China launches Private Economy Bureau, central bank pushes for more lending to private enterprise

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A round-up of the top economic and financial headlines in the Chinese press as of 7 September, 2023.

National Development and Reform Commission launches private economy development bureau  (Xinhua

The second half of the year has seen the intensive launch of a series of measures to promote the development and growth of the private economy 

Recently, the Central Organization Office officially approved the establishment of the Private Economic Development Bureau under the National Development and Reform Commission (NDRC), as a specialized agency to promote the development and growth of the private economy and promote the early implementation and effective results of various key initiatives. 

“Private economic work covers a wide range of areas and has strong policy implications, and requires close collaboration between various departments to form a joint force,” said Zhang Shixin, NDRC deputy secretary-general.

“The establishment of the Private Economic Development Bureau is mainly for the purpose of better coordination and organisation, comprehensive policy implementation and spurring development.”

Zhang Shixin said the main responsibilities of the Private Economic Development Bureau are to track, analyze and assess the development status of the private economy, coordinate and organize the formulation of policies and measures to promote the development of the private economy, and formulate policies to promote the development of private investment. 

At the same time, the Bureau will establish a regular communication and exchange mechanism with private enterprises to coordinate and solve major issues in the development of the private economy, and coordinate and support the private economy to enhance its international competitiveness.

China’s real estate policies undergo further adjustment and optimisation (People’s Daily

In order to adapt to new conditions of major changes in the supply and demand relationship on China’s real estate market, multiple departments and local governments have recently issued directives to make timely adjustments and optimize real estate policies. 

[This will] better satisfy the inelastic and improvement demand of households, while also expanding consumption and stimulating investment, exerting a beneficial impact on stabilizing economic growth.

On 30 August, Guangzhou and Shenzhen in Guangdong Province successively announced the implementation of the policy of “recognizing houses but not loans” (认房不认贷). On 1 September, Shanghai and Beijing also announced the implementation of the policy.

On 31 August, the People’s Bank of China and the State Administration of Financial Supervision jointly issued a notice that the minimum down payment ratio for commercial personal housing loans for first and second homes will be no less than 20% and 30%. At the same time, the interest rate on existing first-home housing loans was reduced.

China’s central bank pushes for finance to support private enterprise (Sina

On 30 August, the People’s Bank of China (PBOC) held a meeting on driving financial support for the development of private enterprises. 

At the meeting, PBOC, the China Securities Regulatory Commission, the State Administration of Financial Supervision and other departments made strong statements, stating that the next step will guide more financial resources to flow to private enterprises and small and micro enterprises, and continue to increase the proportion of loans to private enterprises. 

At the same time, authorities will support listed real estate companies in obtaining finance from the capital market, maintain the stability of stock and debt financing channels for real estate companies, and support the reasonable financing needs of real estate companies for normal operations.

 In terms of financial support for private enterprises, the People’s Bank of China and the State Administration of Financial Supervision stated that they will maintain reasonable and sufficient overall liquidity, guide the flow of financial resources to private enterprises, continue to increase the share of loans to private enterprises and guide credit resources to tilt towards private enterprises.

According to reports from Beike Finance, at the meeting, Pan Gongsheng, Party Secretary and Governor of PBOC, said that in terms of monetary policy, the central bank, will maintain overall liquidity at a reasonable and sufficient level in the future. At the same time, structural monetary and credit policies will guide more financial resources to flow to private enterprises and small and micro enterprises.

“We are working hard to formulate relevant financial policies to support the development of private enterprises, continue to increase the proportion of loans to private enterprises, and unblock the three financing channels of stocks, bonds and loans,” said Ma Jianying, deputy director of PBOC’s Financial Markets Department. 

According to Securities Times, Ma said relevant departments are working hard to formulate policy documents on financial support for the development of private enterprises. 

He made clear that the goal is to continue to increase the share of loans to private enterprises and strive to ensure that financial support for private enterprises is commensurate with their contribution to economic development.

Financial institutions are required to set annual service targets for private enterprises, increase the weight of performance appraisals in private enterprise services, and vigorously expand the target for first-time borrowers that are private enterprises.

Securities regulator targets high-frequency futures transactions (Diyi Caijing

Speaking at the 6th membership conference of the China Futures Industry Association, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), said that it would strengthen supervision and regulation of new forms of transactional conduct such as high-frequency trading. 

[CSRC will also] resolutely prevent excess speculation, and guide the standardised operation of capital on the futures market.

Multiple national banks reduce deposit rates 10 – 25bp at start of September (Securities Journal)

A number of national commercial banks will further reduce their advertised deposit rates starting from 1 September. 

This will be the first time in less than three months that national commercial banks have reduced their advertised deposit interest rates, following a cut in early June this year. 

It’s also the third round of active adjustments to the deposit interest rates since September 2022 made by commercial banks based on their own operating needs and market conditions.

Compared with the reduction in June, the deposit interest rate cuts this time are generally larger, and mainly target time deposits and large certificates of deposit. 

China will increase intensity and effectiveness of active fiscal policy (Xinhua News Agency

On 28 August, the State Council’s report on the implementation of the budget this year was submitted to the Fifth Session of the Standing Committee of the 14th National People’s Congress for review. 

The report proposes that efforts will be made to improve efficiency and implement a proactive fiscal policy. 

[We must] strengthen fiscal and economic monitoring and condition analysis, closely track the implementation of local and departmental budgets, make effective use of the direct access mechanism of fiscal funds, reasonably accelerate the schedule for fiscal expenditures, comprehensively improve the efficiency of capital expenditures, and promote the early implementation of various fiscal and taxation policies. 

This year’s new special bonds will basically be issued before the end of September, and the special bond funds employed for project construction will be used up before the end of October. 

Minister of Finance Liu Kun said that in the next phase, macroeconomic policy control will be intensified, focusing on the expansion of domestic demand, boosting confidence, and risk prevention, in order to continuously promote the sustained improvement of economic operations. 

China’s total computing power enjoys average annual growth of nearly 30% over past five years (People’s Daily

In recent years, China has introduced a series of key policy measures and implemented a large number of major engineering projects focused on accelerating the development and application of computational infrastructure. 

At present, the total scale of China’s computing power ranks second in the world, with an average annual growth rate of nearly 30% over the past five years.

As of the end of June this year, the total volume of data centre racks in use across the country exceeded 7.6 million standard racks, the total scale of computing power reached 197 exabytes per second (EFLOPS), and the total scale of storage capacity exceeded 1080 exabytes (EB).

Private Chinese rocket company makes successful debut sea launch (Xinhua News Agency

With the support of the Taiyuan Satellite Launch Center sea launch team, at 17:34 on September 5, Galactic Energy (星河动力航天公司) successfully completed the launch mission for the Ceres-1 solid propellant launch vehicle.

This is the first time that a private rocket company in China has successfully carried out a sea launch mission.

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