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A Local Government Urged its Employees to Buy Homes, Help Prop Up Struggling Housing Market

The government of Chikan District in Zhanjiang City, Guangdong Province, China, issued a letter on February 19th urging government employees and state-owned enterprises to buy homes in order to boost the struggling local real estate market. The initiative comes as China’s housing market slump continues and governments at all levels have introduced policies to try to stabilize the property sector.

The letter was sent out by the Chikan District 2024 Lunar New Year Activities Preparatory Committee Command Office. It refers to the current sluggish state of China’s real estate market and says that the Chikan District government has been working on multiple fronts to revitalize the sector, including entering negotiations with real estate firms to offer benefits and discounted “one-price special offer housing” to residents.

The stated goal of the letter was to encourage civil servants and state employees to “take the lead in consumption” and “be the role model” in home-buying so as to revive the real estate industry and restore market confidence. From February 21 to 23, the district will hold a real estate and home decoration exhibition focused on providing preferential housing to potential home buyers, offering deep discounts and concessionary policies.

The letter urges all government organs, enterprises, and institutions to fully mobilize their staff to seize this “favorable opportunity” and proactively purchase housing according to their needs. It also asks them to promote Chikan District to their friends and relatives and encourage them to live in and buy homes in Chikan, sharing in the district’s economic development.

Source: Central News Agency (Taiwan), February 20, 2024

HK01: MSCI Removes 66 Chinese Companies From Indices

HK01, a popular Hong Kong-based online media network, recently reported that finance company MSCI removed 66 Chinese stocks from its benchmark China Index and its All Country World Index during the latest MSCI quarterly review. The move by MSCI comes as Mainland China and Hong Kong stock markets plummeted, losing trillions of dollars in market value from their peak in 2021.

Most of the removed companies are in the real estate, pharmaceuticals, internet, and aviation sector. Specific names removed including famous companies such as Weibo, China Southern Airlines, Ping An Healthcare and Technology, as well as real estate developers Gemdale Group and Greentown China. The number of Chinese companies removed was the greatest seen in at least two years. The removals will be effective from the close of trading on February 29, 2024.

China’s weight in global investment portfolios has fallen significantly as China’s real estate industry sinks further into crisis, Chinese consumer spending continues to weaken, and alternative emerging markets such as India continue to perform well. Some experts expressed that MSCI’s stock removals highlight how money is moving out of Chinese equities as investors reduce their exposure. Such investor behavior is largely due to recent weakness in Chinese market fundamentals, ongoing financial instability, regulatory uncertainty, and concern over national-level risks.

Source: HK01, February 14, 2024

Guangming Daily Editorial: “The Economic Landscape in China Is Most Uniquely Beautiful”

Xi Jinping delivered a Lunar New Year address on February 8, comparing China’s economy last year to a beautiful landscape: “the [economic] scenery here [in China] is uniquely beautiful” (“风景这边独好”).

On February 10, Guangming Daily published an editorial propaganda piece titled “Living Better Days!” aiming to substantiate the idea that China’s economic “scenery” in the best in the world. Here is a key paragraph from the piece:

“You see, we decisively implemented a transition from the COVID-19 epidemic prevention and control  phase [to an open society]. The bustling streets and the prosperity of markets tell us that we have come through that difficult period. Agricultural production has again reached new highs: the rumbling of machinery and the reaping of silver sickles proclaim that we have achieved twenty consecutive years of abundant harvests. The vitality of strategic emerging industries can be seen in [the country’s] continuous breakthroughs in technological innovation, in the rapid formation of new productive forces, and in the total export of the “three new industries” (electric vehicles, lithium batteries, and solar cells) having surpassing one trillion yuan (US$ 140 billion). Despite the continued global economic downturn, we have still sent out 17,000 China-Europe freight trains and generated 126 trillion yuan in total economic output. ‘The economic scenery on China’s side is uniquely the best’ – this is the declaration that we have sent out to the world.”

Source: Guangming Daily, February 10, 2024

China’s Pension Funds Struggle with Widespread Losses amid Stock Market Slump

China’s pension-targeted funds, which aim to provide stable returns for retirement savings, have seen continued poor performance over the past year with widespread losses. Data from Wind shows there are currently 462 such funds in China. Of the 345 funds established before 2023, only 35 (10.14%) have realized positive returns over the last year. Additionally, only 11 funds achieved returns above 1% over the past year, while 34 funds saw returns decline by more than 10%. Seven funds have even been liquidated.

China’s pension-targeted funds experienced rapid growth after the first batch was approved for issuance in August 2018. However, since the beginning of 2022, performance has declined dramatically, a situation which has not improved in 2023.

According to a senior Chinese public fund researcher, the poor returns of China’s pension funds is largely due to the overall weak stock market, which has severely impacted pension funds. This highlights the factor that must be recognized – China’s pension-targeted funds are heavily tied to the performance of the broader financial markets. With the markets performing poorly over the past year, China’s pension funds have unsurprisingly also struggled to generate positive returns for retirement savers.

Source: Radio Free Asia, February 12, 2024

CNA: BloombergNEF Puts Canada Ahead of China in Lithium Battery Production Capabilities

Primary Taiwanese news agency Central News Agency (CNA) recently reported that Bloomberg New Energy Finance (BloombergNEF) has released a ranking report on global supply chains for lithium-ion batteries. Canada surpassed China for the first time as number one in the rankings, topping the list of 30 countries. According to BloombergNEF, the “Global Lithium-Ion Battery Supply Chain Ranking [is] an annual assessment that rates 30 countries on their potential to build a secure, reliable, and sustainable lithium-ion battery supply chain.”

The below excerpts are translated from the CNA article:

“China ranked first for the three years prior before falling to second place in the 2024 edition of the BNEF ranking. Canada moved to the top of the list from second place, and the United States now ranks third among battery producers.”

“Canada currently accounts for only a fraction of China’s lithium-ion battery production. BloombergNEF’s analysis focuses on future battery supply chain developments.”

“The Canadian government continues to invest new funds to expand support programs for electric vehicle battery manufacturing.”

“Multinational companies investing in the electric vehicle industry such as Ford, Stellantis, Volkswagen, South Korea’s LG Energy Solution, and Umicore have already started developments in Canada.”

“BloombergNEF examined 46 indicators across five categories to measure each country’s potential to build a safe, reliable and sustainable lithium-ion battery supply chain. These categories include raw materials, battery manufacturing, downstream demand, environmental and social governance, as well as industry, infrastructure and innovation.”

CNA, February 8, 2024

BloombergNEF, February 5, 2024

January Sales of TOP100 Chinese Real Estate Companies Decreased 33% Year-Over-Year

The China Index Academy recently published its January report “Sales Performance Ranking of Chinese Real Estate Enterprises.” Shanghai-based Chinese financial news site East Money wrote about the data from the report, commenting that in January this year the total sales of the TOP100 Chinese real estate companies suffered a year-over-year decrease of 33.3 percent. The decline was 1.6 percent worse than the same period last year.

The China Index Academy report mentioned that January of 2023 saw the relaxation of China’s strict Zero-COVID policy, leading to a surge in demand and relatively high sales during that period. Thus, the baseline for January 2024’s year-over-year change in sales was relatively high. Meanwhile, the real-estate market is currently quite sluggish, the sector as a whole in recession, and Chinese real-estate giant Evergrande is facing liquidation.

According to statistics from the Academy’s report, the transaction area of new homes in 100 key cities fell by about 33 percent month-over-month. Overall market sentiment remains weak. In terms of second-hand housing, transaction volume in key cities increased slightly month-over-month, and the market remains active. The area of new homes approved for sale in 50 key cities fell by about 50 percent month-over-month and more than 15 percent year-over-year. The overall scale of supply is at a low level.

Source: East Money, February 1, 2024

China Identifies Strategic Emerging Industries for Investment

“Strategic emerging industries and future industries are the new battlefield for competition,” according to Zhuang Shuxin, Secretary-General and spokesperson for the State-owned Assets Supervision and Administration Commission of China’s State Council.

A recent People’s Daily article stated that the Chinese government plans to “promote a number of major projects,” select “hundreds of projects” in strategic emerging industries, construct “clusters of strategic emerging industries,” implement special actions such as “AI+,” and accelerate the formation of landmark achievements in key areas such as biotechnology, new materials, and new energy vehicles. The government will also expedite industrial development supported by technological breakthroughs; foster pioneering enterprises, leading enterprises, and unicorn enterprises; and create landmark products in areas such as neuromorphic intelligence, quantum information, deep earth and sea exploration, and laser manufacturing.

Source: People’s Daily, January 30, 2024

The New Social Currency in China’s Financial Industry: Guandan + Maotai

The Chinese card game “Guandan” has rapidly gained popularity nationwide since last year, posing a threat to golf and Texas Hold’em poker as the new “social currency” of China’s financial industry. Such scenes have emerged as financial securities firms giving “Guandan gift boxes” to clients, fund companies organizing Guandan tournaments, private equity and venture capital firms studying Guandan books and skill guides, and industry leaders playing Guandan games at gatherings.

In the past, China’s financial industry was closely intertwined with the US dollar, and social activities largely revolved around western activities such as golf or playing Texas Hold’em poker and drinking red wine. Nowadays, however, foreign sources of funding have largely dried up, and availability of domestic private capital is decreasing too. Financial professionals in China are therefore forced to turn to the government for funding. Since Chinese government officials enjoy playing the game “Guandan,” mastering this game has become critical for Chinese financial professionals.

With the industry drifting towards a “Guandan + Maotai liquor” model, Shanghai has even established a Guandan Sports Association. Originating from Huai’an, Jiangsu Province, “Guandan” is a four-player card game played with two decks of cards, where players form teams of two and must use higher-ranking card combinations to suppress opponents, with the winner being the first to deplete their hand of cards, followed by scoring and ranking up.

Source: Epoch Times, January 29, 2024