CBN丨China’s new yuan loans topped last year’s total in first 11 months

Hi everyone. I’m Stephanie LI.

Coming up on today’s program

• November sees steady expansion of China's financing;

• China issued this winter’s first orange alert for a cold wave.

Here’s what you need to know about China in the past 24 hours 

China has issued more new yuan-denominated loans in January to November than in the whole of last year after the country stepped up efforts to support the real economy via credit delivery at the start of this year.

China's banks extended 21.58 trillion yuan in new yuan-denominated loans in the first 11 months of this year, up 1.55 trillion yuan from a year earlier, according to data released by the People's Bank of China on Wednesday. The figure totaled 21.31 trillion yuan last year.

But new yuan loans declined by 136.8 billion yuan to 1.09 trillion yuan last month from a year ago. Household loans, which refer to mortgages and other forms of credit extended to individuals, rose by 292.5 billion yuan, corporate borrowing jumped by 822.1 billion yuan, and loans to non-bank financial institutions decreased by 20.7 billion yuan.

China's financing activity expanded steadily in November as the increment in aggregate social financing ― the total amount of financing to the real economy ― reached 2.45 trillion yuan in November, up by 455.6 billion yuan from a year earlier. 

The amount was also up from the 1.85 trillion yuan in October, with government bonds raising a net 1.15 trillion yuan in November, up 499.2 billion yuan year-on-year, being the main driver of the increase.

China's outstanding aggregate social financing stood at 376.39 trillion yuan as of the end of November, the central bank said, marking a year-on-year growth of 9.4 percent, generally stable compared with 9.3 percent a month earlier.

The broad money supply, or M2, stood at 291.2 trillion yuan as of the end of last month, up 10 percent year-on-year. The growth rate was 0.3 percentage points down from a month earlier and 2.4 percentage points lower than a year ago.

The M1, which covers cash in circulation plus demand deposits, stood at 67.59 trillion yuan at the end of November, up 1.3 percent year on year.

The M0, the amount of cash in circulation, went up 10.4 percent from a year ago to 11.02 trillion yuan at the end of last month.

The central bank is expected to deliver more modest policy easing in the coming weeks, following a pledge this week by top leaders to step up policy adjustments to support the economic recovery in 2024, analysts said.

"There is still some room for cutting the reserve requirement ratio and interest rates to help maintain stable liquidity in the banking system and promote reductions in financing costs," Wen Bin, chief economist at Minsheng Bank, said in a note.

• The Word Bank has revised up its forecast for China's economic growth this year and next from its October estimates, expecting the world's second-largest economy to grow by 5.2 percent in 2023 and 4.5 percent in 2024. In its China Economic Update published on Thursday, the World Bank made such projections, which were both up by 0.1 percentage point from its previous forecasts. The bank said economic activity in China has picked up this year, driven by increased demand for services, resilient manufacturing investment and public infrastructure stimulus. However, China's economic outlook is clouded by continued weakness in the real estate sector and tepid global demand in the short term, as well as structural constraints to growth, including high debt levels and population aging.

• China's meteorological authorities on Thursday issued this winter’s first orange alert for a cold wave, the highest level of warning. According to the National Meteorological Centre, temperatures are expected to drop by 8 to 12 degrees Celsius in most parts of the country from 2pm on Thursday to 8am on Sunday. Parts of Inner Mongolia, Shaanxi, Jilin and Liaoning could see the mercury plunge by more than 20 degrees Celsius. Around 4,330 passenger flights across the country were canceled out of more than 16,000 scheduled on Wednesday, including 938 flights in Beijing, according to figures from data provider Flight Master.

Moving on to regional highlights

• Many Chinese second-tier cities, including Wuhan in central Hubei province, have lowered their requirements for residents to obtain the local household registration, also known as hukou, in an effort to address the declining population issue. Residents who buy a property in Wuhan from Dec. 7 can immediately apply for the household registration, as the previous restrictions targeting the purchased houses' floor area and price were canceled. Zhengzhou in central Henan province and Qingdao in eastern Shandong province introduced policies in September and November, respectively, to allow residents renting apartments to obtain household registrations. Zhejiang and Jiangsu provinces announced the cancellation of household registration restrictions in most cities except for Hangzhou, Nanjing, and Suzhou.

• Hangzhou and Chengdu held their first land auctions earlier this week since the price ceilings on land bids in big cities were lifted in September, and developers scrambled to get their hands on prime plots, with prices soaring to record levels in some places.  Chengdu raked in 4.6 billion yuan for the sale of the land use rights to eight plots. Three plots sold at a premium, with an average premium of 18 percent. Three changed hands at the asking price and one went unsold. Hangzhou put 10 lots up for bidding and bagged 13.4 billion yuan with five sold for more than the asking price, including one reaching a premium of 38.3 percent, but the average premium was 10.5 percent. Four sold at the starting price and one was unsold.

• Chinese local authorities have stepped up bond sales to assist small and midsize banks in supplementing capital to mitigate risks to the financial system as narrowing margins squeeze lenders, media reported today. Local governments of 16 provinces and regions have issued 19 special purpose bonds designed to inject liquidity into banks as of Dec.11, worth a total of 208.3 billion yuan, according to data from bond market database ChinaBond. 

Greater Bay Area, Greater future

• China's State Council on Wednesday approved the development plan for the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, South China's Guangdong Province, as well as the an overall development plan for Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. The Hengqin cooperation zone will advance the integrative development of Hengqin and Macao, expanding and diversifying the content of cooperation in order to effectively oversee the in-depth integration of Macao and Guangdong Province, said the State Council. In another official reply, the cabinet said Qianhai should play the lead in deepening reform and opening up, strengthening institutional innovation, and taking advantage of Hong Kong’s modern services industry to play a greater role in deepening Shenzhen-Hong Kong cooperation.

• Bank of China (Hong Kong) said it has completed the first-ever e-CNY cross-boundary transaction for a bulk commodity worth 24 million yuan. Working with its parent, the Bank of China, BOCHK set up an e-CNY wallet for Bao-Trans Enterprises and received the digital yuan paid by Baosteel Group for imported iron ore. It is the first case for BOCHK to support a local pilot enterprise to trade bulk commodities using e-CNY for cross-boundary settlement after the bank launched the "corporate e-CNY cross-boundary transaction pilot”.

• Hong Kong Tourism Board announced on Wednesday to distribute 200,000 dining vouchers to residents, describing it as a “Christmas gift” to businesses and locals. The HKD20 million worth of vouchers will be given out in two batches. The first batch will be released at 10am on Dec 20 on a first-come first-served basis on the board's "Discover Hong Kong" website, while the second batch will be handed out in January. Residents will be able to use the vouchers at more than 1,100 restaurants participating in the Quality Tourism Services Scheme and 100 bars. Diners must spend at least HKD100 per meal to use the vouchers.

Next on industry and company news

• China’s Alibaba Group Holding has invested an additional USD634 million in Singapore-based e-commerce subsidiary Lazada amid an intensifying battle with TikTok and others for the Southeast Asian market. Lazada issued a placement of stock to Alibaba’s Singapore subsidiary on Thursday, according to a filing with local authorities. Alibaba has repeatedly injected cash into the company since 2022, with this most recent investment ― its third in 2023 ― bringing this year's total to over USD1.8 billion.

• Chinese developer Country Garden Holdings is selling a minority stake in Zhuhai Wanda Commercial Management Group, China’s biggest shopping mall operator, to help repay mounting debt and ease a liquidity crunch. Country Garden will sell its 1.79 percent stake in Zhuhai Wanda back to the Dalian Wanda Group, controlled by billionaire Wang Jianlin, for 3.07 billion yuan, according to a Hong Kong stock exchange filing on Thursday. The firm will receive the payment in three installments by March 2024, it added. Meanwhile, the firm repaid a 800 million yuan bond on Wednesday before its 2024 maturity, averting what would have been its first onshore default.

• Yonghui Superstores, a leading Chinese chain supermarket operator, said it will sell a 1.4 percent stake worth 4.5 billion yuan in Dalian Wanda Commercial Management Group. The stock will be sold to Agricultural products exporter Dalian Yujin Trading, Yonghui announced yesterday. The deal aligns with the company's strategy of cutting investments and will be done in eight phases from the end of this year to the end of September 2025, it added.

• Shanghai Fosun Pharmaceutical's medical device subsidiary and Israeli peer Insightec will establish a joint venture in China to explore the magnetic resonance-guided focused ultrasound surgery market to treat people with Parkinson's disease or essential tremor. The JV will form strategic partnerships with several medical centers in China to explore the potential of MRgFUS to treat neurological diseases, Fosun Pharma announced yesterday.

• China has added 126 drugs to the catalog of medicines fully or partially covered by its health insurance scheme, including a record 15 treatments for rare diseases. The prices of the newly added drugs are 62 percent lower on average, the National Healthcare Security Administration said yesterday, which along with reimbursed costs should save patients more than 40 billion yuan over the next two years.

• Tesla's shares fell as much as 1.6 percent before the start of trading after the US carmaker filed a recall covering more than 2 million vehicles. US’s National Highway Traffic Safety Administration determined its driver-assistance system autopilot doesn't do enough to prevent misuse after a years-long defect investigation that will remain open as the agency monitors the efficacy of Tesla's fixes. Tesla said in its recall report that it expected to start deploying an over-the-air software to incorporate additional controls and alerts on or shortly after Dec. 12.  

Switching gears to financial news

• Shenzhen Stock Exchange and Abu Dhabi Securities Exchange (ADX) inked a memorandum of understanding on cooperation in Abu Dhabi, the capital of the United Arab Emirates, on Wednesday. The MoU aims to expand the China-UAE capital market cooperation and serve the integrated development of both countries' real economies. The two bourses said they are committed to encouraging market players from both sides to participate in a cross-border index, fixed-income and other investment product cooperation. They also agreed to jointly research the feasibility of ETF product link and depository receipt mechanism to facilitate the cross-border financing of listed companies in each other's market.

• The Saudi Public Investment Fund, one of the world's largest sovereign wealth funds, plans to establish an office in China's mainland to eye new investment opportunities. The PIF, which manages nearly USD600 billion in assets, is expanding its international investments after opening an office in Hong Kong last year, media reported citing Chairman Yasir Al-Rumayyan talking at a summit held in the SAR recently.

Wrapping up with a quick look at the stock market

• Chinese stocks fell on Thursday with the benchmark Shanghai Composite down 0.3 percent and the Shenzhen Component sliding 0.6 percent, while Hong Kong’s Hang Seng index rose 1.1  percent and the TECH index added 0.3 percent.

Biz Word of the Day

China has a four-tier, color-coded weather warning system for cold waves, with red representing the most severe weather, followed by orange, yellow, and blue.

Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI 

Sound Editor: Stephanie LI

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

Produced by 21st Century Business Herald Dept. of Overseas News.

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编委:  于晓娜

策划、编辑：李艳霞 

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