Economy/Resources - 66. page

The Evergrande debt problem was the first. It started a wave of Chinese real estate companies defaulting on their debts. Kaisa Group (佳兆业) ran into same problem. Its subsidiary Jinheng Wealth missed a payment of a 300 million yuan (US$47 million) financial product. Kaisa Group offered a guaranty on the product.

On November 22, Kaisa Group announced a repayment plan for its product. The plan was that its debt will be paid in installments, based on the due date. For money where the due date of the dept has not passed yet, the company will pay the investor 10 percent of the principle in the month when the payment is due. Then it will pay 10 percent every three months thereafter. There will be no interest payment before the principle is due. After that, the interest payment will follow the same 10 percent payment schedule once the principle is due.

For the principle due because the company missed the payment, it will pay interest for the extension at 4.35 percent (based on a one-year commercial load rate). The extended interest will be paid with 50 percent of what is due three months after it completes the payment for the principle and original interest, and then complete it in another three months.

Source: Sina, November 22, 2021
https://finance.sina.com.cn/money/roll/2021-11-23/doc-iktzscyy7194408.shtml

According to the recently released “China Statistical Yearbook 2021,” China’s birth rate in 2020 was 8.52 per 1,000 people. It thus fell below 10 per 1,000 for the first time. This is the lowest rate in the past 43 years. There were 12 million births in 2020, about one-third fewer than the 17.86 million in 2016.

According to the Yearbook, China’s natural population growth rate (birth rate minus death rate) for 2020 was 1.45 per 1,000. This is a record low since 1978. Experts predict that, at the earliest, a negative growth rate is likely to occur during the 14th Five-Year Plan period  i.e., the 2021-2025 period.

In 1987, the birth rate was as high as 23.3 per 1,000, and the natural growth rate that year was as high as 16.61 per 1,000, both of which were historical highs for the period of more than 40 years.

The Chinese Communist Party adopted a law in August 2021 to lessen its control of planned parenthood by allowing three children per couple.

As young people are not responsive to the policy change, at least 12 provinces and cities in China, including Shanghai, Hebei, Henan, Tianjin, Guizhou, Anhui, Shanxi, and Shaanxi, have issued the “Human Assisted Reproductive Technology Application Plan (2021-2025)” The purpose of the plan was to increase assisted reproductive service agencies in order to help infertile couples with artificial insemination.

Among them, Sichuan Province plans to increase the number of institutions in the next five years by 20, Shaanxi Province 10, Anhui Province by 10, Shanxi five, Tianjin two more, and Hebei Province up to five.

At the end of June last year, China had 523 assisted reproductive medical institutions. Among them, there were 56 in Guangdong and 33 in Jiangsu Province. There are 27 medical institutions approved to set up human sperm banks, including two in Beijing, Shanghai, and Henan Province, respectively.

Sources:

1.) China Business Network, November 15, 2021
https://www.yicai.com/news/101229959.html

2.) The Paper, November 21, 2021
https://www.thepaper.cn/newsDetail_forward_15479163

China’s debts have continued to soar, with the latest official figures showing that local government debts surged in the first 10 months of the year, reaching a record high of 30 trillion yuan (US$ 4.7 trillion). A more concerning phenomenon is that nearly half of the new debts were not injected into the economy but were used to pay off old debts.

On Tuesday November 23, China’s Ministry of Finance released the latest data on local government bond issuance. From January to October this year, China issued a total of 6.49 trillion yuan (US$ 1.0 trillion) in local government bonds, up 6 percent from the same period last year and hitting a record high. Among them, 2.8 trillion yuan (US$ 0.44 trillion) was issued to refinance bonds, an increase of 75 percent compared to the same period last year. In other words, the increase in local bond issuance this year is mainly due to the issuance of refinancing bonds.

In addition, as of the end of October this year, the balance of local government debt was about 29.7 trillion yuan (US$ 4.7 trillion). From January to October this year, Guangdong surpassed all other provincial governments in bond issuance. The total amount issued was 589.4 billion yuan (US$ 92.2 billion).

Source: Radio Free Asia, November 23, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/ac-11232021044123.html

Young people in mainland China continue to lie down (tang ping or take a rather passive attitude toward life  — See the article at http://chinascope.org/archives/27040 for a description of this phenomenon) and not have a family. According to the Ministry of Civil Affairs of China, the number of marriages in the third quarter of this year hit a record low.

The latest official statistics released in October show that, in the third quarter of this year, only 1.72 million couples registered to be married. On a quarterly basis, this was the fist time the number has fallen below 2 million couples.

In the first three consecutive quarters of this year, marriage registrations have been falling. In these three quarters combined, 5.886 million couples registered to be married. That figure is 8,000 fewer than in the same period last year.

Analysts observed that the figure for national marriage registrations has fallen year after year since 2013.  The number fell below the 10 million mark in 2019 and it fell below the 9 million mark in 2020, when, in the whole country, only 8.131 million couples registered for marriage.

The recent figures cited above reflect the younger generations’ continuing distrust of the Chinese Communist Party (the CCP) and the widespread public grievances against the regime. Not getting married has become a form of protest against the CCP’s calls for bigger families. People would rather “lie down” to avoid bearing the rising costs of having a family.

Source： Ministry of Civil Affairs, October 29, 2021
http://www.mca.gov.cn/article/sj/tjjb/qgsj/

As China’s real estate developers are struggling with a shortage of cashflow, more and more companies have been giving people houses, many of which are still under construction, as a way of paying their contractors. Normally these houses are sold at a big discount and the recipients can then sell them to recover their cash.

Giving out houses has been happening in many cities. In Guangzhou city, a major economic hub in Southern China, over ten construction projects gave out houses as a way of making their payments.

Also, the housing prices in some cities have started falling. If this trend continues, it could lead to a collapse of the real estate market. Twenty-one cities have issued orders to prevent prices from dropping too fast.

Source: China Business Network, November 13, 2021
https://m.yicai.com/news/101228762.html

The National Development and Reform Commission (NDRC), China’s top economic policy agency under the State Council, recently issued a press release, which requested local governments to punish virtual currency mining activities and to investigate the mining activities that involve state-owned entities.

In late September, NDRC and other cabinet agencies issued a notice on regulating virtual currency mining.  Virtual currency mining projects were forbidden from participating in the electricity market, and the projects that were already in the electricity market were to withdraw.

In July, China’s central bank, the People’s Bank of China (PBOC), issued a “Risk Alert on Preventing Virtual Currency Transactions.” The notice warned that institutions should not provide business venues, commercial exhibitions, marketing, promotion, payment and other services for virtual currency-related activities. Financial institutions were not to provide virtual currency-related services directly or indirectly to customers.

China is a major cryptocurrency mining country. About 70 percent of the world’s bitcoin mining takes place in China. Some of these “miners” had already considered leaving after the authorities showed their determination to eliminate virtual currency mining.

Source: Central News Agency, November 13, 2021
https://www.cna.com.tw/news/acn/202111130086.aspx

The Development and Research Center of the State Council is a policy research and consultation institute under the State Council. On November 9, it held a conference with several real estate developers and banks in Shenzhen in order to talk about the real estate situation in China.

At the meeting, a representative of the Kaisa Group (佳兆业集团) asked for help stating that the company is facing great difficulties, including a tight cash flow, a complete loss of investment capability, continuous credit downgrading, and the fact that Chinese banks’ have stopped providing loans.The Kaisa representative expressed that, without external help, the company may cause a chain reactions of work stoppage and unfinished construction.

(Editor’s Note: Several Chinese media, including the communist party controlled Ta Kung Pao in Hong Kong, reported this news, but they later removed their articles.)

Source: Secret China, November 9, 2021
https://www.secretchina.com/news/gb/2021/11/09/989065.html