor market.
A week before the Fed meeting, markets were overwhelmingly pricing in a 25 basis point cut. A basis point equals 0.01%.
“The point is, we do have room to move, and that is what the committee is signaling,” he said.

The Fed’s action to cut by half a percentage point, or 50 basis points, brought its key borrowing rate down to a range between 4.75%-5%. Along with the decision, individual officials signaled the likelihood of another half point in cuts this year, followed by a full percentage point of reductions in 2025.
Fed Governor Michelle Bowman was the only Federal Open Market Committee member to vote against the reduction, instead preferring a smaller quarter percentage point cut. She released a statement Friday explaining her opposition, which marked the first “no” vote by a governor since 2005.
“Although it is important to recognize that there has been meaningful progress on lowering inflation, while core inflation remains around or above 2.5 percent, I see the risk that the Committee’s larger policy action could be interpreted as a premature declaration of victory on our price stability mandate,” Bowman said.
As for the future path of rates, Waller indicated there are a number of scenarios that could unfold, with each depending on how the economic data runs.
Futures market pricing shifter after Waller spoke, with traders now pricing in about a 50-50 chance of another half percentage point reduction at the Nov. 6-7 meeting, according to the CME Group’s FedWatch.
“I was a big advocate of large rate hikes when inflation was moving much, much faster than any of us expected,” he said. “I would feel the same way on the downside to protect our credibility of maintaining a 2% inflation target. If the data starts coming in soft and continues to come in soft, I would be much more willing to be aggressive on rate cuts to get inflation closer to our target.”
The Fed gets another look at inflation data next week when the Commerce Department releases the August report on the personal consumption expenditures price index, the central bank’s preferred measure. Chair Jerome Powell said Wednesday that the Fed’s economists expect the measure to show inflation running at a 2.2% annual pace. A year ago, it had been at 3.3%. More

A 401(k) match is often considered free money.
Most employers offering a 401(k) plan make a matching contribution on workers’ savings.
Workers may need to stay at the company for a certain number of years before the match is fully theirs, however.

Nitat Termmee | Moment | Getty Images

There are few certainties when it comes to investing.
The stock market can seem to gyrate with little rhyme or reason, guided up or down by unpredictable news cycles and fickle investor sentiment. Average stock returns have historically trended up over long time periods, but their trajectory is hardly assured on a daily, monthly or annual basis. As the common investment disclosure goes, “Past performance is no guarantee of future results.”

Yet, according to financial advisors, there is an outlier in the realm of investing: the 401(k) match.
The basic concept of a 401(k) match is that an employer will make a matching contribution on workers’ retirement savings, up to a cap. Advisors often refer to a match as free money.

For example, if a worker contributes 3% or more of their annual salary to a 401(k) plan, the employer might add another 3% to the worker’s account.
In this example — a dollar-for-dollar match up to 3% — the investor would be doubling their money, the equivalent of a 100% profit.
A match is “one of the rare guarantees on an investment that we have,” said Kamila Elliott, a certified financial planner and co-founder of Collective Wealth Partners, based in Atlanta.

“If you were in Vegas and every time you put $1 in [the slot machine] you got $2 out, you’d probably be sitting at that slot machine for a mighty long time,” said Elliott, a member of CNBC’s Advisor Council.
However, that money can come with certain requirements like a minimum worker tenure, more formally known as a “vesting” schedule.

Most 401(k) plans have a match

About 80% of 401(k) plans offer a matching contribution, according to a 2023 survey by the Plan Sponsor Council of America.
Employers can use a variety of formulas that determine what their respective workers will receive.

The most common formula is a 50-cent match for every dollar a worker contributes, up to 6%, according to the PSCA. In other words, a worker who saves 6% of their pay would get another 3% in the form of a company match, for a total of 9% in their 401(k).
“Where else can you get a guaranteed return of more than 50% on an investment? Nowhere,” according to Vanguard, a 401(k) administrator and money manager.
More from Personal Finance:The ‘billion-dollar blind spot’ of 401(k)-to-IRA rolloversPlanning delayed retirement may not prevent poor savingsHow high earners can funnel money to a Roth IRA
Consider this example of the value of an employer match, from financial firm Empower: Let’s say there are two workers, each with a $65,000 annual salary and eligible for a dollar-for-dollar employer 401(k) match up to 5% of pay.
One contributes 2% to their 401(k), qualifying them for a partial match, while the other saves 5% and gets the full match. The former worker would have saved roughly $433,000 after 40 years. The latter would have a nest egg of about $1.1 million. (This example assumes a 6% average annual investment return.)
Financial advisors generally recommend people who have access to a 401(k) aim to save at least 15% of their annual salary, factoring in both worker and company contributions.

Keeping the match isn’t guaranteed, however

That so-called free money may come with some strings attached, however.
For example, so-called “vesting” requirements may mean workers have to stay at a company for a few years before the money is fully theirs.

About 60% of companies require tenure of anywhere from two to six years before they can leave the company with their full match intact, according to the PSCA. Workers who leave before that time period may forfeit some or all their match.
The remainder have “immediate” vesting, meaning there is no such limitation. The money is theirs right away. More

Many people don’t dispute potential errors on their medical bills because they feel it’s ineffective.
However, calling a health provider to address a financial concern can, for example, help correct, reduce or eliminate one’s bill, according to a University of Southern California study.
Doing nothing and avoiding payment may result in late fees and interest, debt collection, lawsuits, garnishments, and lower credit scores.

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Consumers may feel their medical bills are unyielding, inflexible, set in stone. But that’s not always true: A new study shows patients can often reap financial benefits by disputing charges that seem erroneous or by negotiating for financial relief.
Of consumers who don’t reach out to question a medical bill, 86% said it’s because they didn’t think it would make a difference — but “the experiences of those who did reach out provide evidence to the contrary,” according to a new University of Southern California study.

About 26% of people who called because they disagreed with a charge or couldn’t afford to pay it got their medical bill corrected after the outreach, according to the study, published in August. Roughly 15% got a price reduction, 8% got financial assistance and 7% saw their bills canceled outright.

“Of the people who did reach out, most of them got some recourse through self-advocacy,” said report co-author Erin Duffy, a research scientist at the USC Schaeffer Center for Health Policy and Economics.
Researchers polled 1,135 U.S. adults from Aug. 14 to Oct. 14, 2023.
About 1 out of 5 respondents reported receiving a medical bill with which they disagreed or could not afford within the prior 12 months. About 62% of them contacted the billing office to address the concern.
More from Personal Finance:When to refinance your loan as interest rates fallWhy working longer isn’t a good retirement planStocks often drop in September — but many shouldn’t care

“If you can’t afford to pay something, or [if a bill] doesn’t seem right or match what your care experience was, you should call and ask questions about that,” Duffy said.
Savings can extend into the hundreds or even thousands of dollars, depending on factors like a patient’s health insurance and the type of medical visit or procedure, said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville, Florida.

Bills ‘go all over the place’

Viktorcvetkovic | Getty

A 2023 Consumer Financial Protection Bureau analysis of medical bills for adults age 65 and older found that patients “face a complex billing system with a high likelihood of errors and inaccurate bills.” Often, inaccurate bills result from erroneous insurance claims and occur more frequently among consumers with multiple sources of insurance, the CFPB said.
Common errors included missing or invalid claim data, authorization and precertification issues, missing medical documentation, incorrect billing codes, and untimely filing of claims, the report found. Such mistakes contributed to the “rejection of claims that would otherwise be paid,” it said.
“[Bills] go all over the place,” said McClanahan, founder of Life Planning Partners and a member of CNBC’s Advisor Council. “And there’s no transparency or rhyme or reason for how [providers] decide to charge.”

Doing nothing and avoiding payment of medical bills is likely not a good course of action: It could have negative financial consequences, such as late fees and interest, debt collection, lawsuits, garnishments, and lower credit scores, according to a separate CFPB resource.
“If something seems egregious, question it,” McClanahan said.

How to manage medical bills

Consumers should ask upfront what a medical visit or procedure will cost, or inquire what the estimated cost will be, she said.
Sometimes, consumers will pay “a heck of a lot less” if they pay in cash rather than via insurance, McClanahan said. However, cutting a check could have other consequences like the sum not counting toward one’s annual deductible, she added.
If you feel you were overcharged, request an itemized bill from the provider or hospital, and look for errors or duplicate charges, according to PatientRightsAdvocate.org. Research the fair market price for a service and use that information to negotiate, the nonprofit group said.

If something seems egregious, question it.

Carolyn McClanahan
physician and certified financial planner based in Jacksonville, Florida

The phone number for your medical provider’s accounting or billing office will be on your billing statement, the CFPB said.
Here are three other questions to consider asking about your itemized bill, according to the regulator:

Do charges reflect the services you received?
If you have insurance, do the bills reflect the payment by your insurance and reflect what the provider understood would be covered?
Do any of the charges indicate a service was “out-of-network” when it wasn’t?

When calling a provider about a medical bill, keep a journal about the communication, McClanahan said. Write people’s names and what was discussed, and get a commitment of when you’ll hear back.

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American Airlines is in talks to make Citigroup its exclusive credit card partner, dropping rival issuer Barclays from a partnership that dates back to the airline’s 2013 takeover of US Airways, according to people with knowledge of the negotiations.
American has been working with banks and card networks on a new long-term deal for months, hoping to consolidate its business with a single player to boost the revenue haul from its cards, said the people.
Airlines make billions from their loyalty programs and co-brand credit card deals.

An American Airlines’ Embraer E175LR (front), an American Airlines’ Boeing 737 (C) and an American Airlines’ Boeing 737 are seen parked at LaGuardia Airport in Queens, New York on May 24, 2024. 
Charly Triballeau | AFP | Getty Images

American Airlines is in talks to make Citigroup its exclusive credit card partner, dropping rival issuer Barclays from a partnership that dates back to the airline’s 2013 takeover of US Airways, said people with knowledge of the negotiations.
American has been working with banks and card networks on a new long-term deal for months with the aim of consolidating its business with a single issuer to boost the revenue haul from its loyalty program, according to the people.

Talks are ongoing, and the timing of an agreement, which would be subject to regulatory approval, is unknown, said the people, who declined to be identified speaking about a confidential process.
Banks’ co-brand deals with airlines, retailers and hotel chains are some of the most hotly contested negotiations in the industry. While they give the issuing bank a captive audience of millions of loyal customers who spend billions of dollars a year, the details of the arrangements can make a huge difference in how profitable it is for either party.
Big brands have been driving harder bargains in recent years, demanding a bigger slice of revenue from interest and fees, for example. Meanwhile, banks have been pushing back or exiting the space entirely, saying that rising card losses, scrutiny from the Consumer Financial Protection Bureau and higher capital costs make for tight margins.
Airlines rely on card programs to help them stay afloat, earning billions of dollars a year from banks in exchange for miles that customers earn when they use their cards. Those partnerships were crucial during the pandemic, when travel demand dried up but consumers kept spending and earning miles on their cards. Carriers have said growth in card spending has far exceeded that of passenger revenue in recent years.
While it says it has the largest loyalty program, American was out-earned by Delta there, which made nearly $7 billion in payments from its American Express card partnership last year, compared with $5.2 billion for American.

“We continue to work with all of our partners, including our co-branded credit card partners, to explore opportunities to improve the products and services we provide our mutual customers and bring even more value to the AAdvantage program,” American said in a statement.

Delays, regulatory risk

It’s still possible that objections from U.S. regulators, including the Department of Transportation, could further delay or even scuttle a contract between American Airlines and Citigroup, leaving the current arrangement that includes Barclays intact, according to one of the people familiar with the process.
If the deal between American and Citigroup is consummated, it would end an unusual partnership in the credit card world.
Most brands settle with a single issuer, but when American merged with US Airways in 2013, it kept longtime issuer Citigroup on board and added US Airways’ card partner Barclays.
American renewed both relationships in 2016, giving each bank specific channels to market their cards. Citi was allowed to pitch its cards online, via direct mail and airport lounges, while Barclays was relegated to on-flight solicitations.

‘Actively working’

When the relationship came up for renewal again in the past year, Citigroup had good footing to prevail over the smaller Barclays.
Run by CEO Jane Fraser since 2021, Citigroup has the more profitable side of the AA business; their customers tend to spend far more and have lower default rates than Barclays customers, one of the people said.
Any renewal contract is likely to be seven to 10 years in length, which would give Citigroup time to recoup the costs of porting over Barclays customers and other investments it would need to make, this person said. Banks tend to earn most of the money from these arrangements in the back half of the deals.
With this and other large partnerships, Fraser has been pushing Citigroup to aim bigger in a bid to improve the profitability of the card business, said the people familiar.  
“We are always actively working with our partners, including American Airlines, to look for ways to jointly enhance customer products and drive shared value and growth,” a Citigroup spokesperson told CNBC.
Meanwhile, Barclays executives told investors earlier this year that they aimed to diversify their co-branded card portfolio away from airlines, for instance, through added partnerships with retailers and tech companies.
Barclays declined to comment for this article. More

Many Apple iPhone users in China are just as interested in Huawei’s pricier trifold phone, CNBC found during spot checks at stores Friday, the day the iPhone 16 and Mate XT launched in the country.
Out of 10 people CNBC talked to, eight said they are interested in both the new Huawei and Apple phones.
People in Beijing lined up as early as 5:30 a.m. to get the new iPhone when doors opened at 8 a.m.
But there were no lines outside Huawei’s store, which started delivering the new phones at 10:08 a.m. to people who had reserved the trifold device.

Pictured here is an Apple flagship store in Beijing, China, on the day of the iPhone 16 launch on Sept. 20, 2024.
Bloomberg | Bloomberg | Getty Images

BEIJING — Many of Apple’s affluent iPhone users in China are just as interested in Huawei’s pricier trifold phone, CNBC found during spot checks at stores Friday, the day the iPhone 16 and Mate XT launched in the country.
Out of 10 people CNBC talked to on Friday, eight said they are interested in both the new Huawei and Apple phones. CNBC talked to five individuals at each company’s store during a workday morning.

Chinese telecommunications giant Huawei has sought to rebuild its smartphone business after U.S. sanctions in 2019. Huawei ranked fourth by China smartphone market share in the second quarter, according to Canalys.
U.S.-based Apple dropped out of the top five, giving domestic players the top five spots for the first time, the data showed.
The iPhone 16 Pro Max starts at $1,199, and the iPhone 16 at $799. Huawei’s trifold Mate XT starts at the equivalent of more than $2,800.

The price gap was even more apparent on online platforms selling secondhand goods.
The Huawei Mate XT was selling for 50,000 yuan to 60,000 yuan ($7,100 to $8,520) on second-hand shopping platform Xianyu as of 1 p.m. Friday afternoon. The Apple iPhone 16 Pro Max was selling for 10,500 yuan to 16,300 yuan, the site showed.

Earlier in the day, the listed resale Mate XT price was 19,000 yuan, while the Apple iPhone 16 Pro Max was selling for 9,999 yuan, the site showed.

No lines outside Huawei stores

People in Beijing lined up as early as 5:30 a.m. to get the new iPhone when doors opened at 8 a.m.
But there were no lines outside Huawei stores in Beijing and Hefei, a smaller city west of Shanghai. The Chinese company started delivering the new phones at 10:08 a.m. to people who had reserved the trifold device.
During the 1 hour and 20 minutes that CNBC was at the Huawei store, a couple dozen people went to the second floor to an area reserved for Mate XT buyers.
It was not clear if all of them purchased the device. Many were people buying for resale purposes.
Huawei’s website on Friday showed it had halted sales, and planned to resume them at 10:08 a.m. on Saturday. The page said the company planned to complete deliveries by Sept. 30.
The first person CNBC talked to at the Huawei store arrived at 10 a.m. just to try out the trifold phone. The individual, surnamed Yang, declined to share his first name due to concerns about speaking with foreign media.
He said if he buys the trifold Mate XT, he plans to try it out for a few days before deciding whether to keep it, give it to a friend, or sell it. Yang expected the device could sell for 2,000 yuan more than the list price.
Yang also said he uses an iPhone, and was interested in trying Huawei’s new trifold features because Apple wasn’t offering much that he felt was new.
Even the first person in line at the Apple store, Wang, said he also wanted to get the Huawei trifold phone, but hadn’t gotten a text message yet saying his device was ready to pick up.
He said he bought the iPhone 16 because he heard its battery lasted longer, but was willing to wait for the iPhone 17 for any artificial intelligence features.
— CNBC’s Sonia Heng contributed to this report. More

Onvo, the lower-priced brand launched by premium electric car company Nio, announced its first car, the L60 SUV, would start as low as 149,900 Chinese yuan ($21,210) when buying battery services.
A model with the battery and the car starts at 206,900 yuan.
Deliveries are set to begin Sept. 28.

Chinese electric car company Nio launched its lower-cost brand Onvo on Wednesday, May 15, 2024, in Shanghai, China.
CNBC | Evelyn Cheng

HEFEI, China — There’s yet another Chinese electric car aiming to undercut Tesla, with a steeper discount.
Onvo, the lower-priced brand launched by premium electric car company Nio, announced its first car, the L60 SUV, would start as low as 149,900 Chinese yuan ($21,210) when buying battery services via a monthly subscription, starting at 599 yuan. That’s the equivalent to just over $1,000 a year for “renting” the battery.

A model with the battery and the car starts at 206,900 yuan. Deliveries are set to begin Sept. 28.
Nio shares briefly rose by more than 3.5% in U.S. trading Thursday after the Onvo L60 launch.
The L60’s new price is even less than what the company announced previously. When Nio launched the Onvo brand in May, the company said the L60 would start selling at 219,900 yuan versus Tesla’s Model Y at 249,900 yuan.
Nio CEO William Li told CNBC in an exclusive interview Thursday that he hoped to launch Onvo in Europe as soon as next year, but he did not have a specific timeframe to share.
He said the lower-priced brand would help the company better reach a global market, due to growing tariffs and other challenges for the premium Nio brand to reach its target overseas markets of Europe and the U.S.

As for whether Onvo would cannibalize the Nio-branded sales, Li said the two brands are aimed at very different price segments. He noted how Nio’s deliveries have improved since the company announced its plans for Onvo.
China’s electric car industry has become fiercely competitive over the last few years, with Nio and other companies vying for part of Tesla’s market share.
Geely-backed Zeekr is set to launch its first midsize electric SUV, the Zeekr 7X, in China on Sept. 20, starting at 239,900 yuan.
Xpeng in late August announced its mass market brand Mona would begin sales of its M03 electric coupe in China. The basic version starts at 119,800 yuan, with a driving range of 515 kilometers (320 miles) and some parking assist features.
A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.

In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.
Chinese electric car companies have gradually expanded overseas, often starting with Europe. However, the European Union is nearing the end of a process that would increase tariffs on imported Chinese-made battery electric cars starting in early November. The bloc began an investigation into the Chinese EV makers’ use of subsidies last year.
Nio cooperated with the EU’s probe but was not sampled, meaning its cars would be subject to a 20.8% duty, as of a July announcement from the European Commission. That’s higher than the 19.9% tariffs slated for Geely cars, and 17.4% for BYD’s.
In the fourth quarter, Nio plans to start deliveries in the United Arab Emirates, Li told investors on an earnings call on Sept. 5.
“Because of the tariff in Europe now, selling or exporting cars from China to Europe becomes more expensive,” Li said, according to a FactSet transcript.
“So we will focus on the existing five European markets that we have already started. We also know that to establish NIO such a premium brand in the European market will also take a longer time, and we are very patient with that.”

“But in the meantime, it doesn’t mean that we have stopped our activities there,” Li said. “Earlier this year, we have just opened our NIO house in Amsterdam, and we are still installing and deploying our power swap stations in Europe.”
He expects the L60 to reach 10,000 monthly deliveries in December, and 20,000 vehicle deliveries a month next year. He anticipates 15% vehicle margin on the new Onvo-branded cars.
The brand aims to have more than 200 stores in China by the end of this year, and already opened more than 100 as of early September.
Li said on the earnings call that Onvo and Firefly, an even lower-priced brand set to begin deliveries next year, would look to release vehicles for the international market.
— CNBC’s Sonia Heng contributed to this report. More