Communist Party asks how to best grow private enterprise; China’s foreign reserves back to first place globally

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A round-up of the top economic and financial headlines in the Chinese press as of Tuesday, 9 January, 2024

How China will spur the growth and strengthening of private enterprise in 2024 (People’s Daily

China’s latest Central Economic Work Conference stated that “in order to drive the development and growth of private enterprises, a number of measures must be implemented in terms of market access, acquisition of factors of production, fair enforcement of the law and the protection of rights”

How can we implement and do a good job when it comes to related work? Relevant officials from the Private Economic Development Bureau of the National Development and Reform Commission (NDRC) stated that they will make efforts in three areas.

– Pay close attention to implementation and apply the requirements for equal treatment of state-owned and private enterprises from both an institutional and legal perspective.

– Create an excellent atmosphere and a sound environment that encourages and supports the development of the private economy in terms of policies and public opinion.

– Solve difficult problems and coordinate and solve problems that restrict the development of the private economy on a case-by-case basis and as a whole.

China’s foreign reserve bounce back to USD$3.2T, largest in the world for 18th year (Securities Journal

On 7 January, the State Administration of Foreign Exchange (SAFE) released data on the size of foreign exchange reserves as of the end of December 2023. 

As of the end of December 2023, China’s foreign exchange reserves were US$3.238 trillion, once again rising above the US$3.2 trillion threshold after dipping beneath it in July 2023. 

This marked an increase of US$66.2 billion, or 2.1% from the end of November 2023, and an increase of US$110.3 billion, or 3.5%, compared to the end of December 2022. 

Since 2006, China’s foreign exchange reserves have ranked first in the world for 18 consecutive years, and have remained stable at over 3 trillion US dollars in recent years.

Regarding the increase in the scale of foreign exchange reserves in December, SAFE said that this was the result of factors including the monetary policies and expectations of major economies, the US dollar index declining and a general increase in prices for global financial assets.

Three-year plan for big data as factor of production released by Chinese central government (Securities Journal

On 4 January, 17 central government departments led by the National Data Administration jointly issued the “Data as a Factor of Production x Three-Year Action Plan (2024-2026) (“数据要素×”三年行动计划(2024—2026年)). 

With the in-depth development of a new round of scientific and technological revolutions and industrial transformations, the value of data as a key production factor has become increasingly prominent. However, problems such as low-quality data supply, poor circulation mechanisms, and insufficient release of application potential still exist.

The “Action Plan” selects 12 industries and fields, including industrial manufacturing, modern agriculture, commerce and logistics, transportation, financial services, technological innovation, cultural tourism, medical health, emergency management, meteorological services, urban governance, and green and low carbon technologies for driving the role of the multiplier effect of data as a factor of production and unleashing the value of data.

17 new financial measures launched to support growth in China’s rental housing market (People’s Daily

The People’s Bank of China and the National Administration of Financial Regulation (NAFR) recently issued the “Opinions on Financial Support for the Development of the Rental Housing Market” (关于金融支持住房租赁市场发展的意见). 

The Opinions focus on strengthening innovation in rental housing financial products and service models and broadening diversified investment in the rental housing market. They propose 17 measures on financing channels and other areas to support the development of the rental housing market, and will come into effect on February 5, 2024.

According to the Opinions, financial support for the development of the rental housing market should highlight key points and target shortcomings, mainly in large cities, while also focusing on solving the housing problems of new citizens, young people and other demographics; supporting various entities to build, renovate and operate long-term rental housing, revitalising existing housing and effectively increasing the supply of affordable and commercial rental housing.

People’s Daily highlights use of active fiscal policy to drive high-quality growth (People’s Daily

Active fiscal policy, as a key means of macro-economic adjustment, continued to increase in efficiency and endeavoured to promote overall economic recovery throughout 2023. 

From January to November 2023, 3.8634 trillion yuan in new special bonds were issued nationwide, playing a key role in driving and expanding effective investment. 

1.812509 trillion yuan in new tax cuts and fee reductions as well as tax rebates and deferrals were implemented nationwide, bringing marked benefit to the private economy, small and medium-sized enterprises, and the manufacturing and related wholesale and retail sectors. 

The Central Economic Work Conference has proposed that fiscal policy space should be better utilized to improve financial efficiency and policy effects. 

[It has called for]:

  • Optimizing the structure of fiscal expenditures and strengthening financial support for major national strategic tasks.
  • Reasonably expanding the scope of local government special bonds used for capital investment. 
  • Implementing structural tax and fee reduction policies.
  • Focusing on supporting technological innovation and manufacturing development.

Chinese central bank says opening of bond market to foreign investors won’t miss a step (Securities Daily

The 2024 People’s Bank of China (PBOC) Work Conference called for “deepning the opening of the financial market to the outside world and improving the convenience for foreign investors to participate in China’s bond market.”

In recent years, China’s bond market has continued to deepen its opening to the outside world, making foreign investment more convenient. China’s bond market has become an important choice for the global allocation of foreign institutional investors. According to the latest data from PBOC, as of the end of November 2023 the custody balance of foreign institutions in China’s bond market was 3.54 trillion yuan, accounting for 2.3% of the total

Market participants believe that the Federal Reserve is expected to gradually enter a cycle of interest rate cuts in 2024. The interest rate differential between China and the United States will gradually return to normal, and the convenience of foreign investment in the bond market will increase. China’s economic fundamentals will further recover, and the allocation demand for Chinese bonds amongst overseas institutions will further increase.

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