Chinese policymakers have stepped up efforts in recent weeks to support the struggling economy and markets, highlighting concerns that the recovery will be hampered by the real estate crisis, deflation and weak consumer confidence. There is.
The measures include releasing more long-term capital to banks, tightening regulations on lending stocks for short sales, and expanding access to financing for developers. Still, investors may need to consider further to restore confidence in the Chinese market.
advertisement
Continue reading below
The benchmark CSI300 index has fallen about 4% so far in 2024, hovering near a five-year low. The yuan has joined the declines of most other Asian currencies this year, with benchmark government bond yields falling to their lowest level in about 22 years on Tuesday amid bets on further easing.
Additional support for the economy may be needed if the government wants to announce ambitious expansion targets this year when parliament convenes in March. Many Chinese provinces are targeting gross domestic product (GDP) growth of more than 5% in 2024, and economists are already expecting quite ambitious targets.
Here is a list of measures announced or reported earlier this year as China seeks to support its economy and calm investors.
January 28: Securities lending restrictions
Securities regulators announced they would stop lending certain stocks to short sellers, the latest attempt to put an end to the stock market crash. Strategic investors (usually referring to holders of restricted stock) cannot lend out their shares during the agreed lock-up period.
January 27: Real estate relief
Guangzhou, one of China's largest cities, has further eased regulations on home purchases to stem the fall in prices. Beijing, Shanghai and Shenzhen have lowered down payment requirements since November.
January 26th: Assistance for developers
The Ministry of Housing and Urban and Rural Development has announced that it will publish a list of housing projects eligible for financing support by the end of this month, the latest attempt to expand real estate financing to ease the downturn in the real estate sector. Become.
On the same day, the National Financial Supervisory Administration asked banks to assist eligible developers with their requests, including extending existing loans and adjusting repayment plans.
January 24th: RRR reduction, real estate loans, etc.
People's Bank of China Governor Ban Gongsheng announced on February 5 that the People's Bank will release 1 trillion yuan ($139 billion) of long-term liquidity, the amount that cash lenders must hold in reserve. The company announced that it would reduce the amount by 0.5 percentage point. To the market. The announcement came after official figures showed the country's economy still faces major challenges, marking the biggest RRR reduction since 2021.
Hours later, regulators announced further measures, including expanding access to commercial real estate loans to help developers pay down other debts.
advertisement
Continue reading below
On the same day, authorities in China and Hong Kong announced financial ties, including promoting real estate purchases and expanding programs to allow individuals to invest in Hong Kong and the Greater Bay Area, a region of 70 million people that includes the Hong Kong megacity. announced measures to deepen this understanding. Southern parts of the continent such as Shenzhen and Guangzhou.
January 23rd: Stock Relief Package
According to a Bloomberg report, policymakers are considering using about 2 trillion yuan, mostly from offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy onshore stocks through a Hong Kong exchange link. Bloomberg reported that. It has also secured at least 300 billion yuan of local funds to invest in domestic stocks through China Securities Finance Corporation or Central Huijin Investment. A day earlier, Premier Li Qiang urged authorities to take “stronger” measures to stabilize the stock market and investor confidence. His request came after the CSI300 index hit a five-year low.
January 19: Signs of state takeover
The total trading volume of some of Japan's top exchange-traded funds (ETFs), which are closely watched for signs of government-led purchases, reached the third largest weekly volume on record. This was the highest amount since July 2015, when the so-called “national team” tried to offset the sell-off during the epic bubble burst.
January 16: Special Bonds
According to Bloomberg News, China is considering issuing 1 trillion yuan in new government bonds under a so-called special sovereign bond plan. Proposals discussed by senior policymakers include selling very long-term sovereign debt to finance projects related to food, energy, supply chains and urbanization.
January 5th: Rental housing
The People's Bank of China and NFRA have released guidelines on financial support for the development of the rental housing market. This includes encouraging banks to provide financing to developers, industrial zones, and certain local organizations and businesses to build new housing for long-term rental or to renovate existing properties for that purpose. It included policy.
© 2024 Bloomberg
