All posts by RWZ

Radio Free Asia (RFA) Chinese Edition recently reported on the latest data from the Chinese National Bureau of Statistics, showing that around 460,000 Chinese restaurants were deregistered or had their licenses revoked in the first quarter of this year, a year-over-year increase in restaurant closures of approximately 230 percent. Among the closed restaurants, 180,000 closed in March alone. People in the industry lamented that business has become increasingly difficult. China’s consumer market has continued to decline in the post-COVID-19 era, and a wave of business closures has spread from the manufacturing and international trade sectors to the restaurants industry.

A consumer said in an interview with RFA that many residents in her city could not find jobs and have lost their sources of income; they are cutting back on food and clothing expenses. She also said that people from all walks of life are experiencing the current recession. Prospects now are not particularly good, and people don’t dare to spend their money. Thus, China’s day-to-day consumption patterns have changed. People don’t see hope, nor can they see a future.

The recession in the restaurant business is the most direct manifestation of the reduction in the income of Chinese residents – they are not eating out. Some domestic experts suggested that restaurant owners follow the lead of the green energy automobile industry – reduce prices and go overseas.

Source: RFA Chinese, April 23, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-04232024012355.html

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that China’s three major stock exchanges (the Shanghai Exchange, Shenzhen Exchange and Hong Kong Exchange) will stop disclosing real-time trading volume data starting in mid-May so as to reduce market volatility. The announcement has triggered concerns about downgraded data transparency in the market.

As part of the Chinese State Council’s recent market guidelines, a key effort is the tightening of control over high-frequency trading in mainland Chinese markets. The Shenzhen exchange regulator said that the move to cut real-time market data disclosures was aimed at “unifying investor practices” so as to ensure “fair access to information”.

The newly-announced exchange rules may further reduce foreign investability in China’s equity markets and restrict Hong Kong’s role as a gateway for investment into China. Since 2014, foreign investors have been allowed to invest in A-shares through the Shenzhen-Hong Kong Stock Connection and the Shanghai-Hong Kong Stock Connection. Real-time data is critical for fund managers, especially hedge funds, to measure liquidity and execute their trades in a timely fashion.

The Shanghai and Shenzhen exchanges are China’s two primary mainland stock exchanges. As of Monday, the A-shares market value on these exchanges was 71.21 trillion RMB (about US$9.84 trillion). A-shares are RMB-denominated shares of mainland Chinese companies, generally only available to trade by domestic investors and certain qualified foreign institutional investors.

Source: Sina, April 19, 2024
https://portal.sina.com.hk/finance/marketdigest/2024/04/19/814828/

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, amid the “shock waves” of the real estate market downturn and early mortgage repayments, Chinese banks’ personal mortgage businesses continue to face pressure. By the end of 2023, the total mortgage loan balance of the six major state-owned banks was approximately RMB 26 trillion yuan (around US$3.66 trillion), a decrease of approximately RMB 500 billion yuan (around US$70.34 billion) from the end of the previous year.

Among the six major state-owned banks, the balance of personal housing loans of the five largest banks all decreased year-over-year. Only one of the six largest banks — the Postal Savings Bank of China — saw an increase. In terms of asset quality, five of the six major banks had suffered a year-over-year increase in non-performing mortgage loan ratios by the end of 2023. The Chinese central bank’s “Statistical Report on Loan Investment by Financial Institutions in 2023” showed that the balance of personal housing loans at the end of 2023 suffered an overall year-over-year decrease of 1.6 percent.

In response to the significant decrease in mortgage loans on their books, most banks have been intensifying their efforts to issue new mortgage loans. That being said, increasing early mortgage repayments in 2023 brought further pressure on outstanding mortgage loans and banks’ loan yields.

Source: Sina, April 8, 2024
https://finance.sina.com.cn/wm/2024-04-08/doc-inararwv6421091.shtml

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, according to Chinese customs data, China’s imports and exports both experienced sharp declines in March, far below market expectations. Export shipments fell 7.5 percent year-over-year, while imports also fell 1.9 percent year-over-year. Chinese policymakers are facing challenges as they try to shore up a fragile economic recovery.

Exports suffered their biggest drop since last August, well above the 2.3 percent decline forecasted by economists. Exports for the period January through February increased by 7.1 percent year-over-year.

Over the past year, China’s exporters experienced many difficulties due to weak overseas demand and a tightening global monetary environment. At this point, with the U.S. Federal Reserve and other developed countries showing no urgency regarding the need for interest rate cuts, Chinese manufacturers may continue to face challenges as they try to boost international sales. Analysts warned that Western concerns about overcapacity in certain Chinese industries [and the impact of such overcapacity on Western markets] could bring more trade barriers to China’s manufacturing sector.

China’s imports for March fell 1.9 percent year-over-year, compared with a growth of 3.5 percent in the previous two months, indicating weakness in domestic demand. Analysts do not believe China’s economy will fully recover any time soon, mainly because the crisis in the Chinese real estate industry has been going on for quite some time.

Global ratings agency Fitch recently downgraded China’s sovereign credit rating outlook to negative, citing risks to public finances as the country’s economy faces growing uncertainty during a shift to a new growth model. Structural flaws in China’s economy have reduced the effectiveness of its central bank’s monetary policy tools.

Source: NetEase, April 12, 2024
https://www.163.com/dy/article/IVJQBCIC055292RI.html