Risk off

4 December 2020 By Yawen Chen Follow @ywchen1

From property to cars to chips, President Xi Jinping is pushing new rules to defuse risks and reallocate capital. It echoes his forceful effort to deleverage the economy in 2017. With world leaders distracted by the pandemic, Xi can endure more disruption this time around.

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China’s property market is the biggest “grey rhino” in terms of financial risk, according to Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission. His comments were made in a collection of articles by policymakers on China’s 14th Five-Year Plan, the official Shanghai Securities News reported on Dec. 1.

Real estate related loans account for 39% of total banking loans, and a large number of bonds, equity, trusts and other funds also have been channelled into the real estate industry, Guo said.

The National Development and Reform Commission, China's state planner, has told local governments to investigate new energy vehicle projects linked to property developers Evergrande Group and Shenzhen Baoneng, Reuters reported on Nov. 25, citing a document.

Separately, China will strengthen supervision of new entrants into its “chaotic” semiconductor industry, Meng Wei, a spokeswoman with the state planner, told a news briefing on Oct. 20.

China's factory activity expanded at the fastest pace in more than three years in November, while growth in the services sector also hit a multi-year high, official data showed on Nov. 30, the latest of a flurry of upbeat economic data recently as the country shakes off the impact of the coronavirus.

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Real estate related loans account for 39% of total banking loans, and a large number of bonds, equity, trusts and other funds also have been channelled into the real estate industry, Guo said.

Separately, China will strengthen supervision of new entrants into its “chaotic” semiconductor industry, Meng Wei, a spokeswoman with the state planner, told a news briefing on Oct. 20.

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