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Alibaba Group Holding, China’s largest e-commerce company, reported Friday that third quarter sales rose 40% while profits nearly tripled, outperforming market expectations and defying the generally gloomy outlook for the world’s second-largest economy.
Alibaba, China’s most valuable company with a market capitalization of $460 billion, said sales in the three months to September 30 gained $16.7 billion. Net income, boosted by a one-time gain related to equity interest in a sister company, increased by $10 billion.
The company, which claims a two-thirds share of China’s e-commerce market, credited strong growth in its Taobao and T-mall retail platforms, as well as its nascent cloud computing business.
BABA’s shares, which have risen nearly 30% in value since the beginning of this year, gained more than 2% on Friday.
The company’s solid financial results suggest Chinese consumer spending, at least online, remains robust, even as exports decline and overall growth continues to slow. They bolster confidence in the e-commerce giant ahead of its annual Single’s Day shopping extravaganza, to be held on November 11.
Alibaba expects that this year Singles Day will attract a record 500 million shoppers. Chairman and chief executive Daniel Zhang, who earlier this assumed reins of the group from founder Jack Ma, vows that by 2024, the company will serve a billion consumers and help its merchants achieve 10 trillion yuan in gross merchandise value.
This year marks Alibaba’s 20th anniversary. To celebrate, the company is pulling out all the stops with a glitzy stadium party headlined by Taylor Swift.
Even so, shoppers on Alibaba’s platforms have vowed to shun American brands during this year’s Single’s Day, reflecting nationwide indignation over Donald Trump’s trade tariffs.
Trump, for his part, signaled hope that Chinese leader Xi Jinping might travel to Iowa to sign a “phase one” trade accord in which China would purchase billions of dollars of American agricultural products. But Chinese media this week has suggested that, while the two sides may strike some sort of interim truce, Beijing has mostly abandoned the idea of concluding an overall trade bargain with the U.S. as long as Trump remains in office.
Global investors, meanwhile, continue to hope that both governments will heed Taylor’s sage advice: you need to calm down.
More China news below,
Clay Chandler
-clay.chandler@fortune.com
Innovation and Tech
Faster than we thought. China telecom providers rolled out 5G for commercial purposes Friday, two months before their expected release. Much of the infrastructure will be contracted to Huawei, which has contracts with dozens of countries around the world although some are in flux due to security concerns. Still, 5G seems to be the future, and Apple just announced their next line of iPhones will be equipped with 5G chips. Fortune
Rising stock. Drone maker Ehang has field for an IPO in the U.S., seeking to raise a placeholder amount of $100 million through listing on Nasdaq. The listing comes as Senators pile pressure on the government to ban Chinese drones and is a snub to Shanghai’s new STAR Board—an exchange launched this year to attract local tech talent. Ehang specializes in passenger drones—or unmanned aerial vehicles that can carry people—and has trialed its tech in Guangzhou and Dubai. TechNode
Economy and Trade
Phase one on hold. The White House says it is looking for a new venue to host Trump and Xi so that the two leaders can sign a “phase one” trade deal this month. The feuding duo were due to meet at the APEC summit in Chile, before the host nation yanked the conference. The White House is optimistic a deal will be signed but Chinese officials appear in two minds: anonymous officials told Bloomberg they think a trade deal is impossible with Trump in the White House. The White House, however, remains optimistic. Wall Street Journal
Blue-backed bonds. China announced it will issue its first Euro-denominated bond in 15 years next week seeking to raise $4.5 billion. China might be attempting to shift reliance on dollar-denominated debt as the trade war with the U.S. simmers. But, as interest rate in the Euro zone hit record lows, China might also be a sucker for a bargain. Financial Times
A dip in Victoria Harbour. Hong Kong has been battered into a technical recession as the local economy contracted for two consecutive quarters, dropping 0.4% in Q2 and a further 3.2% in Q3, new data shows. Months of protests have shuttered the local retail industry and scared away tourists. This week, Chief Executive Carrie Lam warned the Special Administrative Region might see a contraction in GDP for the entire year. South China Morning Post
In Case You Missed It
Why China’s Digital Currency Is a ‘Wake-Up Call’ for the U.S. Fortune
Hong Kong Has Officially Entered Recession, But Its IPO Market Is Now the World’s Best Fortune
Google and NASA Have Claimed Quantum Supremacy, But China Is Not Far Behind the U.S. Fortune
The U.S. Interior Department Has Grounded Its Fleet of 800 Drones, Fearing Chinese Surveillance Fortune
Politics and Policy
Party in silence. China’s fourth plenum—a four-day meeting of the country’s largest decision-making body—concluded Thursday. The plenary meetings are shrouded in secrecy, prompting more speculation than news, but are also times when the ruling Party devises new policy and sets future goals. Hong Kong was “of course” a topic of conversation during the plenum, a Party official said, adding that the Party would “perfect” the way Hong Kong’s Chief Executive is selected in the future. Hong Kong protesters are demanding universal suffrage, as promised in the Special Administrative Region’s Basic Law. Reuters
Fundamental flaws. On Thursday, Charles Li, the CEO of the Hong Kong Stock Exchange, said that “One Country, Two Systems” was doomed to fail in Hong Kong as Beijing has never trusted that locals would uphold the “one country” aspect of the arrangement. On Friday, Li walked back his comments which, unsurprisingly, had angered Beijing. “I am the biggest supporter of One Country, Two Systems,” Li said. Bloomberg
This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.
