China Financial Regulatory Reforms electric vehicles subsidies

China Financial Regulatory Reforms

China revises financial regulation regime to control risks

China plans to strengthen oversight of its $60 trillion financial system by creating an expanded national regulatory body and removing some responsibilities from the central bank. According to the plan announced on February 7 at the National People‘s Congress, the new body will take over the supervision of banks and insurance and will oversee all financial sectors except the securities industry. He will take over functions, including overseeing financial holding companies such as Ant Group Co., from the central bank. The purpose of the new regulatory body is to make sure that it covers some of theblind spots in regulating illegal practices in finance, and under one roof to make sure that there is no place to discount responsibility,” said Yu Lanqiang, a representative of the fund. Manager of Pingtan Strategic Asset Management Co. The shakeup will give the Communist Party stronger control over the sector and centralize key policy decisions under President Xi Jinping during his unprecedented third term. This marks the latest development in a decadelong effort to consolidate or at least cooperate more closely between China‘s financial regulators, and followed an earlier merger of banking and insurance supervisors. According to the plan, the Chinese Banking and Insurance Regulatory Commission will cease to exist after major repairs, and the Chinese Securities Regulatory Commission will be transformed into a state institution reporting directly to the State Council. According to the plan, these steps are aimed atresolving longstanding conflicts and issues in the financial sphere.” According to him, the new powers will focus on strengthening supervision of financial institutions and curbing violations. The fact that CSRC remains independent showsthat the authorities see an increase in the size of the stock market and its role in the economy in the coming years as a pool for absorbing household assets, taking the baton from property in the coming years,” Yu said.

China’s Provinces Offer Sweeteners for electric Vehicles after National Subsidies End

✅ National subsidies, which at one point returned up to 60,000 yuan (US$8,700) to electric vehicle buyers, have played a key role in stimulating the spread of electric vehicles in China. For the most part, they were a resounding success: China is the world’s largest market for electric vehicles, and the supply of passenger cars powered by new energy sources almost doubled last year to 6.5 million.

But at the end of the year, national subsidies stopped, and although electric cars are still being sold at a pace that shames other countries, growth has slowed. The heads of automobile companies began to call for the return of subsidies to the national level.

Beijing said it is working on a new policy to support the industry. Meanwhile, local authorities have taken it upon themselves to stimulate demand.

Here are some of the goodies offered in China for consumers switching to electricity:

➡️ Shanghai. Residents of the financial center of China, which has one of the highest penetration rates of electric vehicles in the country, can receive a one-time refund of 10,000 yuan when buying a new electric car to replace an existing gasoline car.

➡️ Beijing. The capital will continue to subsidize those who change their gasoline cars for electric cars. Owners who de-register cars with an internal combustion engine aged from one to six years can receive 8000 yuan, and those who replace cars with an internal combustion engine older than six years receive 10,000 yuan. According to the Beijing government, the incentives helped boost electric vehicle sales by 5 billion yuan in the second half of 2022.

➡️ Hubei. In the province of which Wuhan is the capital, the “largest car sales subsidy season” began this month with money-back offers starting at 5,000 yuan. In addition to the campaign, Dongfeng Motor Group Co., supported by the state, has started offering additional discounts on several of its Citroën, Nissan and Honda models. According to local media reports, Citroën C6 receives the largest refund amount of 90,000 yuan when taking into account the provincial subsidy and Dongfeng promotion.

➡️ Shandong. The Eastern province said it will distribute vouchers for the purchase of new electric vehicles worth 200 million yuan to buyers of new electric vehicles, and people selling their old cars will receive at least 7,000 yuan for expenses.

➡️ Zhengzhou. A manufacturing center in central China has also taken the path of buying vouchers, offering vouchers worth about 150 million yuan for residents who buy electric vehicles since the beginning of this year. People can get vouchers in the amount of 4,000 to 6,000 yuan for use in local shops and supermarkets, as well as in restaurants. There is an incentive to act quickly, because once the 150 million yuan pool runs out, there is no guarantee that there will be another batch.

➡️ Hunan. This southern province will reimburse people 5,000 yuan if they cancel the registration of their used car with an internal combustion engine and buy a new electric car. The plan is part of a goal to produce more than 1 million electric vehicles in Hunan Province, where companies including BYD Co., backed by Berkshire Hathaway, and Zhejiang Geely Holding Group Co. have manufacturing facilities.


Bulls on Chinese stocks are hoping for a 10 percent market pullback before the Lunar New Year 2023 to buy a fall: BofA survey

Bulls on Chinese stocks 2023

Bulls on Chinese stocks are hoping for a 10 percent market pullback before the Lunar New Year to buy a fall: BofA survey

According to a Bank of America survey, investment managers from Hong Kong fear a decline in Chinese stock prices after a sharp rise over the past two months. Some funds are counting on a rollback before the Lunar New Year next week.

“Given the good results, some investors hope to make a profit on the eve of the Lunar New Year,” according to a report dated January 18 by equity strategists at the American bank. They waited for a 5-10% drop before replenishing their positions on dips, as the report showed.

The answer came from a survey of 80 fund managers in the city who attended several meetings and presentations held by Bank of America this month,
as analysts at Wall Street stores including Goldman Sachs, Morgan Stanley and JPMorgan predicted bullish market forecasts based on China’s opening.

Despite the short-term worries, investors are still “unabashedly optimistic,” according to the survey, as China’s economic recovery leaves more room for growth. While the assessment of MSCI China members has expanded to a long—term average multiple of 12 times earnings, “we expect more growth given the cyclical upswing in 2023,” the bank’s strategists added.

About 84% of respondents have a “net long position and overweight” in China, while 78% expect further growth in Chinese markets by 10-20% by the end of this year. About 74% of them believe that China’s markets will not reach their peak before June or even later.

Most financial managers named the internet sector as their top choice, followed by consumers and healthcare. The study showed that most investors prefer stocks registered in Hong Kong or New York to stocks traded on local markets. Most of all, they are concerned about a weaker-than-expected recovery in consumption, geopolitical tensions and negative government policies.

“All key risks on the domestic front have dissipated, with optimism about easing geopolitical tensions in the region this year as well,” Bank of America strategists, including Ajay Singh Kapoor, said in a separate note to clients on Tuesday.

He added that policies aimed at Covid-19, private sector regulation, geopolitics, the credit cycle and property are “more conducive to high stock returns,” and clients do not need to worry that the rally in China could exhaust itself.

However, the powerful rally is starting to falter as the lunar New Year approaches. Some investors have reduced their assets, said Zhang Yidong, chief global investment strategist at Industrial Securities in Shanghai.

Online classroom giant Koolearn has Tripled its Revenue by Switching to Live Streaming e-commerce

China’s most famous online school chain has tripled its sales in six months, switching to selling food and agricultural products live after Beijing’s abrupt ban on commercial extracurricular education in 2021, which upended the multibillion-dollar industry.

Koolearn Technology Holding, a subsidiary of Beijing-based private tutoring giant New Oriental Education & Technology Group, on Tuesday reported revenue of 2.08 billion yuan (US$307 million) from June to November, up 260% from the same period in 2021.

✔️ According to the interim report of a company registered in Hong Kong, companies related to live e-commerce generated more than 85% of total revenue.

The results show that Koolearn has “successfully turned into an online business for e-commerce,” analysts at Shanghai-based research and consulting company SWS Research said in a note.

Koolearn currently has more than 35 million subscribers on six accounts of Douyin, TikTok’s Chinese sibling, which boasts more than 600 million daily active users.

According to the interim report, the company placed more than 70 million orders in the six months ended November 2022, for a total transaction amount of 4.8 billion yuan.

The share price of Koolearn fell by more than 8% and closed at 61.9 Hong Kong dollars on Wednesday, compared with about 4 Hong Kong dollars at the beginning of June last year and exceeded the level before the crackdown.

TAL Education Report released

Key events of the third quarter of fiscal year 2023:

⛔️ Revenue amounted to 232.7M$, compared with revenue of 1,020.9M$ in the same period of the previous year.

✅ The loss from operations amounted to 32.9M$, compared with a loss from operations of 108.4M$ in the same period of the previous year.

➡️ The loss per American depositary share amounted to $0.08

✅ The amount of cash, cash equivalents and short-term investments is $3,040.5M as of November 30, 2022, compared to $2,708.7M as of February 28, 2022.

Key events for the 9 months ended November 30, 2022:

⛔️ Revenue of $750,8M, compared to revenue of $3,849,8M in the same period of the previous year.

✅ The loss from operations amounted to 46.3M$, compared with a loss from operations of 615.2M$ in the same period of the previous year.

✅ Income from non-GAAP operations excluding share-based compensation expenses was $35.9M, compared to a non-GAAP loss from operations of $440.5M in the same period of the previous year.

The first reaction of the market is a slight drop.

Credit Suisse is cautiously optimistic as mainland investors support China’s opening and foreign funds are unsure

According to Credit Suisse, mainland Chinese investors support Beijing’s reopening plan, even if foreign investors seem unsure.

“The overall message this year is cautious optimism,” said John Woods, the Swiss bank’s chief investment officer for Asia Pacific.

China is the main market for the bank’s clients in the Asia-Pacific region, among them pharmaceuticals, tourism and the Internet sector. According to Credit Suisse, high-yield bonds and investment-grade loans are among the main investment topics of the bank in the first half of 2023.

However, foreign investors do not yet believe in the story of China’s discovery due to concerns about the impact of the rapidly growing number of cases of infection on the growth and profits of companies, Woods said. China reopened its border with Hong Kong and the world on January 8 after almost three years, lifting strict quarantine requirements.

“Despite the fact that there is no suitable scenario to effectively manage the Covid-19 outbreak, the opening of China was too chaotic,” Woods said. Credit Suisse believes that it will take at least one quarter to normalize business activity.

At the same time, China is the only major economy that will expand this year, and it will attract attention and an influx of investors, Woods said. Credit Suisse predicts that China’s economy will grow by 4.5% in 2023. This will be much more than in the US and Europe, whose economies will be hampered by a possible recession and higher inflation.

According to Woods, despite the fact that China’s reopening scheme will be an easy task for some investors, there will be problems along the way as authorities respond to spikes in infections and re-infections.

“The opening of China will have a positive impact on tourism, travel, hospitality and entertainment, which will create a positive halo effect in other parts of Asia,” he added.

“The reopening will mean that millions of tourists and visitors will be able to enter Hong Kong, which will have a positive impact on the city’s economy and corporate income,” Woods said, adding that investors are rallying for shares of large companies.

But Woods said the business movement between Hong Kong and Singapore has always been cyclical, and investors will eventually return. People can move to Singapore, but they often return, and the “fluctuations between the two centers” will continue.

According to him, Hong Kong “will remain the gateway to China’s markets.” “As long as the yuan remains non-convertible and Hong Kong has a convertible hard currency into the Hong Kong dollar, the city will have a very deep and secure future.”


China’s GDP: the economy grew by 2.9% in Q4, by 3% in 2022 — the second lowest since 1976

China's GDP: the economy grew by 2.9% in Q4, by 3% in 2022

China’s GDP: the economy grew by 2.9% in Q4, by 3% in 2022 — the second lowest since 1976.

Let’s see how Chinese companies are trading in the Asian session. Top 20 stocks:

1. Alibaba +0,09%
2. JDcom -3,53%
3. EDU -1,18%
4. Li Auto -0,99%
5. XPeng -2,73%
6. NIO -1,18%
7. BYD -2,47%
8. Baidu -3,05%
9. Tencent -0,92%
10. Bilibili -1,7%
11. NetEase -1,94%
12. Autohome -0,79%
13. SMIC +2,42%
14. Xiaomi -2,02%
15. PetroChina -0,52%
16. China Life -3,49%
17. Baozun -2,4%
18. China Petroleum & Chemical 0%
19. Meituan -1,27%
20. Lenovo -0,99%

Compared with the closing of trading in the US session on Friday, Chinese shares in Hong Kong are falling by 2-4%, and compared with yesterday’s trading, a drop of 1-3%. Indices and ETFs for China in the range from -0.16 to -1.31%.

🇺🇸 🇨🇳 This week, Chinese Vice Premier Liu will meet with US Treasury Secretary Yellen. Washington says the goal is to “deepen communication,” while Beijing called the meeting “policy coordination.”

Chinese Deputy Foreign Minister Xie Feng urges the United States not to use technology as a weapon. Xie, who is widely considered China’s next ambassador to the United States, calls for cooperation, not confrontation.

📊 China’s GDP: the economy grew by 2.9% in Q4, by 3% in 2022 — the second lowest since 1976.
Due to the negative statistics released, Chinese stocks are falling today.

The Chinese economy grew by 2.9% YoY in 4Q22, down from 3.9% YoY growth in 3Q22, but above market estimates of 1.8% growth. Quarterly dynamics: 0% kvq vs 3.9% kvq. For the whole of 2022, the economy increased by 3.0% YoY (8.1% in 2021), noticeably falling short of the official target of 5.5%. This is one of the slowest annual rates in recent decades, the worst was in 2020, when China’s GDP added only 2.2%.

The Chinese State Bureau notes that “… the economic recovery is not sustainable, since the global situation is still difficult and difficult, and internal pressure in the form of a reduction in demand, supply shock and weakening expectations still persists …”. The Chinese authorities plan to announce the GDP growth target for 2023 in March

The Netherlands will not accept new US restrictions on the export of chip manufacturing technologies to China and is consulting with European and Asian allies. “We have been talking to the Americans for a long time, but in October they came up with new rules. It cannot be said that we have been under pressure for two years and now we have to sign along the dotted line. And we won’t,” said Dutch Trade Minister Lije Schreinemacher.

The escalation of the US-China conflict “poses a great danger” for the whole world, said Stephen Roach, former chairman of Morgan Stanley Asia. The US and China should restore trust and establish a secretariat in a neutral country such as Switzerland to manage their relations, because their five-year conflict is escalating and “poses a great danger” for them themselves and the world, Roach said.

In China, the first population decline in 60 years is observed in 2022. The total population of mainland China last year was 1.4118 billion people, a decrease of 850,000 people.

The Chinese State Bureau presented relatively good figures for the results of December

• Industry: 1.3% YoY vs 2.2% YoY in November; 0.2% YoY expected. All of 2022: 3.6% yy vs 3.8 yy a year earlier

• Retail sales: -1.8% yy vs -5.9% yy, expected -8.6% yy. All of 2022: -0.25% yy vs -0.09 yy a year earlier

• Investments in fixed assets: 5.1% for 11M22 (forecast 5.0%)

All three indicators came out above consensus. On January 8 of this year, China announced the lifting of anti-bullying restrictions, which hit many segments of the Chinese economy quite sensitively. Previously published statistics on foreign trade indicate a rather weak state of Chinese exports.

Volkswagen expects China’s car market to grow by 5% to 23 million units in 2023.

They say that Evergrande will offer two options for restructuring an offshore company. In one of the options, some debts will be extended to 12 years.
China Evergrande said that its auditor, PricewaterhouseCoopers (PwC), resigned due to disagreements over issues related to the audit of its financial statements for 2021.

Ryan Cohen has acquired a stake in Alibaba worth hundreds of millions of dollars and is pushing the e-commerce giant to increase and accelerate share buybacks. Previously, Cohen earned money by investing in meme shares of GameStop. Today we will translate the details.

✅ Online retail sales in China increased by 4% in 2022, the National Bureau of Statistics of China reported.

Most Chinese provinces are planning GDP growth of 5-6% in 2023. The highest figure was set in the southern Chinese province of Hainan. 4 out of 31 provinces and regions are aiming to achieve annual GDP growth above 7%, and 20 have set goals of about 6%.

Hong Kong stocks are weaker as traders leave the overheated market and China reports a slowdown in growth, while Fosun shows a downtrend.

📌 Hong Kong stocks fell from a six-month high after a government report showed that China’s economic growth slowed last quarter, giving investors an excuse to reduce their assets in an overheated market.

📌 The Hang Seng index declined 1 percent to 21,527.39 during a break in trading at noon local time. The Tech Index lost 0.6% and the Shanghai Composite Index fell 0.3%.

📌 E-commerce platform owner It lost 3% to HK$ 236.60, and search engine operator Baidu lost 2.7% to HK$ 130.70. Tencent fell 0.8% to HK$ 367.20. Shares of Macau casino operator Sands China fell 3% to HK$ 27.90, while shares of WuXi Biologics fell 5.4% to HK$ 69.90.

📌 China’s economy grew by 2.9% in the fourth quarter of last year, compared with 3.9% in the previous three months, the statistics bureau said. The agency added that the annual growth was 3% compared to 8.1% in 2021.

📌 Other government reports today showed that retail sales fell by 1.8% compared to last year after a 5.9% decline in November. Industrial production increased by 1.3% compared with an increase of 2.2% in November.

📌 Against this trend, Fosun International shares gained 2.8% to HK$ 7.34. The inland onshore division of a diversified Chinese conglomerate has received a syndicated loan of 12 billion yuan (US$1.8 billion) from eight Chinese banks, indicating that its liquidity problem has improved.


China will launch a state-run marketplace for NFT trading

China will launch

NFT tokens are so popular that China will launch the world’s first state-run marketplace to deal with them. The marketplace will launch on January 1 during an offline event in Beijing. Its name translates as “China’s digital asset trading platform.”

What can the platform do? It will help Chinese traders buy NFT, as well as digital copyrights and property rights. It’s just like with digital works of art: they can be traded on closed and strictly regulated platforms.

Is an NFT platform a positive thing? Absolutely. Apparently, China is not going to ban the crypto industry. True, it doesn’t use the term NFT, instead it uses “digital collectibles.”

Is China loosening regulations? It seems that they are going to create an investor-friendly environment there. For example, recently the Celestial Empire allowed some companies to audit for the American regulator.


Сhinese aging. How big is china’s aging population

china aging

The one-child policy defined China’s demographic transition for more than three decades.

But to combat an aging population and declining birth rates, the government abandoned the new two-child policy in 2016. Despite this sweeping change, China still faces a growing demographic crisis.

The above animated population pyramid from James Eagle shows the distribution of China’s population by age group since 1950, with projections through 2100.

How the one-child policy created a gender imbalance

Until 2016, the Chinese government had strictly enforced the one-child policy since 1979 and imposed huge fines for any violation of the rules. According to the government, this policy reduced the birth rate by 400 million over the years .

But it also led to selective abortion on the basis of gender because of a deep-seated cultural preference for boys. As a result, the gender balance in China has changed: In 2020, the sex ratio is 111 males per 100 females in the population between the ages of 0 and 4.

This shortage of women, often referred to as China’s “missing women,” is only expected to increase over time. According to the UN World Population Prospects, by 2050, China will have 244 million fewer women than men.

In addition, the country faces another inevitable consequence of the one-child policy: a rapidly aging population.

Why China’s population is aging after all

In 2020, China’s fertility rate – the expected number of children a woman will have in her lifetime – was 1.3.

Generally, fertility rates decline as the economy develops. However, China’s fertility rate is currently lower than that of the United States (1.64 in 2020) and is on par with countries such as Japan and Italy, whose populations are aging. Consequently, the population includes fewer newborns, while many of the working population is approaching retirement age.

Most Chinese workers retire by age 60. This is how China’s retirement-age population is projected to shape up by 2100 :

Most Chinese workers retire by age 60.

In 2021, people aged 60 and older accounted for nearly a fifth of China’s population. As the country’s population begins to shrink around 2030, more than 30 percent of all Chinese are expected to be in this age group.

China’s aging population threatens long-term economic growth as its labor force shrinks and low birth rates lead to fewer newborns, who will later become part of the working-age population. Fewer working people means lower overall consumption, a higher burden of care for the elderly, and slower economic growth.

So how will China respond to the coming crisis?

The three-child policy

According to the 2020 national census, Chinese mothers gave birth to 12 million children in 2020, the lowest number of births since 1949.

In response to these results, the government passed a new law allowing each couple to have up to three children. Despite the change, the high cost of raising a child may deter couples from having a third child.

It remains to be seen how the three-child policy helps combat China’s demographic crisis and what other policies the government will choose.

In any case, we will only know what the future holds for China.

#china #birthrate #chinaspopulation

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