Home loan rates approach historic lows; AI at top of the agenda for China's state-owned enterprises
China's top economic and financial news stories as of 22 February, 2024.
A round-up of the top economic and financial news stories in the Chinese press as of 22 February, 2024.
Mortgage rates approach historic lows, property market hopes to welcome a small spring (Xinhua)
On 20 February, the People's Bank of China (PBOC) (the Chinese central bank) authorized the National Interbank Funding Center to announce the latest round of loan prime rates (LPR).
The 1-year LPR remained unchanged at 3.45%, while the 5-year LPR fell by 25 basis points, from 4.2% to 3.95%.
It is worth noting that this is an asymmetric interest rate cut, with the 5-year LPR falling by 25 basis points, for the largest decrease since 2019.
Consequently, mortgage interest rates are further approaching their lowest levels in history.
Chen Wenjing, market research director of the China Index Research Institute, said that the central bank's interest rate cut is a relatively rare asymmetric cut that has taken place while the medium-term lending facility (MLF) rate still remains unchanged.
Following the reduction, the floor on interest rates for first-home and second-home mortgages has fallen to 3.75% (the 5-year LPR minus 20 basis points) and 4.15% (the 5-year LPR plus 20 basis points) respectively, further approaching historic lows.
Mortgage interest rates in some cities have dropped to record lows, with first-home loan interest rates higher than 4% in only a few areas.
In Beijing, which currently has China's highest mortgage interest rates, the interest rates for both first and second homes have already undergone adjustment following reduction of the LPR.
At present, the interest rates for first-home loans outside the Sixth District of the city have fallen to 3.95%, and for second-home loans to 4.5%. Within the Sixth District of the city, the interest rates for first-home loans and second-home loans have undergone adjustment to 4.05% and 4.55% respectively.
A source from China Merchants Shekou said that the unexpected reduction of the five-year LPR reflects the determination and intensity of current demand-side real estate policies.
Reducing the 5-year LPR will help reduce the financing costs of real estate companies and also help to boost the confidence of home buyers on the demand side of the property market.
214 cities in 29 provinces establish real-estate finance coordination mechanisms (People's Daily)
Since the deployment of the urban real estate financing coordination mechanism in January, various local governments and relevant financial institutions have been working hard towards its implementation.
As of 20 February, 214 cities in 29 provinces have established real estate financing coordination mechanisms, outlining white lists of real estate projects that are eligible for the provision of financial support and forwarding them to commercial banks.
These white lists involve a total of 5,349 projects, of which 162 projects in 57 cities have received bank financing worth a total of 29.43 billion yuan, for an increase of 11.3 billion yuan compared with the period before the Spring Festival holiday.
According to relevant figures from the Bank of China, China Construction Bank, Agricultural Bank of China, Postal Savings Bank of China and some joint-stock banks, 123.6 billion yuan in loans have obtained approval for "white list" projects, and loans are being issued based on the demands of project construction schedules.
Central state-owned enterprises must incorporate the development of artificial intelligence into overall planning (SASAC)
On 19 February, the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council held a special promotional meeting on artificial intelligence for central state-owned enterprises entitled "AI Empowers the Renewal of Industry."
The meeting concluded that accelerating the development of artificial intelligence is an inevitable requirement for state-owned central enterprises to fulfil their functional missions, seize strategic opportunities, cultivate new productive forces, and promote high-quality development.
Central enterprises must proactively embrace the profound changes brought about by artificial intelligence, place greater emphasis on accelerating the development of a new generation of artificial intelligence, continuously strengthen innovation strategies, application demonstrations and talent recruitment, strive to build artificial intelligence industry clusters, and take advantage of large-scale demand.
How to better create an "Invest in China" brand (People's Daily)
Opening up to the outside world is China's fundamental national policy, and attracting and utilizing foreign investment is an important part of opening up to the outside world.
The Central Economic Work Conference held at the end of 2023 stressed the need to "continue to build a market-oriented, lawful and international first-class business environment and establish the 'Invest in China' brand."
With regard to how to continue to build the "Invest in China" brand in 2024 and continuously improve the utilization of foreign capital, Zhu Bing, Director of the Department of Foreign Investment Management of the Ministry of Commerce, said that China will organize key investment promotion activities and widely publicize China's investment opportunities to the outside world, polishing up the golden sign for “Investing in China”.
At the same time, Beijing will support local governments in organizing investment promotion activities based on their own situational advantages, resource endowments, and industrial characteristics, forming a "single chessboard" for national efforts to attract investment.
An official from the Ministry of Commerce said that the number of newly established foreign-invested enterprises in China increased by 39.7% in 2023, which fully demonstrates that foreign-invested enterprises are optimistic about the development opportunities of the Chinese market and continue to increase their "investment in China."
Ministry of Commerce holds 16 roundtable discussions with foreign-invested companies (People's Daily)
Starting from July 2023, the Ministry of Commerce established a roundtable system for foreign-invested enterprises, holding regular meetings to listen to the challenges, problems, opinions and suggestions reported by foreign-invested enterprises, and working with relevant departments and localities to jointly promote solutions.
As of the end of January this year, the Ministry of Commerce has held 16 roundtable meetings with foreign-invested enterprises, with more than 400 foreign-invested enterprises and foreign business associations participating, and the resolution of more than 300 issues and complaints.
At the same time, each province has also established a roundtable conference system, convening more than 140 roundtable meetings attended by more than 2,200 foreign-invested enterprises and foreign business associations, and resolving more than 900 problems and appeals.
An official from the Foreign Investment Department of the Ministry of Commerce said that roundtable meetings adhered to a problem-oriented approach and asked participating companies to provide detailed information on their problems.
Dispelling the myth of China's economic demise (Xinhua)
Since the start of the reform and opening up era, the history of China's economic development can be said to be a history in which various negative arguments from the West have been constantly falsified.
Some people in Western political circles and the media wear "tinted glasses" and cannot understand the greater logic of China's economy overcoming difficulties, nor can they see the new potential of China's high-quality development.
They make self-righteous "small calculations," and consequently find it impossible to figure out the broader strategy of China's economy for dealing with uncertainty, or calculate the "long cycle" of the broader ledger for the strong performance of the Chinese economy.
Jeffrey Sachs, a well-known American economist, recently said that most Western journalists who report on China do not understand the Chinese economy. Some Western media have exaggerated the notion that China will fall into the "middle-income trap", which is pure nonsense.
Martin Wolf, chief economic commentator of the UK's Financial Times, also said that if Western countries want to repair their democratic systems and achieve self-rescue, they must look inward and find the reasons within themselves, rather than becoming an enemy of China.
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