China's state-owned enterprises told to buy old houses
A round-up of key economic and financial developments in China as of 28 May, 2024.
China's senior-most officials continue to bang the drum for the growth of the digital economy. Green loans post a leap of over 35%, while financial regulators commit to reducing financing costs for small businesses. Property giant Vanke grabs a record-breaking loan from a syndicate of Chinese banks, and municipal governments tell state-owned enterprises to buy old houses from homeowners.
Xi Jinping promises entrepreneurs more reforms
President Xi delivered a speech stressing the need for greater reform at a meeting recently convened with Chinese entrepreneurs and specialist experts, according to a report from the People's Daily.
Xi called for "advancing the comprehensive deepening of reform," while also stressing the need to "uphold and develop the basic economic system of our nation, establish a high-level socialist market economic system, improve macro-economic regulatory systems and drive mechanisms for high-quality development."
"In solving the problems of implementation [we will] deepen theoretical innovations and drive systems innovation."
"Reform and opening has already crossed a thousand mountains and ten thousand rivers, but we still need to scale peaks and traverse waters," Xi said.
China's seven key missions for reducing the cost burden on companies
The National Development and Reform Commission (NDRC) recently led the release of the "Notice on Effectively Performing Key Work for Cost Reductions in 2024" (关于做好2024年降成本重点工作的通知).
According to the Notice, the Chinese government will seek to reduce the cost burden on enterprises in the real economy, via 22 missions across seven key areas that include:
Raising the targetedness and effectiveness of preferential tax policies, with a focus on tech innovation and manufacturing growth.
Raising the quality and effectiveness of the ability for finance to service the real economy, and reducing costs for smaller companies to avoid exchange rate risk.
Continuing to reduce transaction costs.
Easing the labour cost pressures for enterprises, with reductions to unemployment insurance and occupational injury insurance rates, and strengthening of support for enterprises in labour-intensive industries.
Reducing costs for the usage of raw materials by enterprises.
Driving increases in the quality and reductions to the cost of logistics.
Spurring enterprises to uncover their internal potential. Strengthening funding support for the technological upgrade of manufacturing firms.
Beijing pushes for digital upgrade of Chinese economy
The Chinese central government has reiterated its commitment to driving the digital transformation of China's economy.
On 24 May, key figures from the Chinese central government delivered speeches at the opening 7th Digital China Summit held in the Fujian province capital of Fuzhou.
They included
Ding Xuexiang (丁薛祥), China's first vice-premier.
Liu Liehong (刘烈宏), head of the National Data Administration (NDA),
Gou Ping (苟坪), deputy-chair of the State-owned Assets Supervision and Administration Commission (SASAC), and
Jiang Pingdeng (江平等), deputy-minister of the Ministry of Industry and Information Technology (MIIT).
Senior officials outlined plans for driving the digital transformation of the Chinese economy, including:
Arranging for central state-owned enterprises (SOE) to focus their energies on digital technology.
Expanding the use of data as a factor of production.
Accelerating the construction of data infrastructure and infrastructure systems.
Comprehensive deepening of smart city development.
Vigorously driving the in-depth integration of digital technology with the real-world economy.
"The establishment of a digital China is a key engine for driving Chinese-style modernisation," Ding Xuexiang said.
"Since the 18th National Congress of the Communist party, the party central committee has elevated the development of the digital economy to the level of national strategy."
China produced a total of 32.85 zettabytes in 2023, for a year-on-year rise of 22.44%, according to the "National Data Resource Survey Report (2023)" released at the Summit.
The core industries of China's digital economy currently account for a 10% share of national GDP.
MIIT calls for greater synergy between private enterprise, SOEs and small business
Four central government departments led by the Ministry of Industry and Information Technology (MIIT) have announced plans to hold a "Hundred Locations, 10,000 Companies" (百场万企) event, to increase ties between central state-owned enterprises, private companies and small and medium-sized businesses.
"This activity will establish and improve channels for connecting large, medium and small-scale enterprises, concentrate the resources of all parties, and drive even more SMEs to integrate into the innovation chains, industry chains and supply chains of large-scale enterprises," the People's Daily reports.
China issues 40 billion yuan in 20-year ultra-long-term treasuries
China advanced plans to raise trillions via ultra-long-term treasuries on 24 May, with the launch of a 40-billion yuan issue of 20-year bonds.
Sales of the 20-year treasuries ran from 24 - 27 May, with exchange trading of the instruments scheduled to commence on 29 May.
The Ministry of Finance (MOF) said it will issue 20-year ultra-long-term treasuries each month until November, for seven issues in total in 2024.
China plans to issue ultra-long-term treasuries across multiple tenors, including 20 years, 30 years and 50 years, over the next several years.
The central government said the funds will be used to drive infrastructure development, make transfer payments to heavily indebted local governments, and optimise the government debt structure.
Green loans leap over 35% in Q1 2024
China's domestic and foreign currency green loan balance stood at 33.77 trillion yuan as of the end of the first quarter, according to data from the People's Bank of China (PBOC).
The figure marks a year-on-year (YoY) rise of 35.1%, and an increase of 3.7 trillion yuan over the quarter.
The People's Daily said that green finance is playing an increasingly important role in solving ecological and environmental problems, and has major significance for expediting adjustments to the industrial structure.
"In recent years the green development of China's economy has continually increased, and continuous expansion of the scale of the green economy is driving further growth in the demand for green finance," said Shi Yichen (施懿宸), a senior academic advisor from the Green Finance International Research Institute at the Central University of Finance and Economics.
Securities regulator steps up scrutiny of large-scale offloading by key shareholders
On 24 May, the China Securities Regulatory Commission (CSRC) issued a slew of measures targeting large-scale offloading of equity stakes by key shareholders in listed companies.
The new regulations stipulate that controlling shareholders are not permitted to sell off stocks via concentrated auction transactions or block transactions, unless companies have satisfied conditions such as reaching targets for net profits and dividend payments.
CSRC has increased advance disclosure duties for major shareholders prior to large-scale equity sales, and required that the affiliates of major shareholders be subject to the same restrictions.
The regulator said it has strictly prohibited the use of securities lending and reloans as an indirect means for key shareholders to sell off stocks.
Vanke grabs China's biggest real estate loan since 2020
According to state-owned media reports from 23 May, Vanke has entered an agreement with a syndicate of financial institutions led by China Merchants Bank to obtain a loan of 20 billion yuan.
The loan is reportedly the largest provided to a property company in China since 2020, and is collateralised by shares in a Vanke logistics subsidiary. Vanke said the funds will be used to shore up the company's liquidity.
"[We] have the confidence and the ability to appropriately dispose of maturing debt, as well as actively, comprehensively and systematically complete the transition in our financing model," Vanke said in a statement.
Over 70 Chinese cities encourage state-owned enterprises to buy old homes
More than 70 municipal governments around China are encouraging local state-owned enterprises to purchase existing dwellings from homeowners, as part of new programs to resuscitate the housing market by "exchanging old [homes] for new" (以旧换新).
Zhongguo Xinwen reports that policies have the goal of driving reductions in housing inventory, and are considered a key means for boosting demand for residential dwellings
"Multiple locations are already conducting trials for local SOEs to purchase homes, but at present the scale is small, and homebuyers [exchanging homes] are required to purchase new housing in designated developments," said Chen Wenjing(陈文静, research supervisor for market research at the China Index Academy.
China's publicly offered mutual funds hit record size of 30 trillion yuan
The scale of China's publicly offered mutual funds has reached a record high, after posting a surge in growth since the start of 2024.
Securities Journal reports that the scale of China's publicly offered mutual funds has exceeded the 30 trillion yuan threshold to hit 30.78 trillion yuan, after seeing growth of more than 4.5 trillion yuan from January to April.
Fixed-income products have been the main driver of growth, with money market funds and bond funds increasing by nearly 1.5 trillion yuan in the month of April alone.
Equity funds have played only an ancillary role in driving growth, increasing by 700 billion in February, before seeing only modest gains in March and April.