1/7/2022 Financial News In China: Communist China Plans To Relax ‘Three Red Lines’ To Encourage State-Led Property M&A; Communist China Postal Authority Proposes Changes To Country’s Express Delivery Rules

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1.Kaisa forced by local government to reimburse investors in wealth products

Under pressure from the authorities, Chinese real estate company Kaisa Group Holdings Ltd is working hard to come up with a workable plan to reimburse investors for wealth products, said two sources with direct knowledge of the matter. Kwok Ying Shing, chairman of the cash-strapped developer, accepted a request from the government of Shenzhen, where the company is based, to provide by the end of January a proposal to reimburse investors in its wealth management products ( WMP), said one of the sources. The sources added that if the company does not do so, they believe the possible consequences include the Shenzhen government’s seizure of some of Kaisa’s assets and the gradual takeover of the company.

2.Communist China to Ease Debt Rules for State-Led Distressed M&A

Communist China will make it easier for state-backed property developers to buy up distressed assets of debt-laden private peers, a source with direct knowledge said on Friday, another step by policymakers to avert a liquidity crisis in the sector. State-owned developers acquiring distressed assets will not have those loans counted as debt under rules that cap borrowing. The “three red lines” policy restricts the amount of new borrowing property developers can raise each year by placing caps on their debt ratios. The authorities have encouraged state-owned builders to look at the assets of private peers struggling with liquidity issues, as an increasing number have failed to meet their debt obligations, sending shockwaves to the financial markets. Chinese developers are facing an unprecedented liquidity squeeze due to years of regulatory curbs on borrowing. Banks have told state-owned developers about the exclusion of M&A loans in calculating their debt ratios, the source said, but added that the appetite to acquire assets is not high.

3.China Regulator Recovers $47 Billion in Funds After Audit Review

Communist China’s auditing regulator said officials should “keep their eyes open” when conducting audits, after recovering more than 300 billion yuan ($47.04 billion) in government funds, the state-run Xinhua news agency reported. The task of auditing this year will focus on fiscal expenditure, including implementing tax cuts and reductions, Xinhua quoted Hou Kai, auditor general of the National Audit Office, as saying at its annual meeting on Thursday. The National Audit Office recovered 304 billion yuan – some of which were used for major projects – in the first 11 months of 2021 after an audit, up from 220 billion yuan recovered a year earlier, Xinhua reported. The report on Thursday did not say where the funds had gone to, but added that about 23,000 cadres were reviewed as part of an audit.

4.Communist China Plans to Relax ‘Three Red Lines’ to Encourage State-Led Property M&A

Chinese policymakers plan to exclude debt accrued from acquiring distressed assets when calculating property developers’ compliance with the “three red lines”, financial intelligence provider REDD reported on Friday, amid unprecedented stress on the sector. The “three red lines” policy restricts the amount of new borrowing property developers can raise each year by placing caps on their debt ratios. Local governments including Shanghai and Guangdong held respective meetings with domestic state-owned developers last week, REDD added, after policymakers asked the firms in mid-December to acquire assets from 11 private developers with liquidity issues to ease their financial stress.

5.Communist China postal authority proposes changes to country’s express delivery rules

Communist China’s postal authority on Friday proposed revisions to the measures by which the country governs its express delivery market, which includes ones aimed at stamping out unfair competition and improving the protection of employee rights. The State Post Bureau said in a statement published on its website that it was necessary to improve how the industry was regulated given its growing importance to Communist China’s economic and social development in recent years. The measures were first introduced in 2008 and last changed in 2012. The proposal, which is open to public feedback until Feb. 5, also said it wanted companies to establish carbon management systems and to use environmentally friendly products. They will also be required to establish systems to maintain the stability of their networks.

6.Lithium photovoltaic 50 billion big bull stocks limit down

The traditional cyclical blues have suddenly risen, and the popular lithium glimmers have collapsed. It was only in 2022 that the hot-gate track of lithium, photovoltaic, which exploded in 2021, came to a halt for several days, after a sudden wave of violence in institutions such as the traditional cycle shares of real estate, construction, insurance, household electricity, etc., and the hot-gate track, which rose by more than 6 per cent in the morning and by more than 10 per cent since its inception. The style of the market has changed dramatically since 2022, with the market as a whole rising and falling in the morning, and the above-sum index of the main board is clearly stronger than the entrepreneurship board and the 50-percent index, which is concentrated in the popular track. The closing morning saw a 0.35 per cent increase in the above-mentioned index, a 0.2 per cent drop in the index, a 0.81 per cent drop in the start-up panel index, a 0.69 per cent drop in the 50 index, a small increase in the stock share, a 1490 increase, a 310 drop and a 740.2 billion exchange between the two municipalities. The market style has changed so much that the North buys and buys money, especially from Communist China. The North buys $6.2 billion in the morning, with $5.7 billion in equity.

7.Henan Provincial Government Work Report: Completed the restructuring and risk reduction work of city commercial banks, and reduced high-risk institutions

According to the recent report on the work of the Henan provincial government, the focus in 2022 was on preventing risks in the economic and financial sphere, specifically the completion of the urban comptoirs, the restructuring of the agro-industrial services, and the downgrading of high-risk institutions. On 7 December 2021, the programme announced by the Bank of China and China indicated that the Bank was to issue the bank’s shareholdings of approximately 13,248 million shares (approximately 13,325 million shares) to the current shareholders of Luoyang Bank, Punt Hill Bank and the Focal Middle Travel Bank in order to satisfy the total cost of potential absorption of the merger at about RMB 28.5 billion. At the same time, the Bank could potentially sell a number of its credit and other financial assets to potential buyers at a preliminary cost not less than RMB 9 billion (to be adjusted and finalized after further assessment and consultation). The above-mentioned matters have been considered and adopted by the board of directors of the former Central Bank, which has yet to disclose the timing of the general meeting of shareholders. According to the Network of Central Bankers, the Bank was scheduled to convene a general meeting of shareholders on 24 December 2021 to consider a bill on the consent of the former Central Bank to absorb the consolidated central bank, etc., but it was ultimately postponed.

8.China’s Dec New Yuan Loans Seen Lower, Hit Record in 2021

New bank loans in China likely fell in December, although lending for the full year 2021 set a record, a Reuters poll showed, as the central bank maintained policy support for the economy. Chinese banks are estimated to have issued 1.25 trillion yuan ($196.06 billion) in net yuan loans last month, down from 1.27 trillion yuan in November, the median estimate in the survey of 21 economists found. If December data, due during the coming week, is in line with forecasts, total new lending in 2021 would hit 20.07 trillion yuan, up 2.2% from the previous record of 19.63 trillion yuan in 2020. China’s central bank cut the reserve requirement ratio (RRR) for banks on Dec. 15, its second such move in 2021, releasing 1.2 trillion yuan in long-term liquidity to bolster business activity. The central bank also cut the rates on its relending facility by 25 basis points (bps) to support the rural sector and small firms. The economy faces multiple challenges heading into 2022 due to a property downturn and strict COVID-19 restrictions that have hit consumption and put pressure on the central bank to loosen policy.

By【G translators – Financial Team】
Author: Tracy

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

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