Sector Report on China 21.12.2021

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Financial Authorities Declarations

Flash News !

-The National Bureau of Statistics (NBS) conducted a reduction of 241.9 billion Yuan of the 2020 GDP. The revised GDP for 2020 is then 101.36 Trillion Yuan  (about 15.92 trillion USD). So, the GDP growth in 2020 was 2.2% after revision (-0.1 pp compare to previous calculations).

-The Shanghai Environment and Energy Exchange (SEEE) declared that the new carbon market volume stayed at 107 million tonnes in trading volume and 4.43 billion yuan in turnover at the end of December 15 (the 102 nd trading days of the carbon market).

-The  Beijng Stock Exchange (BSE) reported ‘’smooth operations ‘’ for the first trading months. 82 firms are listed on the BSE including 71 transfers from the oldest market National Equities Exchange and Quotations (NEEQ) and 11 approved IPO.

-The China Development Bank issued 15 billion Yuan of bonds to support green transportations projects maturing in 3 years at 2.19%.

“So far, the bank has issued green bonds worth about 105 billion yuan in total, with the balance of such bonds standing at around 95 billion yuan” the bank said.

-The Futures Market registered a total turnover of 50.79 trillion Yuan up 9.24% yoy in November 2021 according to the China Futures Association (CFA). In the Jan-Nov 2021 period, the total turnover stood at 536.46 trillion Yuan up 40.27% yoy.

-According to Moody’s Investors Services the Shadow Banking assets continue to decrease due to a strict and stronger regulation.

« The ratio of shadow banking assets as a share of China’s nominal GDP at the end of 2020 reached the lowest level since 2013, » said Lillian LI, a Moody’s Vice President and Senior Credit Officer.

-Ernest & Young (EY) indicated that the funds raised by A-Shares during IPO process record  high in 2021.

“A total of 492 companies are estimated to be listed on the Chinese A-share market in 2021, up 25 percent year on year, and the proceeds raised expanded by 14 percent from a year ago to reach 536.3 billion yuan (about 84.26 billion U.S. dollars)”  the report showed.

The EY report also indicated that Shanghai and Shenzhen markets are expected to rank 2d and 3rd in the world top IPO places.

-The State Administration of Foreign Exchange (SAFE) indicated that the Qualified Domestic Institutional Investors (QDII) quotas were granted to 174 chinese financial institutions amounted 157.52 Billion USD.

-The National Development and Reform Commission (NDRC) data showed that 382 new Public-Private Partnership (PPP) project registered since January 2021. In addition, the Planner approved 84 Fixed-Assets Investments (FAI) projects for a total of 757 Billion Yuan.

The CBIRC data on Insurance Sector

Insurance Sector Q1-Q2-Q3 2021
Average Solvency ratio 240%
Average Core Solvency ratio 227.3%
Property Insurance Cie Solvency Ratio 285.6%
Life Insurance  Cie SR 231.6%
Reinsurance Cie SR 307.3%

 

The CSRC approved IPO !

The China Securities Regulatory Commission. (CSRC) approved IPO of Caina Technology Co., Ltd., YiDong Electronics Technology Co., Ltd., and Ningbo Tianyi Medical Appliance Co., Ltd. will on  the ShenZhen ChiNext market.

The CSRC declaration on US regulators.

On December 17, the China Securities Regulatory Commission (CSRC) indicate be ready to communicate with its US counterparts, the Securities and Exchange Commission and Public Company Accounting Oversight Board (PCAOB),  on audit oversight cooperation and welcomed the attitudes of the US regulators to engage and search a solution to the issue.

« Currently, dialogues on audit oversight cooperation between the Chinese and U.S. regulators are ongoing and have yielded positive progress, » said the CSRC.

Customs Tariffs adjustments!

The Customs Tariff Commission of the State Council announced a further implementation of provisional tariffs lower than the most-favored-nation rates on 945 imported commodities. The new rates will be effectives on January 1 2022.

“Considering the development of domestic industries and changes in supply-demand conditions, the country will raise import and export tariffs from Jan. 1 on some commodities within the range of its accession commitments to the World Trade Organization,” said the circular.

In addition, China will continue to impose conventional rates in accordance with the Free Trade Agreements signed with 29 countries. For least developed countries having diplomatic relations with China, a preferential rate will be granted.

Central Bank Operations and declarations

Date Operations Maturity Amount Interest rate
December 13 Reverse Repo 7-days 10 Billion Yuan 2.2%
December 14 Reverse Repo 7-days 10 Billion Yuan 2.2%
December 15 MLF 1-year 500 Billion Yuan 2.95%
  Reverse Repo 7-days 10 Billion Yuan 2.2%
December 16 Reverse Repo 7-days 10 Billion Yuan 2.2%
December 17 Reverse Repo 7-days 10 Billion Yuan 2.2%

 

People’s Bank of China (PBOC) Data

November 2021 Units
Outstanding of Yuan funds for Foreign exchanges purposes 21.26 Trillion Yuan
— growth +35.44  Bln Yuan mom
FOREX Reservers 3.22 Trillion USD
— growth +4.8  Bln USD mom

 

 

Real Estate Market November 2021 Units
New home prices in Tier 1 Cities* +0.0% mom
Resold Houses prices in Tier 1 Cities* -0.2% mom
New home prices in Tier 2 Cities -0.4% mom
New home prices in Tier 3 Cities -0.3% mom
Property Investment 13.73 Trillion Yuan
— Growth +6% ytd
— Growth from 2019 +13.2% over two years
*Beijing. Shanghai. Shenzhen and Guangzhou
Financial Institutions at end of Q3 Units  
Combined Assets 375.68 Trillion Yuan  
— growth +8.2% yoy  
Combined Liabilities 341.3 Trillion Yuan  
— growth +8% yoy  
Assets of Banking Institutions +7.7% yoy  
Assets of Securities Institutions +23.7% yoy  
Assets of Insurance firms +8.4% yoy  

 

Government Declarations

  • New measures focus on Industry Sector

The National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) jointly unveiled new measures to boost the industrial economy high-quality development.

The main objectives are to ensure energy supply and security while stabilizing prices of bulk raw materials. In addition, the Demand potential should be fulfilled by implementing technological updates of enterprises and cultivate new business forms and models.

“China will step up safety measures in the industrial sector, improve policy systems in key regions, strengthen financing support for the manufacturing industry, and help firms navigate employment challenges.More efforts will be made to reduce burdens on medium and small companies and optimize market environments” as indicated in the released document.

  • The Ministry of Finance on debt risks

The  Ministry of Finance (MOF) declared that Local Government debt risks are under control. The Vice-Minister XU Hongcai indicated that the debt ratio stood at 93.6% below the international Standards of 100% -120%.

The Local Gvt outstanding of debt stood at 25.66 Trillion Yuan in 2020 while the total outstanding of debt of the Government (local + central) reached 46.55 Trillion Yuan. Then the Debt/GDP ratio stood at 45.8% below the 60% prudential limits of international standard practices.

XU Hongcai added that the ‘’hidden debt risks of local government have been significantly reduced and discovered.

  • Data published !
  November 2021 Units
Retail Sales of Consumer Goods 4.1 Trillion Yuan
— growth +3.9% yoy
— growth from 2019 +9% over 2 years
Industrial Output +3.8% yoy
High-Tech manufacturing Output +15.1% yoy
NEV output +112% yoy
Robots outpout +27.9% yoy
Integrated Circuits output +11.9% yoy
Unemployment Rate 5%  
— UR 16-24 yrs 14.3%  
— UR 25-59 yrs 4.3%  
  Jan-Nov 2021 Units
Retail Sales of Consumer Goods 39.96 Trillion Yuan
— growth +13.7% yoy
Online Retail sales 11.87 Trillion Yuan
— growth +15.4% yoy
FAI Investment 49.4 Trillion Yuan
— growth +5.2% yoy
— growth from 2019 +7.9% over 2 years
Industrial Output +10.1% yoy
Profits of Industrial Firms 7.16 Trillion Yuan
— growth +42.2% yoy
FDI in actual use 1.04 Trillion Yuan
— growth +15.9% yoy
FDI in services Sector +17% yoy
FDI in High-Tech industries +19.3% yoy
Fiscal Revenue 19.13 Trillion Yuan
— growth +12.8% yoy
  Jan-Nov 2021 Units
Tax revenue 16.45 Trillion Yuan
— growth +14% yoy
Income Tax Revenue 1.26 Trillion Yuan
— growth +20.3% yoy
VAT Revenue +13.4% yoy
Central Gvt Collection 8.84 Trillion Yuan
— growth +13.1% yoy
local Gvt Collection 10.29 Trillion Yuan
— growth +12.6% yoy
Fiscal Spending 21.39 Trillion Yuan
— growth +2.9% yoy
Spending on Education +5.1% yoy
Spending on Science and Technology +5.9% yoy
Spending on Social Security and Unemployment +4.9% 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

 

 

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