Chinese regulators attempting to rein in Ant Group Co. and a swelling online-lending industry have a target in their sights: the excessive, debt-fueled lifestyles of the country’s youth, the Wall Street Journal reported. Leading up to last year’s coronavirus pandemic, a new generation of tech-savvy and free-spending citizens helped power rising consumption, a growing driver of China’s economy. Many used short-term loans to pay for expenses such as prestige cosmetics, electronic gadgets and costly restaurant meals.
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Under founder Jack Ma, Alibaba Group Holding Ltd. had regulators and local officials in its corner as it grew into a Chinese version of Amazon.com Inc. Chinese President Xi Jinping’s recent crackdown on the empire of China’s best-known entrepreneur has put an end to that, the Wall Street Journal reported. Since late last year, Alibaba has been in Beijing’s crosshairs, along with its financial affiliate Ant Group Co. Regulators already have come down hard on Ant, which they consider a risk to the financial system, forcing it to make changes that will severely hamper its prospects.
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Two developments in the China Fishery Chapter 11 bankruptcy filing have given William Brandt, the trustee overseeing the sale of the company’s Peruvian assets, hope that he will get a deal done, Seafood Source reported. On 19 February, Brandt filed a proposed settlement agreement with China Fishery Group’s court-appointed liquidator, FTI Consulting, which had sued the company, arguing it had used ill-gotten earnings to purchase Copeinca in 2013.
China will put financial institution bankruptcy laws on its legislative agenda for the first time, according to a report by the top legislative body released on Monday, Reuters reported. The absence of a legal bankruptcy framework for Chinese financial institutions has prevented technically insolvent firms from exiting the market effectively. A slew of laws will be revised including the Enterprise Bankruptcy Law in the five-year legislative programme, said the report, signed off by Li Zhanshu, chairman of the standing committee of the National People's Congress, or parliament.
China’s chief banking regulator warned about rising risks from the country’s property sector and from global financial markets, underscoring Beijing’s focus on risk controls after a robust pandemic recovery, the Wall Street Journal reported. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told reporters in a briefing Tuesday that he was concerned about what he called a “bubble” in Chinese real-estate prices, which he said could threaten the country’s financial sector and its broader economy.
China is set to reduce local government bond sales and rein in its budget deficit this year, scaling back the pandemic stimulus measures that fueled debt while helping the economy recover, Bloomberg News reported. The government is likely to reduce its quota for special local bonds -- mostly used for infrastructure spending -- to 3.5 trillion yuan ($541 billion) from 3.75 trillion yuan last year, according to the median estimate of 10 economists surveyed by Bloomberg. The fiscal deficit target is forecast to be cut to 3% of gross domestic product from 3.6% in 2020.
Chinese bondholders are gaining more power in the corporate restructuring process, underscoring a renewed push by authorities to reform the nation’s $5.2 trillion credit market, Bloomberg News reported. Following a slew of defaults late last year that rattled markets, disgruntled creditors have successfully pushed for borrower concessions that would have seemed out of reach in China only a year ago.
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China’s banking regulator formalized rules that will force Ant Group Co. and other online lenders to have more skin in the game when they make loans with banks, dealing a blow to a burgeoning business that helped drive Chinese consumer spending in recent years, the Wall Street Journal reported. Starting in 2022, internet-lending platforms in the country will have to fund at least 30% of every loan they make jointly with commercial lenders, which include banks, trust companies, and finance companies.
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U.S. Treasury Secretary Janet Yellen said that the U.S. will keep tariffs imposed on Chinese goods by the former Trump administration in place for now, but will evaluate how to proceed after a thorough review, Reuters reported. “For the moment, we have kept the tariffs in place that were put in by the Trump administration ... and we’ll evaluate going forward what we think is appropriate,” Yellen told the cable news network, adding that Washington expected Beijing to adhere to its commitments on trade.
Chinese coffee chain Luckin Coffee said yesterday that its board had found no evidence of misconduct by Chief Executive Jinyi Guo during a month-long investigation into allegations made by some employees, Reuters reported. Guo, who took over after the competitor to Starbucks ousted co-founder and chairman Charles Zhengyao amid an internal fraud investigation, had denied the allegations. The coffee chain’s explosive growth was halted last year by an investigation into its accounts for overstating 2019 revenue and understating net loss.