China

Developing countries in Africa are losing a champion that for years allowed them to borrow at cheaper rates than they could find in capital markets, Bloomberg News reported. China, Africa’s largest bilateral creditor, has been scaling back lending in the region amid its worsening growth woes. That comes at a time of rising interest rates globally and shrinking liquidity, factors that have already sent bonds of the riskiest African borrowers such as Ghana and Zambia crashing, and currencies including South Africa’s rand to near pandemic lows.

China's central bank has asked major state-owned banks to be prepared to sell dollars for the local unit in offshore markets as it steps up efforts to stem the yuan's descent, Reuters reported. State banks were told to ask their offshore branches, including those based in Hong Kong, New York and London, to review their holdings of the offshore yuan and ensure U.S. dollar reserves are ready to be deployed.

China has spent a trillion dollars to expand its influence across Asia, Africa and Latin America through its Belt and Road infrastructure program. Now, Beijing is working on an overhaul of the troubled initiative, according to people involved in policy-making, the Wall Street Journal reported. A slowing global economy, combined with rising interest rates and higher inflation, have left countries struggling to repay their debts to China. Tens of billions of dollars of loans have gone sour, and numerous development projects have stalled.

There is a movement of home buyers around China who have moved into what they call "rotting" apartments, either to pressure developers and authorities to complete them or out of financial necessity, as numerous cash-strapped builders halt construction amid the country's deep real estate slump, Reuters reported. Shanghai E-House Real Estate Research Institute estimated in July that stalled projects accounted for 3.85% of China's housing market in the first half of 2022, equivalent to an area of 231 million square metres.

China’s central bank took another step to shore up the yuan, making it more expensive for traders and institutions to bet against the currency after it weakened rapidly against the dollar, the Wall Street Journal reported. The People’s Bank of China said on Monday that financial institutions selling foreign-exchange forward contracts will be subject to a 20% risk-reserve ratio, up from zero currently. The change, which will kick in on Sept. 28, will make it costlier for banks—and correspondingly, their clients—to sell yuan to buy dollars in the derivatives markets.

As the euro has fallen below parity with the dollar and the British pound plunges toward a one-for-one exchange rate as well, another currency is also weakening against the dollar: China’s renminbi, the New York Times reported. For Shanghai trading on Monday morning, China’s central bank, the People’s Bank of China, fixed the initial value of the renminbi at more than 7 to the dollar for the first time in more than two years.

Chinese firms for years were among the most aggressive buyers of U.S. luxury hotels, office towers and other commercial real estate. Now they are running for the exits, the Wall Street Journal reported. Chinese companies have sold a net $23.6 billion of U.S. commercial properties since the start of 2019, according to data provider MSCI Real Assets. That marks a dramatic turnaround. Between 2013 and 2018, Chinese firms were net buyers of nearly $52 billion of U.S. commercial properties, according to MSCI. Buyers from China snapped up aging U.S.

An offshore bondholders' group of cash-strapped Kaisa is offering up to $2 billion to acquire stalled housing projects of the Shenzhen-based developer to facilitate their completion, Reuters reported. The takeover talks are in early stages, according to the people, who declined to be named as they were not authorised to speak to the media on this subject. If successful, it would be the first foreign investor takeover of Chinese developers' distressed residential assets in the latest wave of crises to hit the property sector over the past year.

China will speed up fund injections to expedite project construction and boost domestic consumption, China's state planner said on Monday, even after the economy showed signs of renewed momentum last month, Reuters reported. The world's second-biggest economy slowed sharply in the second quarter, dragged down by a deepening property crisis, and slowing exports and imports. However, it showed surprising resilience in August, with faster-than-expected growth in factory output and retail sales, although the property crisis continues to hang over recovery prospects.

Renewed Covid-19 curbs and a worsening property downturn are dampening the outlook for China’s economy, despite some modest signs of improvement as stimulus measures kicked in, the Wall Street Journal reported. China released a raft of economic data on Friday, including figures showing that housing price declines accelerated and consumer spending remained weak. The data wasn’t all bad, though. Infrastructure investment picked up more quickly than expected, and China’s labor market improved.