10/23/2021 Financial News In China: Evergrande Will Reduce Real Estate Development; Taxation Office Handles Tax Deferment For Heating Companies

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1.Evergrande Will Reduce Real Estate Development

Xu Jiayin, chairman of China Evergrande Group 3333.HK, who is deeply in debt, said on Friday that all the buildings or projects that Evergrande has not pre-sold will be sold on existing buildings in the future, which will greatly reduce the scale of real estate development and construction; it will be realized within 10 years.  Transition from the real estate industry to the new energy automobile industry.  The Securities Times quoted his speech at the “Hengda Group’s Resumption of Work and Production Conference” and stated that the sales scale of Evergrande’s real estate will fall from more than 700 billion yuan last year to about 200 billion yuan a year within 10 years. At the end of the grace period, China Evergrande finally paid interest on a much-watched dollar bond, which seemed to have won it a ray of life.  After China Evergrande opened sharply higher on Friday, it once rose by 7.75%. Evergrande Property 6666.HK also rose by more than 5% during intraday trading; Evergrande Motor 0708.HK once rose by 7%.

2.The Chairman Of Vanke Responded Whether He Would “Help” Evergrande

China’s leading real estate company-Vanke, its board chairman Yu Liang was asked at the company’s business exchange meeting on Friday whether he would consider “helping” its peer China Evergrande, which is in deep debt crisis.  It is safe to save people.”  According to mainland media reports, Yu Liang was asked at the Vanke business exchange meeting whether he would rescue Evergrande, and said, “Everyone is cold in the winter in the industry. First of all, you must ensure your own safety to save people.” The Evergrande issue has caused waves all over the world.  Although Evergrande is actively exploring self-rescue by selling assets, at present, apart from the successful sale of Shengjing Bank earlier, significant progress has not been made in its asset sales.  The transaction that could have sold a controlling stake in Evergrande to Hopson Development, which could have cashed out more than 20 billion Hong Kong dollars, eventually fell through. At the semi-annual performance meeting at the end of August, Vanke President and CEO Zhu Jiusheng once stated that he had contacted Evergrande in recent months and had some discussions, but there was no more substantial cooperation.

3.SOHO China And Huayuan Real Estate Joint Venture Company Under Investigation

The sale of Blackstone Group BX.N failed for less than a month and a half, and the Chinese commercial real estate company SOHO China 0410.HK ushered in another blow.  The Beijing Municipal Taxation Bureau announced on Friday that after receiving a report on the suspected tax evasion of SOHO China’s subsidiary Beijing Jianhua Real Estate Co., Ltd., it will file a case for inspection in accordance with the law.  According to the industrial and commercial registration information, Beijing Jianhua Land was established in 1994 with a registered capital of 104 million yuan; the company has two shareholders, of which SOHO China holds 60%, and the remaining 40% is owned by Huayuan Real Estate Co., Ltd. 600743.SS  Held through a wholly-owned subsidiary. Huayuan Group, the parent company of Huayuan Real Estate, is a long-established state-owned developer in China with a small scale. It is well-known because of Ren Zhiqiang, the courageous former chairman of the company.  Ren Zhiqiang and SOHO China founder Pan Shiyi have many intersections and collaborations.

4.RMB Income Hits Nearly Four And A Half Months High

The renminbi against the U.S. dollar closed on Friday to a new high of nearly four and a half months, while the central parity fell 142 points, temporarily out of the more than four-month high.  Traders said that market risk appetite has recovered, and the US dollar index has rebounded slightly after being under pressure again. The yuan continued to show a strong trend, and the exchange rate closed close to the 6.39 mark. If the US dollar index still adjusts in the future, the yuan is expected to test the year’s high.  They also pointed out that the State Administration of Foreign Exchange today stated that the RMB will not continue to appreciate or depreciate. If the foreign exchange market experiences major fluctuations, countercyclical adjustments will be carried out in due course. It is difficult to improve the short-term partial settlement of RMB, and the RMB exchange rate CFETS index is expected to continue.  The shock has risen. Another foreign bank trader said that the market sentiment has gradually returned to calm in the past two days, and the direction of the US dollar will depend on the future.  The latest view of the Bank of East Mitsubishi believes that China’s export surplus is difficult to maintain at a high level, and its support for the renminbi will weaken.

5.China’s State Administration Of Taxation Handles Tax Deferment For Heating Companies

In order to cooperate with the work related to ensuring the supply of energy and electricity in this winter and next spring, the State Administration of Taxation of China stated on Friday that all taxes payable by coal power and heating companies in the fourth quarter of this year will be deferred, and the progress of VAT credit and refund will be accelerated.  Intensify the implementation of relevant industry-specific and inclusive tax and fee preferential policies.  “The operation and taxation status of coal-fired power and heating enterprises shall be examined household by household, and the list of preferential tax policies for enterprises shall be carefully sorted out,” said the WeChat press release on the official website of the State Administration of Taxation. The relevant person in charge of the State Administration of Taxation stated that the tax department will continue to meet the tax-related needs of coal power and heating companies in the next step, and promote the implementation of various tax support measures to alleviate business difficulties.

6.Apple’s Negotiations With CATL And BYD Have Almost Stalled

Three people familiar with the matter said that Apple’s AAPL.O and China’s CATL and BYD have largely reached a deadlock in their planned electric vehicle battery supply negotiations, because they refused to set up a dedicated team solely to serve Apple and build a factory in the United States.  According to sources, these companies notified Apple at some point in the past two months that they were unable to meet their requirements.  However, according to a source, Apple has not given up the hope of resuming negotiations with CATL 300750.SZ or BYD 1211.HK.  Chinese battery manufacturers are more advanced than competitors in the development of lithium iron phosphate (LFP) batteries, which are cheaper to produce; sources have previously stated that Apple favors this battery technology.  One person with direct knowledge of the negotiations said that the Ningde era has been reluctant to build a factory in the United States due to the tense political relationship between China and the United States and out of cost considerations.

7.SAFE Said It Will Carry Out Counter-cyclical Adjustments In Due Course

Wang Chunying, deputy director of the State Administration of Foreign Exchange of China, said on Friday that “if the foreign exchange market encounters large fluctuations, countercyclical adjustments will be carried out in due course.” In response to monetary policy adjustments in developed economies, Wang Chunying also said that the foreign exchange bureaus will make advance policies.  To respond to adjustments, do a good job of expected guidance, and maintain the stability of the foreign exchange market.  Entering October, the Fed’s tightening expectations have become clearer, but the RMB exchange rate is still fluctuating upwards, and its performance is obviously stronger; this week it broke the 6.4 mark, breaking the previous fluctuation range and setting a new high in more than four months. The RMB exchange rate CFETS index also  It broke through the 100 mark and frequently set new highs in more than five years and eight months.  When analyzing the reasons, Wang Chunying said that the recent cross-border capital has maintained a small and stable net inflow.

8.China’s China’s Fiscal Revenue And Expenditure In September Turned Negative Year-on-year

China’s fiscal “post-positioning” this year, the issuance of special bonds has been slow.  The Ministry of Finance said on Friday that it will continue to strengthen the guidance to local governments in the next step, and increase support for key projects around the country’s major regional development strategies and the 14th Five-Year Development Plan.  The Ministry of Finance held a third-quarter fiscal revenue and expenditure press conference and announced that in the first three quarters, the national general public budget revenue was RMB 16,420 billion, a year-on-year increase of 16.3%; the national general public budget expenditure was RMB 17,929.3 billion, a year-on-year increase of 2.3%. According to Reuters calculations based on historical data, the national general public budget revenue in September fell 2.1% year-on-year, which was the first time in the year to turn negative, and it was the lowest level in the year. Last month’s growth was 2.7%.  Negative, a year-on-year decrease of 5.3%, the third negative value during the year, and an increase of 6.2% last month.

By【G translators – Financial Team】
Author: 雪梨

Disclaimer: This article only represents the author’s view. Gnews is not responsible for any legal risks.

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