Chinese officials said they would stop reporting the country’s youth unemployment rate after months of spiraling increases, depriving investors, economists and businesses of another key data point on the declining health of the world’s second-largest economy, the Wall Street Journal reported. The surprise move extends China’s efforts to restrict access to a variety of data on its economy and corporate landscape to outside scrutiny.
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China's largest private real estate developer Country Garden is seeking to delay payment on a private onshore bond for the first time, the latest sign of a stifling cash crunch in the property sector, piling pressure on Beijing to step in, Reuters reported. Adding to worries about contagion risk, a major Chinese trust company that traditionally had sizable exposure to real estate, Zhongrong International Trust Co, has missed its repayment obligations on some investment products.
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For more than a quarter-century, China has been synonymous with relentless development and upward mobility. As its 1.4 billion people gained an appetite for the wares of the world — Hollywood movies, South Korean electronics, iron ore mined in Australia — the global economy was propelled by a seemingly inexhaustible engine. Now that engine is sputtering, posing alarming risks for Chinese households and economies around the planet, the New York Times reported.
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Problems are mounting for China’s largest surviving property developer, Country Garden Holdings, which is desperately trying to avoid the same fate as its many defaulted rivals, the Wall Street Journal reported. The 31-year-old company said that it expects to post its worst loss since going public 16 years ago, and estimated the red ink could be as much as the equivalent of $7.6 billion for the first half of 2023. The developer also said its contracted sales slumped 60% in July from a year earlier—a much bigger decline than in previous months.
Ratings agency Moody's on Thursday downgraded Chinese developer Country Garden's corporate family rating (CFR) to Caa1 from B1, citing heightened liquidity and refinancing risk after the company missed bond payments, Reuters reported. Caa1 rating is a level that signals a very high credit risk, according to the ratings agency's website. Country Garden expects to record a half-year loss owing to higher impairment provisions on projects, it said on Thursday.
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Foreign investors funneled over $3 billion into Chinese debt in July in the first net monthly inflows this year for the world's second-largest economy, data from the Institute of International Finance (IIF) showed on Thursday, Reuters reported. Inflows were less than a third of the $10.6 billion poured into Chinese bonds in December as China geared up to lift nearly two years of strict COVID-19 curbs. July also saw a $7.7 billion inflow from non-locals to Chinese stocks, a big jump from the $1.9 billion in June and the second-largest monthly inflows in 2023.
Country Garden, China’s biggest developer by sales, has been pummeled in the markets twice in the past week, the New York Times reported. Investors are panicked by two events: On Aug. 1, the company scrapped a plan to inject cash into the business, something it needs. This week, it missed two interest payments on bonds. The bond payments, which are owed in U.S. dollars, are relatively small in value, but by missing them, the company put itself at risk of default. Country Garden’s market value has more than halved since the start of the year.
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China’s deepening economic malaise has entered a potentially dangerous new phase, the Wall Street Journal reported. In July, consumer prices in the world’s second-largest economy tipped into deflationary territory for the first time in two years, as a host of other problems weigh on its recovery after lifting Covid-19 curbs. A drop in exports is accelerating, youth unemployment has hit record highs and its housing market is mired in a protracted downturn.
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China's imports and exports fell much faster than expected in July as weaker demand threatens recovery prospects in the world's second-largest economy, heightening pressure for authorities to release fresh stimulus to steady growth, Reuters reported. The grim trade numbers reinforce expectations that economic activity could slow further in the third quarter, with construction, manufacturing and services activity, foreign direct investment and industrial profits all weakening.
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Chinese developer Country Garden Holdings Co.’s stock and bonds plunged as noteholders said they haven’t received coupon payments effectively due Monday, further darkening sentiment in the crisis-stricken property sector, Bloomberg News reported. Some holders of two different notes said they didn’t receive coupon payments as of Tuesday afternoon. The investors asked not to be named as they’re not authorized to speak publicly. The company owed $10.5 million of interest on a dollar bond that matures in 2026 and $12 million on a note due 2030, according to data compiled by Bloomberg.
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