In a rare attempt to bolster China's yuan, a self-regulatory body overseen by the country's central bank has told major state-owned banks to lower dollar deposit interest rates, four people with direct knowledge of the matter said, Reuters reported. This could encourage Chinese firms, especially exporters, to settle foreign exchange receipts in yuan, which has weakened to six-month lows against the dollar. The buoyant U.S. currency and the Federal Reserve's interest rate hikes have prompted many Chinese companies to hoard dollar receipts.
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China
China said local government debt is manageable and authorities have enough financial resources to avoid risks from spreading, seeking to allay investor fears of possible defaults, Bloomberg News reported. The official Xinhua News agency published a report Monday responding to recent concerns about local government finances. It quoted an unidentified official from the Ministry of Finance as saying government finances are generally healthy and urged local authorities to tackle their debts.
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China is working on a new basket of measures to support the property market after existing policies failed to sustain a rebound in the ailing sector, Bloomberg News reported. Regulators are considering reducing the down payment in some non-core neighborhoods of major cities, lowering agent commissions on transactions, and further relaxing restrictions for residential purchases under the guidance of the State Council, the people said, asking not to be named because the matter is private.
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Tremors in a key corner of China’s debt market are threatening to become the next force that will rattle the world’s second-largest economy. With the real estate market in a slump and growth showing signs of losing momentum, investors are growing concerned about another potential drag: Local government financing vehicles, which have long provided a big boost to the economy as authorities used them to bankroll the construction of roads, subways and other infrastructure projects, according to a Bloomberg News report.
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China's factory activity shrank faster than expected in May on weakening demand, heaping pressure on policymakers to shore up a patchy economic recovery and knocking Asian financial markets lower, Reuters reported. The official manufacturing purchasing managers' index (PMI) fell to a five-month low of 48.8, the National Bureau of Statistics (NBS) said on Wednesday, down from 49.2 in April and below the 50-point mark that separates expansion from contraction. The PMI also dashed forecasts for an increase to 49.4.
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China’s era of rapid growth is over. Its recovery from zero-Covid is stalling. And now the country is facing deep, structural problems in its economy, the Wall Street Journal reported. The outlook was better just a few months ago, after Beijing lifted its draconian Covid-19 controls, setting off a flurry of spending as people ate out and splurged on travel. But as the sugar high of the reopening wears off, underlying problems in China’s economy that have been building for years are reasserting themselves.
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The rows of towering buildings crowding the banks of the Gan River are a testament to the real estate boom that transformed Nanchang in eastern China from a gritty manufacturing hub to a modern urban center, the New York Times reported. Now those skyscrapers are evidence of something very different: China’s real estate market in crisis, reeling after years of overbuilding.
One of China’s poorest provinces is testing Beijing’s mettle with a mountain of debt that local borrowers are struggling to repay, the Wall Street Journal reported. Investors worry it is a harbinger of another major debt crisis in the country, and believe the central government will have no choice but to defuse it. Cracks have been showing in the finances of Guizhou, a southwestern province with jaw-dropping landscapes and some of the world’s highest bridges.
U.S.-based Micron Technology Inc. on Monday forecast a hit to revenue in the low-single to high-single digit percentage after a ban by China on sale of its memory chips to key domestic industries marked the latest in the Sino-American trade spat, Reuters reported. China's cyberspace regulator said late on Sunday that Micron, the biggest U.S. memory chipmaker, had failed its network security review and that it would block operators of key infrastructure from buying from the company. It did not provide details on what risks it had found or what products from the company would be affected.
Some Hong Kong-based staff with U.S. consultancy Mintz Group have left the city after the firm's Beijing office was raided by Chinese police in March, according to two sources with direct knowledge of the matter, Reuters reported. Investigations by Chinese authorities into Mintz, as well as U.S. management consultancy Bain & Co and mainland consultancy Capvision Partners, have sent a chill through companies that deal with China, with many unclear where red lines stand as Beijing prepares to introduce stricter anti-espionage laws in July.
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