In this roundup, Chinese small businesses see slowest growth in manufacturing and services activity since mid-2020, head of China’s banking and insurance regulator wary of bubbles bursting in markets foreigners and the onshore sale of the so-called “carbon neutral bonds” are moving from the interbank market to the smaller foreign exchange market.
Read our special two-session roundup for highlights from China’s annual parliamentary meeting.
Caixin’s manufacturing purchasing managers index (PMI) fell for the third consecutive month in February to 50.9. Caixin’s services PMI in February also fell for three consecutive months to 51.5.
Readings were the lowest since June and May of last year, respectively. Caixin’s PMIs are more focused on small companies, with official PMIs more focused on large companies.
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The People’s Bank of China completed Rmb 50bn ($ 7.7bn) of 2.2% seven-day reverse repurchase transactions between Monday and Friday, compared to Rmb 80bn which matured this week.
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The Ministry of Commerce announced 22 measures to stabilize foreign investment in 2021.
It also plans to relax foreign strategic investments in Chinese listed companies, such as the maximum participation limit and the lock-up period.
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The Chinese banking sector provided 2.2tr Rmb of new loans to the manufacturing sector in 2020, the combined amount of the previous five years, said Chairman of the China Banking and Insurance Regulatory Commission (CBIRC) Guo Shuqing, during a press briefing on Tuesday. .
New loans to private companies reached Rmb5.7tr last year. Meanwhile, Chinese banks have eliminated Rmb3tr of non-performing loans.
Despite a slowdown in mortgage lending growth last year, there are still bubbles in China’s real estate sector, Guo said, adding that the country needs to “proactively” manage the healthy development of this market.
Guo said he was “very worried” about the bursting of bubbles in foreign financial assets after many countries implemented “extremely loose monetary policies” in the wake of the Covid-19 pandemic, pushing the markets in the opposite direction of the real economy. He also pointed out the risk of influx of foreign capital into China.
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Foreign investors increased their holdings of onshore bonds for the 27th consecutive month in February, by 95.7 billion Rmb, according to data from the China Central Depository & Clearing Co (CCDC). The outstanding amount they held reached 3.15tr Rmb at the end of last month. In addition to the CCDC, the Shanghai clearinghouse also clears and settles bond transactions.
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A total of 471 foreign institutional investors participated in the Chinese interbank bond market (CIBM) last month through the CIBM Direct program, and 641 accounts – including five new investors – through Bond Connect, according to the China Foreign Exchange Trading System (Cfets ).
International onshore bond trading slowed in February, as volume fell 41% from the previous month. The amount traded, 671.8 billion Rmb, represented 3% of the total volume of transactions in the CIBM, according to data from Cfets.
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Chinese issuers have started selling ‘carbon neutral bonds’ in the exchange bond market, after six issuers launched these agreements on the interbank market last month. Carbon neutrality bonds are a type of green bond, the proceeds of which are intended to finance green projects aimed at reducing carbon emissions and supporting Beijing’s commitment for the country to reach its peak in carbon dioxide emissions by 2030 and become carbon neutral by 2060.
Since then, at least six issuers, mainly from the energy and transportation sectors, have sold such transactions on the forex market to raise RMB 13.5 billion, according to government filings.
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The CBIRC has authorized China Cinda Asset Management Co to issue Rmb 22 billion in perpetual bonds to supplement its senior capital, a regulator update showed.
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The CBIRC published the quarterly credit risk ratings of the 178 Chinese insurance companies for October-December 2020, giving the highest “ A ” rating to 100 companies. Three insurers received a “D” rank indicating high credit risk, and six confirmed insurers failed the regulator’s assessment.
Companies reported an average overall solvency ratio of 246.3% by the end of the fourth quarter of 2020, according to the CBIRC. Their average basic solvency adequacy ratio is 234.3%.
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The State Administration for Market Regulation has sanctioned five “community group buying” platforms for “inappropriate pricing behavior”. The online platforms are owned by Alibaba Group Holding, Didi Chuxing Technology, Meituan, Pinduoduo and Tencent Holdings. They were fined 6.5 million rmb.
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In 2020, 232 companies listed on the Shanghai Star Market recorded 15.6% annual increase in revenue to 331.5 billion Rmb and 60% growth in net profit to 41.2 billion Rmb, according to data compiled by onshore media.
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Chinese brokerage firm Zhongshan Securities Co has been arrested by the Shenzhen office of the China Securities Regulatory Commission for alleged violations, such as breaches of due diligence. The company was told to rectify its problems.
