China wants to supercharge financial access for tech firms
Key economic and financial developments in China as of Friday, 24 May, 2024.
Both the Ministry of Finance and the China Securities Regulatory Commission have outlined plans to improve financial access for tech enterprises. Cities around China are loosening up credit conditions for home buyers, after the launch of landmark measures by the Chinese central bank to revive the faltering property market. Xi Jinping has met with Chinese entrepreneurs and stressed the need to drive further economic reforms.
Cities around China slash down payments for home loans
Major cities around China have moved to reduce the down payments for home loans, in the wake of loosening measures launched by the Chinese central bank to resuscitate the country's ailing property market.
Cailian reports that as of 22 May, banks in the provincial capitals of Wuhan, Hefei, Changsha, Xi'an and Jinan had reduced down payments to 15% for first-home mortgages and 25% for second-home loans.
All of these cities have also seen reductions to interest rates for home loans. In Jinan, first-home loan rates have fallen to 3.55% from 3.7%, while second-home loan rates have dropped beneath the four per cent threshold, from 4.15% to 3.95%.
On 17 May, the People's Bank of China (PBOC) unveiled a slew of loosening measures described by domestic observers as "unprecedented," in a bid to invigourate the ailing Chinese property market.
The measures include removing floors on mortgage rates, and bringing down payments for home loans to the record lows of 15% for first-home mortgages and 25% for second-home mortgages.
57 listed companies in China receive risk warnings since start of May
Data from Wind indicates that as of 22 May, 57 companies listed on Chinese bourses had received risk warnings from regulators.
Securities Daily reports that most of the warnings involved failure to issue standardised reports, falsification of financial reports, and major litigation. 28 of these companies received warnings in relation to audit reports.
Liu Xiangdong (刘祥东), chief analyst with Dongyuan Investment, said the move "embodied the determination of Chinese regulators to standardise the market and protect the lawful rights and interests of investors," amidst ongoing efforts by Beijing to expand the role of China's capital markets.
Tian Lihui (田利辉), head of the Nankai University Financial Development Research Institute, said the move reflected the strengthening of China's ability to regulate capital markets, and mechanisms to ensure that "the strong prevail and the weak are weeded out."
Beijing drafts first list of projects for ultra-long-term treasury bonds
On 21 May, the National Development and Reform Commission (NDRC) announced that it had assembled its first list of development projects that will be funded via the issuance of ultra-long-term treasury bonds.
On 15 May, Premier Li Qiang said these projects would be concentrated in the "two key [areas]" (“两重”) of "the implementation of key national strategy and security capability in key areas," in order to "provide vigorous support to Chinese-style modernisation."
China plans to issue 1 trillion yuan in ultra-long-term treasury bonds this year with tenors of between 20 to 50 years. Issuance of ultra-long-term treasuries is also set to continue for the each of next several years.
Observers say the move is designed to alleviate the debt burdens of China's local governments, as well as optimise the consolidated government debt structure and fuel long-term infrastructure stimulus.
Former central bank chief says major commercial banks should be allowed to found securities firms
Dai Xianglong (戴相龙), the former head of the People's Bank of China (PBOC), said major commercial banks in China should be allowed to establish their own securities firms, as part of the development of a modernised and uniquely Chinese financial system.
At the inaugural Renmin University Shenzhen Financial Forum (深圳金融论坛) held in Shenzhen on 19 May, Dai also called for the Chinese central bank to release social financing and quantitative monetary targets at the start of each year, and expand the volume of short-term Chinese treasury issues.
Securities Daily touts popularity of China's bond market with foreign investors
State-owned media is touting the continued popularity of China's debt market with foreign investors.
Data from China's State Administration of Foreign Exchange (SAFE) indicates that offshore investors made 124.7 billion in net purchases of Chinese onshore bonds in April, alongside 41. billion in share purchases.
"Offshore institutional investors have increased their holdings of Chinese bonds for eight consecutive months," Securities Daily said.
PBOC data indicates that as of the end of April, offshore investors held 4.05 trillion yuan in bonds on China's interbank market, accounting for a 2.9% share of the total interbank market custodial amount.
Ministry of Finance to launch tech innovation guarantee plan for SMEs
The People's Daily reported on 22 May that the Ministry of Finance (MOF) plans to implement a "science and tech innovation special re-loan plan," in order to "improve risk-sharing and supplementary payment by state financial guarantee funds for innovative small and medium-sized enterprises."
MOF said it will also direct Chinese banks and governmental guarantee agencies at all levels to strengthen financial support for innovative tech SMEs, and drive more financial resources towards the area of tech innovation.
According to MOF, the goal is for China to achieve "high-level tech independence and self-strengthening, accelerate the formation of new quality productive forces, and provide vigorous support to high-quality economic development."
Xi Jinping meets with entrepreneurs, stresses the need for further reform
On 23 May, President Xi Jinping met with entrepreneurs at a forum held in the Shandong province city of Jinan.
In a speech delivered at the forum, Xi said that the Communist Party's 20th National Congress had outlined the blueprint for the full establishment of a modern nation, and called for the comprehensive deepening of reform measures.
Beijing Stock Exchange has nearly 7 million investors
The Beijing Stock Exchange has accumulated nearly 7 million investors less than three years after its launch, according to figures revealed by exchange head Sui Qiang (隋强), during a speech delivered at the Financial Street Forum on 23 May.
Sui said social welfare funds, insurance funds, and QFIIs had all become investors in the Beijing Stock Exchange, alongside over 900 publicly offered mutual funds.
Since October last year, daily market transactions have stood at around 8.54 billion yuan.
The Beijing Stock Exchange was opened in September 2021, becoming the third official bourse in China after the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
Chinese policymakers say the Beijing Stock Exchange is intended to serve the needs of innovation-oriented SMEs.
CSRC wants special support for equity financing by tech companies
China's securities regulator has flagged greater support for the use of equity financing by Chinese enterprises working on key technologies.
At the Financial Street Forum held on 23 May, Zhou Xiaozhou (周小舟), a senior official with the China Securities Regulatory Commission (CSRC), called for "preferential support for equity financing by companies that work with key and core breakthrough technologies."
Zhou also said that CSRC would push for "actively and effectively employing the unique role of venture investment and equity investment in uncovering, rearing and supporting future industries and emerging industries."
People's Daily is upbeat on AI
The People's Daily - the flagship newspaper of China's Communist Party, is banging the drum of AI's potential with a slew of articles published by its online platform this week.
These include stories on how large-language model (LLM) based AI could be on par with human beings when it comes to mental reasoning, ongoing efforts to develop autonomous cars in Beijing, and the development of neural implants in California that can facilitate communication for mute individuals by "reading their minds."