Veteran securities official under investigation; Beijing uses government funds to drive private investment in industry

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A round-up of the top economic and financial headlines in the Chinese press as of 14 November, 2023.

State-owned investment funds spur private capital to support industrial growth (People’s Daily)

The report of the 20th National Congress of the Communist Party of China stated that “the focus of economic development should be on the real economy and promote new industrialization.”

Establishing government investment funds to drive social capital to increase investment is an effective way to help build a modern industrial system.

Data from Zero2IPO Research Center show that as of the end of 2022, China had established a total of 2,107 government investment funds with a target scope of approximately 12.84 trillion yuan and a subscription scale of approximately 6.51 trillion yuan.

In order to promote the accelerated development of special advantageous industries and emerging industries, in 2023 government investment funds have displayed the trait of “accelerating upgrading”, with many regions establishing industrial funds worth tens to hundreds of billions of yuan. 

“Recently, the state has continuously sent key signals on the guidance of venture capital, and has repeatedly stressed supporting private capital to develop venture capital and support the better development of venture capital and other venture capital funds,” said Zhu Kejiang, senior researcher at the Shanghai Gaojin Financial Research Institute.

“Under the guidance of state’s positive signals, government investment funds and the entire equity investment industry is returning to a longer-term, more stable and sustainable state of development.”

Multiple banks launch consumer loan discount campaigns as home loans grow lacklustre  (Economic Daily

Recently, many banks have successively launched preferential interest rate campaigns for consumer loans. The minimum interest rate of some banks has even dropped to 3%. 

“Overall, the interest rates of personal consumer loans are continually falling,” said Dong Ximiao, chief researcher at China Merchants Union and part-time researcher at the Institute of Finance of Fudan University.

“The real estate market has been relatively weak this year, household willingness to consume housing has declined, and the number of new housing loans been ordinary. Some banks have experienced negative growth.”

Consequently, some banks hope to make up for the decline in personal home loans by developing consumer loans, in order to maintain the stability of revenue and net profits. 

Some banks hope to speed up the development of personal consumer loan operations by lowering interest rates and launching discount campaigns. This is the most fundamental reason for the continued decline in consumer loan interest rates.

In addition, since the beginning of this year, the central bank has adjusted policy interest rates on multiple occasions, and commercial banks have also reduced deposit interest rates many times. 

The two reserve requirement ratio cuts have significantly reduced the capital costs for banks. The cost reduction in funds is reflected on the assets side, giving banks the ability to reduce consumer loan interest rates.

M2 money supply up 10.3% at end of October, renminbi loans rise 10.9% (Chinese central bank)

At the end of October, the balance of broad money (M2) was 288.23 trillion yuan, for a year-on-year increase of 10.3%. The growth rate was the same as at the end of last month and 1.5 percentage points lower than the same period last year.

At the end of October, the balance of domestic and foreign currency loans was 240.2 trillion yuan, for a year-on-year increase of 10.3%. The balance of renminbi loans was 235.33 trillion yuan, for a year-on-year increase of 10.9%. The growth rate was the same as at the end of last month and 0.3 percentage points lower than the same period last year.

In terms of sectors, household loans decreased by 34.6 billion yuan, of which short-term loans decreased by 105.3 billion yuan, and medium- and long-term loans increased by 70.7 billion yuan. 

Loans to enterprises (institutions) increased by 516.3 billion yuan, of which short-term loans decreased by 177 billion yuan, and medium- and long-term loans increased by 70.7 billion yuan. Long-term loans increased by 382.8 billion yuan, bill financing increased by 317.6 billion yuan; loans from non-banking financial institutions increased by 208.8 billion yuan.

Securities regulator investigates Hillhouse Capital for reducing holdings in Longi Green Energy (Caijing

Hillhouse was recently placed under investigation by the China Securities Regulatory Commission (CSRC) for allegedly illegally reducing its holdings in photovoltaic giant Longi Green Energy (601012.SH).

On 9 November, Longi Green Energy announced that the company’s shareholder HHLR Management Co., Ltd. (previously known as Hillhouse Capital Management) received a notice from CSRC on 8 November, 2023, for allegedly violating restrictions on share transfers. 

Head of China Futures Association placed under investigation (Sina.com

An Qingsong (安青松), party secretary and president of the China Futures Association, was detained by relevant authorities for investigation last Tuesday (7 November).

An Qingsong, 54, first joined the China Securities Regulatory Commission (CSRC) system in 1995, for a career of 28 years. He has served at CSRC agencies, local bureaus, and regulatory organs, and has rich regulatory experience. 

An Qingsong was a key participant in the share-trading reform of China’s stock market, which had great historical significance. In the early stage of the implementation of the registration system for the Science and Technology Innovation Board in 2019, CSRC established an office for comprehensive deepening of capital market reform office. An Qingsong served as one of the three leaders of this office.

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