In the Financial/Economic News

[Randy W]

Several depositors told Sixth Tone they were no longer able to pay their relatives’ medical bills due to their accounts being frozen. In two cases, those relatives had died after losing access to their health care. Multiple sources told Sixth Tone they’d witnessed other depositors attempt to kill themselves.

In desperation, many depositors have traveled to Zhengzhou several times to petition the authorities to intercede on their behalf. Local officials, however, have gone to extraordinary lengths to deter demonstrations.

from the Sixth Tone on Facebook 
https://www.facebook.com/1570821646570023/posts/pfbid02aq4KftqFUTkJ8YAMGicfTEXTvfPPeZHDHt5Vw6WsCsXmKPZ9jm9zeWzVDAoddTyzl/

The Devastating Human Cost of the Henan Banking Crisis
In April, thousands of bank depositors in central China’s Henan province lost access to their life savings. Four months later, their lives have descended into a Kafkaesque nightmare.

 

Quote

 

Nie knew the petitioners wouldn’t be welcome in Zhengzhou, but nothing had prepared him for what awaited them. Outside the regulator’s offices, police officers quickly surrounded the small group of depositors. Many others had been detained before they made it to the building.

The officers hadn’t touched Nie and his family, reluctant to use force against his wife, elderly parents, and two children. But they had spent the following days pressuring him to leave, shouting, hurling insults, and issuing threats.

At midnight, the officers finally went home, and Nie’s wife and parents were able to take the children to a nearby hotel to sleep. Nie, however, was unable to join them. As soon as he’d arrived in Zhengzhou, his health code had turned red. 

 . . .

But Nie felt he had no choice but to carry on. If he failed to recover his savings, the consequences for his family would be dire.

His job at a factory in south China pays just 4,000 yuan ($590) a month. Even during normal times, it was barely enough to support his family. But in recent months, his parents have suffered from a stroke and heart problems, respectively. The drugs alone cost over half his monthly salary.

Until April, Nie had been relying on the 200,000 yuan in his savings account to pay the bills. But since losing access to that money, he’d been struggling to keep his head above water. Unless he found a solution within three months, he’d no longer be able to pay for his parents’ health care, he said.

The struggles faced by Nie and other depositors in Henan have shocked China in recent weeks. Many have been unsettled not only by the scale of the banking crisis, but also by the harsh treatment the victims have received.

 

 

[Randy W]

Multiple Chinese companies to delist from NYSE voluntarily

from China Daily

Quote

 

Sinopec and PetroChina had both informed the NYSE that they will apply for delistings of their American Depositary Receipts listed on the exchange in accordance with laws and regulations, the oil producers said in separate announcements published on the Shanghai Stock Exchange on Friday.

Citing the small trading volumes of their ADRs but heavy relevant compliance costs, the companies said they plan to submit delisting filings to the US Securities and Exchange Commission around August 29 and are expected to stop being listed on the NYSE by early September.

China Life Insurance Co Ltd and Aluminum Corp of China Ltd also said on Friday they will voluntarily apply to delist from the New York exchange, effective around September 1.

The China Securities Regulatory Commission said on Friday that it respects the decisions some State-owned enterprises have made to delist from US exchanges based on their conditions and in accordance with the rules of the overseas stock exchanges.

 

 

 

 

[Randy W]

“Summer is almost over, winter is coming. We have no windows, let alone heating. I hope the government will solve this problem for us as soon as possible.”
Across China, failing developers are halting construction on new housing complexes. Desperate buyers are moving in anyway.

from the Sixth Tone on Facebook
https://www.facebook.com/sixthtone/posts/pfbid02g429Vwo3qWHJHGn8xWhuZrDAXASpbhQyM8dpcDvVERqc9qtD7c9kh6rV7mg8sc9Kl

‘We Own It’: The Chinese Homeowners Squatting in Unfinished Buildings
Across China, failing developers are halting construction on new housing complexes. Desperate buyers are moving in anyway.

Wang Shuting (pseudonym), a full-time mother with three kids, stands in her apartment inside an unfinished building, in Xi’an, Shaanxi province, August 2022. Wu Huiyuan/Sixth Tone

Quote

 

Wang and Zhou have occupied one of the empty units on the fourth floor. There is no running water or electricity, a single solar lamp providing the sole illumination. The only furniture consists of two single iron beds pushed against one wall, and an unpainted wooden board serving as a makeshift table.

But the pair, who are both 60 years old, have resolved to put up with the basic conditions. They feel they have no other choice.

“Although life is rudimentary here, we no longer have to worry about the monthly rent,” Wang tells Sixth Tone. “We bought it. We own it. It’s our home.”

Wang, Zhou, and nearly 100 other homeowners moved into the unfinished apartment compound — Jinling Apartment — just over three months ago. It was an act born of desperation and defiance.

 

 

[Randy W]

“Every single one of our clients would like to stop manufacturing in China, and people say, ‘Why don’t they?’” said Dan Harris. “There’s a million reasons why it’s just not that easy.”

In an article written by Stephanie Yang for the Los Angeles Times, Harris Bricken attorney Dan Harris shares his insight on the rising number of foreign companies seeking to leave China.

Read the full article now: https://lat.ms/3RjZVVZ

Foreign businesses want out of China. But breaking up may be tougher than ever

Quote

 

Four years later, his company, Agilian Technology, which designs, produces and distributes goods for overseas clients, remains wholly reliant on its factory in southern China. Yet the impetus for departing what has long been considered the bedrock of global manufacturing has only escalated.

Multinational companies are facing a slew of fresh challenges doing business in China because of the ever-deteriorating U.S.-China relationship, enduring pandemic restrictions and the specter of war with Taiwan.

“It was not necessarily a strong strategy before but more like, let’s see how it goes,” said Gaussorgues, 51, who founded Agilian, whose parent company is based in Hong Kong, five years ago. “Now it’s something like, we have to do it. That’s a big difference.”

 . . .

Four years later, his company, Agilian Technology, which designs, produces and distributes goods for overseas clients, remains wholly reliant on its factory in southern China. Yet the impetus for departing what has long been considered the bedrock of global manufacturing has only escalated.

Multinational companies are facing a slew of fresh challenges doing business in China because of the ever-deteriorating U.S.-China relationship, enduring pandemic restrictions and the specter of war with Taiwan.

“It was not necessarily a strong strategy before but more like, let’s see how it goes,” said Gaussorgues, 51, who founded Agilian, whose parent company is based in Hong Kong, five years ago. “Now it’s something like, we have to do it. That’s a big difference.”

 

 

[Randy W]

China’s Pinduoduo Quietly Launches U.S. E-Commerce Site Temu
Temu is the latest example of Chinese companies expanding overseas as the economy loses steam at home

E-commerce company Pinduoduo is popular in China for its competitive prices.PHOTO: REUTERS STAFF/REUTERS

Quote

 

Chinese e-commerce company Pinduoduo Inc. this week quietly launched an online marketplace in the U.S. called Temu, the latest example of overseas expansions by Chinese companies as the economy at home slows down.

Similar to Shein, the Chinese ultrafast-fashion e-commerce company, Temu boasts competitive prices. It features products in 14 categories, including apparel, accessories, pet supplies and beauty products, and it offers a 20% discount to first-time shoppers and free shipping for orders of $49 or more.

The launch came without fanfare. Temu’s website and social-media accounts don’t mention its links to Pinduoduo. However, its page codes contain references to “Pinduoduo,” “PDD”—Pinduoduo’s stock symbol—and “Xunmeng,” the name of Pinduoduo’s main Chinese entity. Midlevel Pinduoduo executives said Temu is operated by Pinduoduo.

According to Temu’s website, its business in the U.S. is operated by Whaleco Inc., a Delaware-based company. A Singapore-based company, Elementary Innovation Pte., handles its business outside the U.S. Elementary Innovation lists Zheng Zhenwei, a founding member and senior vice president of Pinduoduo, as its director.

Pinduoduo and Temu didn’t respond to requests for comment.

 

 

Link to site - https://us.temu.com/w/index.html

Edited September 7, 2022 by Randy W (see edit history)

[Randy W]

The whole problem is that the developers have too strong of an incentive to take the pre-sales cash and run - whether to develop a new property somewhere else, or, in many cases, to skip the country entirely - before their commitment has been fulfilled.

 

China’s property boom was built on a lax presales policy that allowed developers to amass eye-watering debts. Unwinding that system will require fundamental — and painful — reforms.

To understand how integral the presales system is to China’s housing market, it helps to explore why the policy was first introduced. Its origins lie in a previous crisis: China’s acute housing shortage of the 1990s.

The country’s market reforms unleashed an unprecedented wave of urbanization during this period, as people left their farms to seek higher-paying jobs. Over 150 million people moved into the cities between 1990 and 2000 — and all of them needed somewhere to live.

China’s traditional, state-controlled property sector couldn’t cope. In 1990, the average urban resident in China had just 7.1 square meters of living space, according to government data. Most families relied on employers to provide housing, but they often had to wait years because the system was overwhelmed.

The Chinese government turned to the private sector to solve the shortage. In 1991, China had 4,200 property developers. Four years later, that number had jumped to more than 33,000, as officials opened up the real estate market. Yet these private firms were brand new and cash-poor. Each developer held just 46.6 million yuan of assets on average in 1996.

In 1994, the Chinese government issued a new policy designed to jump-start the market: the urban commercial housing presale management method. The system — which was closely modeled on a similar policy Hong Kong had been using for four decades — allowed developers to begin selling properties inside new residential projects once at least 25% of construction had been completed.

The growth of China’s real estate market over the following years was stunning. In 2003, Chinese developers built nearly 117,000 square meters of new properties. By 2010, this figure had soared to 4 billion square meters, making the country’s property market the largest in the world.

from the Sixth Tone on Facebook 
https://www.facebook.com/sixthtone/posts/pfbid0PwREL9FysFYEt6XxkEDGkPNFzLQkT1xhvtx7NYSQKUseYJUWGwhr1zfeJCQd1aETl

Can China Fix Its Broken Housing Market?
China’s property boom was built on a lax presales policy that allowed developers to amass eye-watering debts. Unwinding that system will require fundamental — and painful — reforms.

Buildings under construction in Shenzhen, Guangdong province, Aug. 12, 2022. VCG

Quote

 

Unfinished apartment blocks — known as lanweilou, or “rotten-tail buildings,” in Chinese — ring China’s urban centers. Around 5% of the apartments under construction in 50 major cities — around 71.5 million square meters of property — are now lanweilou, Shanghai Yiju Real Estate Research Institute found in a survey conducted during the first half of 2022.

Buyers who invested in these developments have been left in dire situations. Some, no longer able to afford their rent, have taken the desperate step to squat inside their half-constructed homes. Others have organized joint mortgage strikes, arguing they should not be forced to pay for apartments that do not — and may never — exist.

Meanwhile, confidence in the real estate market has fallen sharply. Commercial property sales were down 28.8% year-over-year during the first seven months of 2022, according to National Bureau of Statistics data. Local government land sales were down more than 30%.

Chinese authorities are taking emergency steps to ease the crisis. The central government plans to issue 200 billion yuan ($29 billion) of special loans to allow cash-strapped developers to finish construction on stalled projects. Several local governments are also launching their own bailout funds.

 

 

 

[Randy W]

China tells state banks to prepare for a massive dollar dump and yuan buying spree as Beijing's prior interventions have failed to stem its currency's worst year since 1994

from Yahoo! Finance
Read the original article on Business Insider

Quote

 

• Reuters reported that China told state-owned banks to get ready to sell dollars and buy yuan in an effort to prop up the local currency.

• The move could stem the yuan's fall, as it remains on track for its largest annual loss against the dollar since 1994.

• A hawkish Fed has pushed the dollar to 20-year highs this year, pressuring currencies around the world.

The scale of this latest effort to prop up the yuan will be big and could provide a floor to the Chinese currency, according to the report.

The amount of dollars to be sold hasn't been decided yet, but Reuters said it will primarily involve the state banks' currency reserves. Their offshore branches, including those based in Hong Kong, New York and London, were ordered to review offshore yuan holdings and check to see that dollar reserves are ready.

 

 

[Randy W]

Cities across China are resorting to pressuring groups of state-sector workers to buy up unsold housing stock at discounts of up to 30%, as local governments struggle to jump-start flatlining property markets.

from the Sixth Tone on Facebook
https://www.facebook.com/sixthtone/posts/pfbid02D87zzZPyK2RXGGWaLDgUEw75Z4VUCyjqXpPYHpA6UHGAhQvDFv5b1xXKfTygHsiAl

Chinese Cities Offer Huge ‘Group Buying’ Discounts on Unsold Properties
In a desperate bid to revive the property market, more than 20 cities have launched schemes encouraging groups of state-sector workers to buy up new apartments at discounts of up to 30%.

Quote

Local governments, which rely heavily on revenue from real estate, are under pressure to get the market moving again. That’s leading many to create “group buying” schemes, where employers — normally state-sector entities — are offered steep discounts if large numbers of their staff agree to buy properties, according to The Paper.

 

Edited October 7, 2022 by Randy W (see edit history)

[Randy W]

China’s eight publicly listed airlines made combined losses of 106 billion yuan ($14.5 billion) during the first three quarters of 2022. These are the highest losses the firms have ever recorded in a single year. The company with the largest losses was Air China, previously the most profitable, which was 28.1 billion yuan in the red during the first three quarters.

from the Sixth Tone on Facebook
https://www.facebook.com/sixthtone/photos/a.1604152706570250/3366319190353584

 

[Randy W]

“Suspending the mortgage payments is a gamble...there is no way out. We’ve been driven to despair.” Homebuyers involved in China’s mortgage boycott movement are facing harassment, punishment, and threats of legal action. But they say they can’t afford to give up.

from the Sixth Tone on Facebook 
https://www.facebook.com/sixthtone/posts/pfbid02kqUGgztzZLH74QNs6T1YuP6CvLFkRTBGyRzuhX9UnxmCpcZVdQrm42TrYc5PWubDl

‘No Way Out’: Why China’s Mortgage Strikers Refuse to Back Down
Homebuyers involved in China’s mortgage boycott movement are facing harassment, punishment, and threats of legal action. But they say they can’t afford to give up.

A man stands inside the half-finished Sinic City complex in Nanchang, Jiangxi province, November 2022. Wu Huiyuan/Sixth Tone
 

Quote

 

His credit rating has tanked, dashing his hopes of starting a business. He has had to deal with repeated, angry calls from the bank. And he risks being blacklisted via the social credit system, making it impossible for him to buy luxury goods, take a flight, or even ride a high-speed train.

The 27-year-old, however, plans to continue striking regardless. He feels he has no other choice.

 . . .

By doing so, the strikers hope to pressure the banks and the government to take stronger action to ensure developers restart zombie construction projects. In theory, they have real leverage. Up to 2 trillion yuan ($280 billion) of mortgages — around 5% of China’s total outstanding mortgages — could be affected by the boycotts, GF Securities estimates. If the authorities fail to deal with the strikes, it could spark a wider economic crisis, analysts say.

“The main concern is that the mortgage boycott could expand,” said Alfredo Montufar-Helu, head of the China Center for Economics and Business at research group The Conference Board. “If this were to happen, it could exacerbate the cash crunch that developers are facing and potentially lead to more debt defaults. This would then contribute to a much deeper downturn of the property sector in China.”

But much will depend on how far the strikers are willing to go. In China, failing to repay a mortgage can result in severe punishment. Anyone who defaults risks having their credit rating immediately downgraded via the social credit system. If a bank then gets a court order and the striker still refuses to pay, they are added to a blacklist, which places strict limitations on their ability to travel and consume freely.

 

 

 

[Randy W]

In a first, US watchdog gets full access to audit Chinese firms
It marks a victory for US regulators and relief for Chinese firms like Alibaba that faced delisting from US exchanges.

Washington and Beijing have been locked in a heated trade and technology war [File: Nicolas Asfouri and Nicholas Kamm/AFP]

from Al Jazeera

Quote

 

The United States Public Company Accounting Oversight Board (PCAOB) says it has gotten full access to inspect and investigate accounting firms in China for the first time ever, removing the risk that around 200 Chinese companies could be kicked off US stock exchanges.

The statement on Thursday from the PCAOB, the US accounting watchdog, marks a victory for US regulators and a relief for Chinese firms, including Alibaba, facing delisting amid rocky relations between the world’s largest economies. Washington and Beijing have been locked in a heated trade and technology war.

For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them,” said PCAOB Chair Erica Williams.

“This falls into the category of a game-changing view of Chinese companies because the threat of their delisting seems to have been eliminated,” said Art Hogan, chief market strategist at B Riley Financial.

 

 . . . and Reuters

U.S. PCAOB says it is able to inspect firms in China for first time

Quote

 

The U.S. Public Company Accounting Oversight Board on Thursday said it has determined that it has gotten full access to inspect and investigate firms in China for the first time in history.

The U.S. accounting watchdog said it exercised sole discretion to select firms for audit and had selected two, KPMG Huazhen LLP in China and PricewaterhouseCoopers in Hong Kong.

The PCAOB, which oversees registered public accounting firms around the world, said late last year said that Chinese authorities had prevented the watchdog from completely inspecting and investigating in mainland China and Hong Kong.

Washington and Beijing reached a landmark deal in August to settle a long-running dispute over auditing compliance of U.S.-listed Chinese firms. Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns.

 

 

Edited December 16, 2022 by Randy W (see edit history)

[Randy W]

Billionaire Jack Ma to cede control of China’s Ant Group
Business magnate Jack Ma, who controlled more than 50 percent of the fintech giant’s shares, will now hold just 6.2 percent.

Jack Ma will hold just 6.2 percent of the voting rights following the adjustment [File: Yuya Shino/Reuters]

from Al Jazeera

Quote

 

In November 2020, Ant’s $37bn initial public offering (IPO), which would have been the world’s largest, was cancelled at the last minute. It led to a forced restructuring of the financial technology firm and speculation the Chinese billionaire would have to cede control.

Ma indirectly controlled 53.46 percent of Ant Group’s shares, making him the company’s “control person”. But now he will hold just 6.2 percent of the voting rights following the adjustment, according to the information in the statement.

“The adjustment is being implemented to further enhance the stability of our corporate structure and sustainability of our long-term development,” the Ant statement said.

 

Ant Group, one of China’s most influential tech titans, has announced that its founder, Jack Ma, plans to relinquish control of the company.

from the NY Times on Facebook 
https://www.facebook.com/nytimes/posts/10153058716619999

 

 

Edited March 28, 2023 by Randy W (see edit history)

[Randy W]

see Alibaba founder Jack Ma is back in China in CFL topic.

Jack Ma is Beijing’s prodigal entrepreneur

from Reuters

Quote

 

A better way to reassure investors might be to clarify the status of Ant, the payments-to-credit group co-founded by Ma, which remains uncertain. Letting it revive its initial public offering, which was derailed after Ma’s jeremiad, would put money where Li’s pro-market mouth is.

Yet even as party officials talk up the private sector’s economic importance, they are strengthening political influence over business decisions. The recent detention of prolific tech dealmaker Bao Fan suggests the government is still in crackdown mode. Ma the prodigal entrepreneur has returned, but perhaps not for long.

 

 

[Randy W]

Boutique investment bank China Renaissance Holdings said it would delay its audited annual results and suspend its stock trading from Monday, after mainland authorities took away its chairman, Bao Fan, to co-operate with an investigation.

from Reuters on Facebook
ttps://www.facebook.com/Reuters/posts/pfbid02XqfHwTtQsoE1yY4vRJopbkFaQWDEucugUoPyuzisL6vQEBKYKKeatp5pNUM1zZaNl

 

China Renaissance delays results, halts trade citing star dealmaker's disappearance

Quote

 

In a filing to the Hong Kong stock exchange, the bank said auditors told it they were unable to complete their audit and sign off on the earnings report until Bao, as controlling shareholder, becomes generally available for contact.

"While the company has used its best efforts to facilitate the requests of the auditors", those requests are not matters within the control of China Renaissance, the bank said in the filing, adding that the board "was not able to reasonably estimate when it would meet to approve" the 2022 annual results.

Bao, who is also CEO, started the bank in 2005 with a two-person team, seeking to match capital-hungry startups with venture capitalist and private equity investors.

 

 

[Randy W]

Dual circulation needed to protect China economy in ‘extreme’ circumstances, Xi Jinping warns

• The Chinese president said the strategy to boost domestic activity will make sure the country can continue to function normally
• The comments to manufacturers in Inner Mongolia were Xi’s second recent warning to prepare for ‘worst-case’ scenarios

from the SCMP

Chinese President Xi Jinping at the Zhonghuan industrial park in Hohhot, capital of the Inner Mongolia autonomous region on northern China on Wednesday. Photo: Xinhua
 

Quote

 

Chinese President Xi Jinping said China’s strategy to build domestic economic circulation is to make sure the economy can function normally “under extreme circumstances”, in another stern warning of the geopolitical uncertainties ahead.

Xi said the dual circulation strategy is “not contradictory” to China’s participation in international trade and investment flows, during an inspection tour of manufacturers in northern China, state news agency Xinhua said on Thursday.

Xi’s remarks came just a week after his warning to a top level security meeting that China should prepare for “worst-case and extreme scenarios”, to withstand “high winds and waves and even perilous storms”.

 . . .

The dual circulation concept was introduced in 2020 and signalled Beijing’s pivot from the export-oriented growth model. The strategy was also included in Xi’s working report to the 20th Party Congress in October.

The strategy aims to reorient the country’s economy by prioritising the domestic front, while remaining open to international trade and investment. It initially raised concerns about China’s openness, leading to repeated assurances from the party that it did not mean shutting the country’s doors to business.