China’s Top Financial News Stories for the Week Ending 28 July, 2023

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A round-up of China’s top economic and financial news stories for the week ending Friday, 28 July 2023.

China’s new financial super-regulator holds inaugural press conference (Securities Times

On 27 July, the State Administration of Financial Supervision (SAFR) held a press conference on the operational data of the banking and insurance sectors in the first half of 2023. This was the first press conference held by SAFR since its launch. 

As of the end of the first half of the year, the total assets of banking sector financial institutions were 406.2 trillion yuan, a year-on-year increase of 10.5%. The total assets of insurance companies were 29.2 trillion yuan, a year-on-year increase of 9.6%. The balance of insurance funds used was 26.8 trillion yuan, a year-on-year increase of 9.7%. Renminbi loans increased by 15.7 trillion yuan, an increase of 2.02 trillion yuan year-on-year.

In the first half of the year, the cumulative net profit of commercial banks was 1.3 trillion yuan, a year-on-year increase of 2.6%, while the growth rate decreased by 4.5 percentage points compared with the same period last year. The balance of commercial bank loan loss reserves increased by 456.1 billion yuan. The provision coverage ratio was 206.1%, maintaining a relatively high level. The capital adequacy ratio of commercial banks is 14.66%. At present, the comprehensive solvency ratio of the insurance industry is 190.3%, which remains within a reasonable range.

Big benefits for the housing market! Ministry of Construction makes major statement (China Fund Report

Ni Hong, Minister of Housing and Urban-Rural Development, said at a recent corporate symposium that the real estate market should continue to stabilize and recover, vigorously support inelastic and renovation housing demand, and further implement measures including reductions in down payments and loan rates for first home purchases, tax reductions and exemptions for improved housing exchanges, and continuing to do an effective job of guaranteeing the delivery of properties, accelerating the delivery of project construction, and effectively protecting the legitimate rights and interests of the people.

The Ministry of Housing and Urban-Rural Development said that stabilizing the two pillars of the construction industry and the real estate industry will play an important role in promoting economic recovery. It is necessary to take industrialization, digitalization, and greenification as the direction, vigorously promote the sustainable and healthy development of the construction industry, and give full play to the positive role of the construction industry in “promoting investment, stabilizing growth, and ensuring employment.”

Wang Yi appointed foreign minister, Pan Gongsheng appointed central bank chief by NPC Standing Committee (Xinhua

The 4th meeting of the Standing Committee of the 14th National People’s Congress was held in the Great Hall of the People in Beijing on 25 July. After voting at the meeting, it was decided to remove Qin Gang as foreign minister and appoint Wang Yi as foreign minister, and remove Yi Gang as governor of the People’s Bank of China and appoint Pan Gongsheng as governor of the People’s Bank of China.

Expand external opening, drive improvements to quality in foreign trade (People’s Daily Opinion Piece

At present, the external environment is complex and challenging, and foreign trade is indeed under pressure. However, the fundamentals of China’s long-term economic growth have not changed. Coupled with a strong industrial system and complete production capacity, the successes of high-level opening up are constantly becoming apparent. 

The growth of foreign trade is resilient and has large room to maneuver. By constantly innovating new methods and new measures to expand and open up, and continuing to promote the transformation and upgrading of foreign trade, we will surely be able to further strengthen the new momentum of foreign trade growth, seize the initiative and win the future amidst international competition that’s becoming increasingly fierce. 

China Securities Regulatory Commission to invigorate capital markets at the investment, financing and transaction phases (China Securities Journal)

From 24 – 25 July the China Securities Regulatory Commission held a mid-year work symposium for the 2023 system to summarize work, analyze conditions, and study and deploy key tasks for the second half of the year.

CSRC stated that the latest meeting of the CPC Politburo called for “invigorating the capital market and boosting investor confidence”, which reflects the great importance and strong expectations of the Party Central Committee for the capital market. 

CSRC should comprehensively implement policies in the areas of investment, finance, and trade, and make concerted efforts to ensure that the major policies of the Party Central Committee are fully implemented in the field of capital markets. 

CPC Politburo convenes meeting on economic work in H2 2023 (People’s Daily

The current economic situation faces new difficulties and challenges, mainly due to insufficient domestic demand, difficulties in the operations of some enterprises, many hidden risks in key areas, and a complex and challenging external environment. 

China must: 

  • Actively expand domestic demand, give full play to the fundamental role of consumption in driving economic growth, and expand consumption by increasing household income. 
  • Vigorously promote the development of a modern industrial system, accelerate the cultivation and growth of strategic emerging industries and create more pillar industries. 
  • Continue to deepen reform and opening up, adhere to the “Two Unwaverings”, effectively improve the core competitiveness of state-owned enterprises, and effectively optimize the development environment for private enterprises.
  • Effectively prevent and resolve risks in key areas, adapt to the new situation of major changes in the relationship between supply and demand in China’s real estate market, adjust and optimize real estate policies in a timely manner while promoting the stable and healthy development of the real estate market.
  • Raise safeguards for people’s livelihoods, make stabilisation of employment a key strategic consideration and expand the middle-income demographic.

National Development and Reform Commission explains Opinons for driving private economy (Sohu

The Central Committee of the Communist Party of China and the State Council’s “Opinions on Promoting the Development and Growth of the Private Economy” were officially announced yesterday (20 July)

Li Chunlin, deputy director of the National Development and Reform Commission (NDRC), pointed out that for a long time, the private economy has played a positive role in stabilizing growth, promoting innovation, increasing employment, and improving people’s livelihood. strength. The introduction of the “Opinions” will effectively promote the development and growth of the private economy.

People’s Bank of China, State Administration of Foreign Exchange raise macro-prudential adjustment index for cross-border financing (People’s Bank of China

In order to further improve the macro-prudential management of full-scale cross-border financing, continue to increase the sources of cross-border funds for enterprises and financial institutions, and guide them to optimize the structure of assets and liabilities, the People’s Bank of China and the State Administration of Foreign Exchange have decided to adjust the macro-prudential regulation of cross-border financing for enterprises and financial institutions. The index will be raised from 1.25 to 1.5 starting from 20 July, 2023.

Foreign investment in China’s bond market has room for continued growth: SAFE (People’s Daily

Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange (SAFE), said at a press conference held by the State Council on 21 July that the performance of the global cross-border bond market is still relatively sluggish this year, but foreign investment in China’s bond market is generally positive. 

If the factor of redemption at maturity is not considered, the net purchase of domestic bonds by foreign investors in the first half of this year was nearly USD$79 billion, reversing the trend of net sell offs last year. In the second quarter especially, the net purchase of domestic bonds by foreign investors was US$58.5 billion, which was at a relatively high level in quarterly terms. If consideration is given to redemption at maturity, foreign investors have increased their net holdings of domestic bonds for two consecutive months.

Loan prime rate remains unchanged, financing costs of real economy decline amidst stability (Beijing government

The People’s Bank of China authorized the National Interbank Funding Center to announce that the quoted loan prime rates (LPR) for 20 July 2023 were 3.55% for the 1-year tenor and 4.2% for the 5-year tenor, both of which remain unchanged from the previous period. 

Experts believe that this holding action for the LPR in July is consistent with market expectations and will not hinder a continued decline in financing costs for the real economy. In the next stage, macro-adjustment efforts are expected to continue to increase, further consolidating the credit loosening process.

Outstanding home loan rates temporarily unchanged, internal sources at banks say reductions on the way (21st Century Business Herald

On 21 July, local media in Changzhou, Jiangsu province, reported that some banks had reduced interest rates on existing mortgages. This reporter contacted a number of local banks in Changzhou, and they all said that relevant policies have not yet been issued. At present, the only way to adjust the interest rate of existing housing loans is by “on-lending”, that is, converting pure commercial loans into provident fund loans and commercial loans.

“1+N” policies for the private economy launched (Economic Information Daily

The “Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Development and Growth of the Private Economy” (中共中央 国务院关于促进民营经济发展壮大的意见) was recently released, proposing 31 measures in eight aspects to optimize the development environment of the private economy and boost the confidence of the private economy.

This reporter learned at a State Council press conference on 20 July that in the next phase, relevant departments will study and issue the “1+N” supporting measures for the “Opinions”, including recent measures to promote the development of the private economy and policy documents to promote private investment, which are expected to be implemented in the near-future. A multi-pronged approach will strengthen policy support for private enterprises and further stimulate the vitality of private economic development.

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