CX Daily Mar. 10: The Winners And Losers Of China’s Credit Easing
Leaders from China, France and Germany press for a settlement to the Russia-Ukraine war. Hong Kong needs mainland’s help in fighting severe Covid-19 cases, Carrie Lam says. A Chinese metal giant faces heavy losses on a wild nickel ride. Plus, bond sales by China’s top property developers slump. If you haven’t already, click here to sign up for this briefing. Group access and applicable discounts are available. Contact us for a customized plan.
By Kevin Guo
TOP STORIES
A worker paints a bridge with white in East China’s Zhejiang province, in July 2021. Photo: VCG
Credit /
In Depth: The winners and losers of China’s credit easing
Chinese banks are taking steps to inject more liquidity into the economy this year, but some sectors stand to benefit more than others.
The efforts are part of Beijing’s credit easing strategy to bolster the slowing economy, which is now facing the “triple pressure” of shrinking supply, shocks to demand and weakening expectations. China’s GDP growth fell to 4% year-on-year in last year’s fourth quarter, the weakest since the second quarter of 2020.
But even as the central government seeks to stimulate the economy with more credit, it’s still seeking a balance so it doesn’t derail efforts in the recent years to slash excess leverage in China’s overheated housing market and debt-ridden local governments. To achieve that balance, it appears more willing to support parts of the economy that benefit long-term growth, including small businesses.
Russia-Ukraine /
Leaders from China, France and Germany press for settlement to Russia-Ukraine war
Leaders from China, France and Germany voiced joint support Tuesday for Russia and Ukraine to continue peace talks and reach a negotiated settlement to end the conflict.
In a virtual summit with French President Emmanuel Macron and German Chancellor Olaf Scholz, Chinese President Xi Jinping said that China is “deeply grieved by the outbreak of war again on the European continent,” according to a statement released by Chinese foreign ministry.
Xi said that the pressing task for now is to “prevent the tense situation from escalating or even running out of control.” He also called for “maximum restraint to prevent a massive humanitarian crisis.”
Nickle /
Chinese metal giant faces heavy losses on wild nickel ride
A Chinese metal giant is scrambling to manage massive losses from shorting nickel futures after the metal went on an unprecedented rally.
Tsingshan Holding Group Ltd., one of the world’s biggest nickel and stainless steel producers, came under mounting pressure to meet margin calls for its short position, which it built since last year betting on a price decline for nickel.
The Chinese stainless steel giant facing billions in losses after nickel bets sour
FINANCE & ECONOMY
Cranes stand in Kunming, Southwest China’s Yunnan province, in November 2021. Photo: VCG
Property /
Bond sales by China’s top property developers slump amid housing crisis
The financial squeeze on China’s property developers shows little sign of easing, with total fundraising by 100 of the country’s largest builders monitored by consultancy firm China Real Estate Information Corp. (CRIC) slumping to its lowest in four years in February.
The 100 companies, which include China Vanke Co. Ltd. and Hong Kong-listed Sunac China Holdings Ltd., raised a combined 39.8 billion yuan ($6.3 billion) last month, 58.8% less than a year earlier and down 58.9% from January, CRIC said in a report Monday. The top 10 developers appear to be holding up better — their combined fundraising fell only 45.4% year-on-year in the first two months of 2022, a separate CRIC report released Sunday showed.
Chinese developer Logan faces $839 million liquidity crunch this month
Central bank /
Caixin Explains: Why China’s central bank is handing over 1 trillion yuan to treasury
Signs of greater coordination of China’s fiscal and monetary policy emerged when the country’s central bank announced Tuesday that it will transfer more than 1 trillion yuan ($158 billion) in profit to the finance ministry which the government can use to stimulate the economy.
As the country works toward an economic growth target of around 5.5% for the year, its top leaders have highlighted economic stability as their highest priority and urged greater government spending.
Covid-19 /
Hong Kong needs mainland’s help in fighting severe Covid cases, city’s leader says
Hong Kong Chief Executive Carrie Lam said Wednesday that the city needs the Chinese mainland’s help to boost its capacity to treat severe cases as the city registers the world’s highest Covid-19 death rate amid its worst ever outbreak.
As of Tuesday, more than 520,000 cases had been reported and 2,365 people confirmed dead during Hong Kong’s fifth wave of the Covid-19 pandemic, government data show. Nearly 70% of those who died were people aged over 80, with many unvaccinated, according to a government report (link in Chinese).
China throws up temporary bridge to build Covid hospital in Hong Kong
Zhang Wenhong: How to beat Covid-19 with a smarter zero-Covid policy
Quick hits /
Energy price spike threatens China’s inflation outlook
China government bonds tumble from top ranking as funds flee
BUSINESS & TECH
Construction activity at an Evergrande property development in Guangzhou, South China’s Guangdong province. Photo: Evergrande
Evergrande /
With local government backing, Evergrande secures funding to complete some projects
With local government support, cash-strapped China Evergrande Group secured money to finish a number of housing developments from banks, state-owned enterprises, and local partners weighing their best options, sources close to the company told Caixin.
In Northeast China’s Liaoning province, the developer reached an agreement with the local government and contract builders, with the contractors promising to finish the projects with their own funds. Evergrande agreed to use some of the projects’ properties and proceeds from housing sales as collateral to repay the contractors under government supervision, the sources said.
Business climate /
U.S. firms less optimistic about doubling down on new investments in China, survey shows
American businesses in China feel less optimistic about planning major investments in the world’s second-largest economy this year, due to challenges related to the regulatory environment, talent recruitment and the U.S.-China relationship, a new survey shows.
The American Chamber of Commerce in China (AmCham China) said in an annual Business Climate Survey released Tuesday that China remains a top global priority for many members, but most are not planning significant investments in 2022.
NEVs /
NEV-maker boss urges Beijing to impose floor on price of NEV credits
The head of a minor new-energy vehicle (NEV) startup called on the Chinese authorities to set a floor on the price of NEV credits as the rapidly increasing sales of the vehicles is pushing the price downward and putting pressure on electric-car makers’ balance sheets.
In a proposal submitted to the annual meeting of China’s top legislature, Zhejiang Hozon New Energy Automobile Co. Ltd.’s Chairman Fang Yunzhou said regulators should ensure that the price of an NEV credit doesn’t fall below 2,000 yuan each.
GALLERY
China ratchets up Covid controls
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