CX Daily: Coal, Once a Boon, Turns Chinese Rustbelt City Into a Bust

China’s central bank encourages banks to set deposit rates based on market signals. Shimao sparks a bond sell-off by seeking one-year extension

Piles of coal are seen in Hegang city, Heilongjiang province, on Oct. 28, 2015. Photo: VCG

Fiscal /

In Depth: Coal, once a boon, turns Chinese rustbelt city into a bust

Hegang’s depressed property market is just one symptom of the hardship that’s befallen the city over the past decade as the coal industry boom of the 2000s and early 2010s turned to bust. Once a major source of Hegang’s prosperity, coal has become its nemesis — the typical story of an industrial monotown, where a single company or industry that dominates its economic life goes into decline.

The local government coffers, once awash with tax revenue from state-owned coal companies like Heilongjiang Longmay Hegang Mining Co. Ltd. and Hegang Mining (Group) Co. Ltd., are running low, and the city’s been forced into a fiscal restructuring to dig itself out of a financial hole.

Scandal /

Former China Supreme Court judge handed 14-year prison sentence for corruption

Wang Linqing, a former assistant judge at China’s top court, was sentenced to 14 years in prison for taking bribes and illegally obtaining state secrets, three years after a high-profile scandal involving the loss of court documents put him in the spotlight.

Wang, 47, was also fined 1 million yuan ($150,000) for the offenses, the Beijing No. 2 Intermediate People’s Court said Saturday. His illegal gains will be turned over to the state treasury, the court said in a statement (link in Chinese).

FINANCE & ECONOMY

China’s weighted average deposit rates declined by 10 basis points, or a tenth of a percentage point, to 2.37% in the last week of April. Photo: VCG

Interest rate /

PBOC encourages banks to set deposit rates based on market signals

China’s central bank established a deposit interest rate marketization mechanism in April to encouraging banks to adjust rates based on market signals as part of an overhaul aiming to maintain healthy competition in the deposit market.

This is the first time the People’s Bank of China (PBOC) disclosed such a mechanism. Banks are to set and adjust deposit rates based on the 10-year government bond yield and the one-year loan prime rate, the central bank said Monday in its first-quarter monetary policy report.

SMEs /

China ramps up support for small businesses hit by Covid

China is calling on local governments to step up assistance to small and micro businesses amid headwinds brought by the worst Covid-19 outbreak in two years.

As concern about economic growth and the impact of lockdowns deepens, the nation’s top leadership signaled greater support to shore up the economy.

Quick hits /

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BUSINESS & TECH

Signage at the Intercontinental Shanghai Wonderland Hotel, developed by Shimao Group Holdings Ltd., in Shanghai on Feb. 9. Photo: VCG

Property /

Chinese developer Shimao sparks bond sell-off by seeking one-year extension

Bond investors are fleeing one of China’s biggest property developers, Shimao Group Holdings Ltd., after it sought a one-year payment extension on a 475 million yuan ($70.6 million) onshore bond due later this month.

Issued in 2019, the publicly offered bond has a coupon rate of 4.15%, and the principal is due on May 22. The company will hold a creditors’ meeting next week to put the proposal to a vote, according to a Monday filing.

The bond’s price plunged 21.1% Tuesday morning and was suspended from trading by the Shanghai Stock Exchange. The price of two onshore bonds issued in 2020 also dropped.

NEVs /

China’s capital wants a bigger share of NEVs on its roads

China’s capital vowed to increase the share of new-energy vehicles on the city’s roads as part of a five-year local traffic plan that foreshadows fewer restrictions on the purchase of passenger cars.

The plan is for the local NEV purchase quota to account for a greater share of Beijing’s total, though it will still cap the number of passenger cars at 5.8 million by 2025, according to the municipal government’s five-year plan (link in Chinese) for transportation development.

Quick hits /

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Tech Insider /

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GALLERY

The sparse streets of Beijing