China

Chinese leader Xi Jinping is bringing the country’s financial sector to heel, one banker at a time, the Wall Street Journal reported. For decades, China sought to learn from Western finance. Now it’s purging many of the internationally experienced financiers who helped steer the country’s economic rise, while ushering in a new generation of loyal functionaries willing to carry out Communist Party edicts and disavow capitalist excess.

Country Garden, once China's top property developer by sales, posted on Tuesday a net loss of 12.84 billion yuan ($1.75 billion) for the first half of 2024, as conditions deteriorated amid a prolonged sector-wide slump, Reuters reported. The loss followed a full-year net loss of 178.40 billion yuan for 2023, the company said in a separate statement. Country Garden, which defaulted on $11 billion in offshore bonds in late 2023, had delayed the publication of its 2023 full-year and 2024 interim results.

New loans extended by Chinese banks posted their first decline since 2011 last year, underscoring weak demand for financing in an economy plagued by deflation and a housing slump, Bloomberg News reported. Financial institutions offered 18.09 trillion yuan ($2.47 trillion) of new loans in 2024, according to data released by the People’s Bank of China on Tuesday, representing the first annual drop in 13 years. Aggregate financing, a broad measure of credit, also rose less than the previous year’s increase marking the first slowdown since 2021.

China’s central bank again vowed to help the economy grow this year, firming expectations of more monetary easing as it walks a fine line between conflicting policy targets complicated by a possible trade war with the U.S., the Wall Street Journal reported. Officials at the People’s Bank of China said at a Tuesday briefing that they will ramp up support for the economy with measures like lower interest rates and reducing the amount of cash lenders must hold as reserves to free up liquidity.

China announced on Monday that its trade surplus reached almost $1 trillion last year as its exports swamped the globe, while the country’s own businesses and households spent cautiously on imports, the New York Times reported. When adjusted for inflation, China’s trade surplus last year far exceeded any in the world in the past century, even those of export powerhouses like Germany, Japan or the United States. Chinese factories are dominating global manufacturing on a scale not experienced by any country since the United States after World War II.

Defaulted property developer Sunac China Holdings said that it can’t rule out a second offshore debt restructuring as a prolonged property crisis dims its outlook and it faces another court petition to wind up operations, Bloomberg News reported. The company “doesn’t exclude seeking a more comprehensive holistic offshore debt solution”, given that current market conditions are “significantly below” expectations when it completed its first overhaul in 2023.

China Evergrande said on Monday that a court in Hong Kong had ordered one of its key offshore units to be wound up, the latest in a slew of legal victories for the embattled developer's liquidators, Reuters reported. The liquidators had filed a winding-up petition against company subsidiary CEG Holdings BVI in September, in a bid to recover funds from the debt-laden property company that defaulted in 2021 and triggered China's real estate market crisis.

China’s top securities regulator said it will work on building a mechanism to stabilize the market, vowing to anchor market expectations in 2025 after a disappointing start to the new year, Bloomberg News reported. The China Securities Regulatory Commission said stability is top of its agenda in 2025 as it pledged to make every effort to induce and maintain the market’s stabilizing and positive momentum, according to a statement following its work meeting on its priorities for the year.

In a striking sign of the Chinese economy’s stagnation, the central bank said on Friday that it had temporarily stopped buying government bonds, the New York Times reported. The central bank’s unexpected action is aimed at braking a recent shift by investors toward purchasing bonds while shunning riskier assets like stocks and real estate. That shift has driven China’s long-term interest rates to a record low. The decision to stop buying government bonds is especially unusual because interest rates have been rising lately in most of the world, in response to inflation fears.