Sector Report on China 18.10.2021

0
66

Financial Authorities Declarations

  • Flash News !

-The National Development and Reform Commission (NDRC) urged in a circular to sign mid to long term coal supply contracts among power generators and heating suppliers to ensure coal shipment to the sector.

-Premier LI Keqiang also called for market-oriented approaches to overcome prices pressure on power and coal supplies for this winter and next spring. He proposed Gas transfer from South to North and a temporary tax deferral policy for firms facing difficulties in coal or power supplies.

  • The CSRC approved IPO !

The China Securities Regulatory Commission. (CSRC) approved IPO on Jiangsu Cai Qin Technology Co., Ltd on Shanghai STAR market. In addition, the Sichuan Zigong Conveying Machine Group Co., Ltd received approbation to be listed on A-share market.

Central Bank Operations and declarations

Date Operations Maturity Amount Interest rate
October 11 Reverse Repo 7-days 10 Billion Yuan 2.2%
October 12 Reverse Repo 7-days 10 Billion Yuan 2.2%
October 15 Reverse Repo 7-days 10 Billion Yuan 2.2%
  MLF 1-year 500 Billion Yuan 2.95%
October 18 Reverse Repo 7-days 10 Billion Yuan 2.2%

 

  • PBOC and Evergrande case.

The People ‘s Bank of China (PBOC) talk on Evergrande Group (恒大集团 Héngdà Jítuán).

The PBOC indicates that the indebtedness level of the Group is an individual case and not representative of the Chinese Real Estate sector. According to ZOU Lan, an official with the PBOC, the vast majority of property business registered positive financial performance despite the tighter regulations on Housing Prices implemented to maintain stability.

ZOU Lan pointed out that the Evergrande Group failed to changes its Corporate Governance to better fit with the Regulation and then persist to an massive expansion in multiple sector while stay risk-blind.  This behavior leads to accumulate risk and affects the financial conditions and resilience of the Group.

He is also optimistic of the consequences of the Evergrande default.

The financial liabilities are less than one-third of the developer’s total liabilities […]  its spillover risks on financial institutions are overall controllable.”

He also concludes that the Group should quickens assets cession and resumption of ongoing projects.

Related authorities and local governments are mitigating the risks in a law-based and market-oriented manner and urging Evergrande to accelerate the disposal of assets and the resumption of halted construction projects

  • PBOC data and macro-indicators.
  September 2021 Units
New Yuan Loans 1.66 Trillion Yuan
— Growth +0.44 Trl mom
— Growth -232.7 bln yoy
M2 234.28 Trillion Yuan
— Growth +8.3% yoy
M1 62.46 Trillion Yuan
— Growth +3.7% yoy
M0 8.69 Trillion Yuan
— Growth +5.5% yoy
Net cash injection 255.2 Billion Yuan

 

Government Declarations

  • Inflation data released !

The National Bureau of Statistics (NBS) released CPI and PPI data. Concerning consumer-side, the CPI is pushing down thanks food and pork prices collapse according to DONG Lijuan a senior statistician.

CPI is on downward growth path driven by the strong decrease in food prices registered at -5.2% yoy. The countries was facing a pork-flue pandemic pushing authorities to implement a prices stabilization mechanism of pork price. The pork-price collapse 46.9% yoy as NBS Data highlight.

Concerning Producer-side, the PPI is on a upward trend as there are pressures on energy prices and raw material especially coal noted DONG Lijuan.

The NBS data based on survey highlights that price of 37 government monitored goods (total 50)  registered an increase in mid-october.

  September 2021 Units
CPI +0.7% yoy
— Growth -0.1 pp mom
PPI +10.7 % yoy
— Growth +0.7 pp mom
  • New rules for electricity pricing !

The National Development and Reform Commission (NDRC) announced improvements of the coal-fired power pricing mechanism to support reform focus on market-orientation pricing.

The floating range of the electricity market-based prices is set at +/-  20% (previously ceiling of 10% and floor of 15%).  The NDCRC also specifies that the ceiling of 20% is not applicable for intensive-energy consuming industries and firms!

This can better transmit the pressure of power generation costs and curb unreasonable power consumption” said PENG Shaozong an official with the NDRC.

However, the reform does not cover the scope of residents and agriculture sector  electricity consumption.

All local governments should give priority to the supply of low-cost power for residents and agriculture […] Electricity consumption for residents and agriculture are not involved in the reforms so they will retain their electricity pricing methods” he noted.

Data Published

  Jan-Sept 2021 Units
GDP +9.8% yoy
 — Growth 2019-2021 +5.2% in average
Q3 GDP +4.9% yoy
Retail Sales 31.8 Trillion Yuan
— Growth +16.4% yoy
Online Consumption 9.19 Trillion Yuan
— Growth +18.5% yoy
New urban job 10.45 Million
Disposable Income per capita 26265 per annum
— Growth +10.4% yoy
–prices adjusted Growth +9.7% yoy
Urban DI per capita 35946 per annum
— Growth (nominal terms) +9.5% yoy
— Growth (real terms) +8.7% yoy
Rural DI per capita 13726 per annum
— Growth (nominal terms) +11.6% yoy
— Growth (real terms) +11.2% yoy
  September 2021 Units
Unemployment Rate 5%  
Unemployment Rate 16-24 yrs 14.6%  
Unemployment Rate 25-59 yrs 4.2%  
Retail Sales 3.68 Trillion Yuan
— Growth +4.4% yoy
— Growth from 2019 +7.8% over 2 yeas

 

  Jan-Sept 2021 Units
Total Trade 28.33 Trillion Yuan
— Growth +22.7% yoy
— Growth from 2019 +23.4% over 2 yeas
Imports +22.7% yoy
Exports +22.6% yoy
Top partners
ASEAN +21.1% yoy
Eurpopean Union +20.5% yoy
USA +24.9% yoy
B&R countries +23.4% yoy

 

Sources : Ministry of Finance, People’s Bank of China and the State Administration of Foreign Exchange, National Bureau of Statistics, Ministry of Commerce, Ministry of Finance, General Administration of Customs, State-owned Assets Supervision and Administration Commission

 

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here