Economy/Resources - 6. page

To help the Chinese real estate sector, which is facing a daunting crisis as companies run out of capital to complete construction projects, Beijing recently ordered its banks to provide financial support to a massive list of real estate projects. This is another case of the Chinese Communist Party attempting to control markets via state power.

On January 5th, 2024, China’s Ministry of Housing and Urban-Rural Development and its National Administration of Financial Regulation jointly issued a “Notice on Establishment of Coordination Mechanisms for Urban Real Estate Financing.” According to the notice, cities at the prefecture level and above are required to establish “coordination mechanisms” for urban real estate financing “with the team leader being the responsible comrade of the city government who is in charge of housing and urban-rural development.” These coordination mechanisms will present financial institutions with lists of real estate projects eligible for financing support within each given administrative region. Financial institutions are to assess the lists and will fast-track credit/financing approval for projects that are in good shape. For projects facing “temporary difficulties” but whose long-term financial outlooks are balanced, financial institutions are instructed to “provide support through extension of existing loans, adjustment of repayment arrangements, and issuing new loans” rather than “blindly withdrawing, suspending, or pressuring existing loans.”

The Xinhua state news agency published an article on February 18 stating that the National Administration of Financial Regulation “held two special meetings to deploy and implement work related to the urban real estate financing coordination mechanism” following initial release of the notice. “By now, most cities have established the coordination mechanism. They have proposed ‘white lists’ of real estate projects and forwarded them to banks.”

According to Xinhua, preliminary data collected by Financial Times (China) showed that 15 commercial banks, including the six major state-owned banks and several joint-stock commercial banks, have engaged financial support for nearly 13,000 projects. The Industrial and Commercial Bank of China (ICBC) has worked on over 2,000 projects, Agricultural Bank of China on over 2,700 projects, and China Construction Bank on over 2,000 projects.

Source:
1. China’s Government Website (Gov.cn), January 5, 2024
https://www.gov.cn/zhengce/zhengceku/202401/content_6925683.htm
2. Xinhua, February 18, 2024
http://www.xinhuanet.com/money/20240218/0688b047bcf246c18b117a962c4a217c/c.html

To force an upward trend in stock market prices, Beijing is taking measures to restrict major institutional investors from conducting net sales of stocks during the opening and closing phases of stock market trading in China. Additionally, Beijing has prohibited institutions from shorting A-share stocks via stock index futures.

On February 22, the China Securities Regulatory Commission (CSRC) responded to reports on the restrictions published by foreign media. The CSRC stated that the regulatory authorities “do not intervene in normal market transactions.” They said that their actions are a measure to “fulfill regulatory responsibilities on trading, and they do not represent a restriction on selling [stocks].” Rather the restrictions are to “crack down on illegal activities such as market manipulation and insider trading.”

Sources:
1. Radio Free Asia, February 22, 2024
https://www.rfa.org/mandarin/Xinwen/10-02222024151556.html
2. Xinhua, February 23, 2024
http://www.xinhuanet.com/money/20240223/d1c45ad547734c3ab892fac1aab2d3cd/c.html

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
https://news.gmw.cn/2024-02/10/content_37142995.htm