China

Chinese banks are expected to keep benchmark lending rates unchanged this week as the central bank pauses monetary easing and defends the yuan, though a reduction is anticipated in coming months, Bloomberg News reported. Sixteen of the 17 economists surveyed by Bloomberg forecast the one-year loan prime rate will be maintained at 3.65% on Tuesday, with only one estimating a 10 basis-point drop in the rate. Eleven of the 12 economists who gave an estimate for the five-year LPR, a reference for mortgage rates, expect it to be held steady. Only one forecast a 15 basis-point reduction.

Many Chinese in their 20s and 30s are cutting spending and saving cash where they can, rattled by China's coronavirus lockdowns, high youth unemployment and a faltering property market, Reuters reported. This new frugality, amplified by social media influencers touting low-cost lifestyles and sharing money-saving tips, is a threat to the world's second-largest economy, which narrowly avoided contraction in the second quarter. Consumer spending accounts for more than half of China's GDP.

China's exporters – the last reliable pillar of the world's second-largest economy as it struggled with the pandemic, weak consumption and a property crisis – are warning of hard times ahead as softer overseas markets force them to shed workers, shift to lower-value goods and even rent out their factories, Reuters reported. Alarm bells sounded for China's $18 trillion economy when trade data last week showed export growth well short of expectations and slowing for the first time in four months.

Chinese authorities have told the nation’s biggest banks and state-owned firms to start a round of checks on their financial exposure to Fosun, one of the country’s largest non-state conglomerates, Bloomberg News reported. Multiple regulators including China’s banking watchdog and the local commission that oversees state investments in Beijing recently told institutions under their oversight to closely examine their Fosun exposure.

China will continue to roll out phased policies to stabilise its economy with a focus on reviving consumption and boosting investment, and implement these policies as soon as possible, state media cited Premier Li Keqiang as saying on Monday, Reuters reported. China will implement a variety of measures to stabilise growth, employment and prices, Premier Li said. "China will promote the recovery of consumption as the main pulling force and make greater efforts to boost effective investment, " Premier Li was quoted by state radio.

Lenders of struggling Chinese developer Evergrande Group have appointed a receiver this week to seize its Hong Kong headquarters, two sources said, as the world's most indebted developer struggles to emerge from its debt crisis, Reuters reported. Saddled with more than $300 billion in liabilities, Evergrande has been trying to sell its 26-storey China Evergrande Centre in Hong Kong's Wan Chai district after a potential $1.7 billion deal collapsed late last year, as part of the asset disposal effort to raise funds.

China is increasingly counting on its banks to step up mortgage lending and help boost a sinking housing market. But there is a problem: Lenders are stuck with many mortgages from boom times that are at higher risk of not being repaid, the Wall Street Journal reported. Chinese property developers wrote at least $300 billion of mortgage guarantees over the past few years for partially built apartments that they presold, according to regulatory filings.

Burdened with a growing pile of souring loans to the developing world the past few years, Chinese lenders have been rescheduling payments and offering more credit to borrowers in financial straits, the Wall Street Journal reported. Those strategies—reminiscent of “extend and pretend” practices of banks unwilling to recognize bad debts—failed in Sri Lanka, whose government collapsed recently under the weight of unpayable loans. Now, China’s tactics face further tests, as other developing countries flirt with financial instability amid higher inflation and rising interest rates.

State-owned companies of the Chinese northeastern city of Shenyang bought China Evergrande Group's shareholding in Shengjing Bank in an auction for 7.3 billion yuan ($1.05 billion), Alibaba auction platform showed yesterday, Reuters reported. In July, Evergrande, the world's most indebted property developer, said its unit, Evergrande Nanchang, had been ordered to pay an unamed guarantor 7.3 billion yuan for failing to honour debt obligations.

China's exports and imports lost momentum in August with growth significantly missing forecasts as surging inflation crippled overseas demand and fresh COVID curbs and heatwaves disrupted output, reviving downside risks for the shaky economy, Reuters reported. Exports rose 7.1% in August from a year earlier, slowing from an 18.0% gain in July and marking the first slowdown since April, official data showed on Wednesday, well below analysts' expectations for a 12.8% increase.