Xi celebrates Shanghai free trade anniversary; top Chinese economists make Q4 predictions

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A round-up of the top economic and financial headlines in the Chinese press as of 27 September, 2023.

Eight leading economists look at Q4 macro-economy: consumption and real estate expected to improve (Securities Daily

As the impact of a raft of policies continues to make itself felt, a number of recent data points show that positive factors for economic performance are accumulating, bright spots are increasing, and social expectations have improved. 

What are the highlights for economic performance in the fourth quarter that are worth anticipating? What will be the focus of policy efforts?

In this regard, “Securities Daily” interviewed eight leading economists, including Wen Bin, chief economist of Minsheng Bank; Zhao Wei, chief economist of China International Finance Securities; Ming Ming, chief economist of CITIC Securities, Dong Zhongyun, chief economist of AVIC Securities, Pang Ming, Jones Lang LaSalle chief economist and head of research for China; Wang Tao, head of Asian economic research and chief China economist at UBS; Deng Haiqing, chief economist at AVIC Fund, and Chen Li, chief economist and research director at Sichuan Finance Securities.

The economists interviewed generally believe that following the intensification of macroeconomic policies in the third quarter, the national economy will stage a recovery and the year-on-year GDP growth rate for the quarter could reach more than 4.6%. 

The macro-economy in the fourth quarter will extend the recovery trend in the third quarter, and the performance of consumption, real estate and other areas is expected to improve. In addition, there is still room for improvement in monetary policy, fiscal policy and industrial policy in the fourth quarter.

Xi Jinping celebrates 10th anniversary of Shanghai’s free trade zone – “high-level external opening is proceeding at an urgent and steady pace” (People’s Daily)

In September 2013, the Shanghai Pilot Free Trade Zone was officially established. Since then, free trade pilot zones have set forth from Shanghai and continued to expand and develop. The 21 free trade pilot zones have basically formed a pattern that covers the east, west, south, north, and centre of the country, setting off a new wave of China’s reform and opening up.

This year marks the 10th anniversary of the launch of pilot free trade zones. Over the past 10 years, under the personal planning, deployment and promotion of General Secretary Xi Jinping, the 21 free trade pilot zones have given full play to their exemplary and leading role as “vanguards” for reform and opening up, boldly experimenting and boldly making progress for comprehensively deepening reform and expanding opening up.

China launches “combination” to attract foreign investment, these multi-national companies step up Chinese investment (China News Net

The Ministry of Commerce will launch the “Collection and Management System for Complaints by Foreign-Invested Enterprises” at the end of September. 

Chen Chunjiang, Assistant Minister of the Ministry of Commerce, pointed out that this is the equivalent to setting up an online roundtable meeting for foreign-invested enterprises. Enterprises can use this system to report various problems encountered during project implementation, production and operation at any time.

In addition to this, the 4th Qingdao Summit of Multinational Corporate Leaders, co-organized by the Ministry of Commerce and Shandong Province, will be held from October 10th to 12th. A press conference held by the State Council Information Office on 22 September indicated that 316 multinational companies have signed up to participate.

On 18 September, Pan Gongsheng, Secretary of the Party Committee and President of the People’s Bank of China, chaired a symposium with foreign-invested financial institutions and foreign-funded enterprises to listen to relevant opinions and suggestions and study how to increase financial support to stabilize foreign trade and foreign investment. 

JPMorgan Chase Bank, HSBC, Deutsche Bank, BNP Paribas, UBS Securities, Mitsubishi UFJ Bank, Tesla, BASF, Trafigura, Schneider and other foreign financial institutions and foreign-invested enterprises participated in the symposium.

Prior to this in August, the State Council issued the “Opinions on Further Optimizing the Foreign Investment Environment and Increasing Attraction of Foreign Investment” (关于进一步优化外商投资环境 加大吸引外商投资力度的意见), which focused on the outstanding concerns of foreign-invested enterprises and unveiled a new set of 24 targeted policies and measures.

First home mortgage rates reduced, bank profits could come under pressure (Xinhua News Agency)

Starting from 25 September, many banks, including the big four state-owned lenders, have started to reduce existing first-home mortgage interest rates. 

According to estimates by industry insiders, following adjustment to interest rates on existing first-home mortgages, the financial burden of more than 40 million households and hundreds of millions of individuals will be significantly reduced, with an average decrease of approximately 0.8 percentage points. 

“Reducing the existing first-home mortgage interest rate will inevitably have a certain impact on bank interest income, and net interest margins will come under further pressure.” said Wang Qing, chief macro analyst at Golden Credit Ratings.

Xie Zhibin, vice-president of China CITIC Bank, previously indicated that the lender’s total personal home mortgage loans stand at around 950 billion yuan, of which those with interest rates higher than the new loan interest rate are around 600 billion yuan. It is estimated that every 10 basis point reduction in existing mortgage interest rates will have an impact on the bank’s mortgage income of approximately 600 million yuan.

Tencent takes part in multi-lateral central bank digital currency bridging project, explores cross-border applications (Securities Journal

Recently, under the guidance of the Chinese central bank’s Digital Currency Research Institute, Tencent, as part of the first batch of digital renminbi operating institutions, actively participated in the multilateral central bank digital currency bridge project (Project mBridge). 

Tencent will use the multilateral central bank digital currency bridge to explore pilot application projects for enhancing cross-border payment service. 

The Multilateral Central Bank Digital Currency Bridge is a project launched with the joint-participation multiple central banks, that makes use of distributed ledger technology (DLT) to optimize the cross-border payment experience and achieve interoperability and interactivity betwee then central bank digital currencies of different countries.

Reform of rural credit unions makes progress around the country (China Securities Report

The National Enterprise Credit Information Publicity System recently announced that Liaoning Rural Commercial Bank Co., Ltd. was established on 19 September.

Since the start of this year, further progress has been made in the reform of rural credit cooperatives in many locations, and a number of rural commercial and provincial rural commercial banks have obtained approval for establishment.

Industry insiders said that with vigorous support of regulators, the tenet of “one province, one policy” in various regions has accelerated the pace of the reform and de-risking of rural credit cooperatives, and they will play a more important role in supporting local economic development.

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