China Digest

Economics and policy from China’s newspapers

Tuesday April 25, 2017

Debt ratio of listed 253 companies higher than 70% last year

As many a 253 listed companies on the Shenzhen and Shanghai stock exchanges had a debt to assets ratio of higher than 70% in their 2016 financial reports, the Securities Daily reported on Tuesday morning, citing information from the WIND financial terminal. Three companies had a debt ratio of more than 100%, the report said, while some 148 listed companies had had a debt ratio of more than 70% over five consecutive financial reporting years, the report added.

SOEs’ mixed ownership plans receive approval

The Economic Information Daily said on Tuesday morning that the central government had approved mixed ownership plans of state-owned enterprises (SOEs) in key sectors such as power utilities, oil, natural gas, railway, telecommunications, the military and aviation. The change will see private ownership introduced to the SOEs through capital injections and/or organisational restructuring, as part of China’s overall plan to overhaul SOEs.

China Eco Watch Table 0424

Government needs to curb property market “irrationalism”: State media

A front page opinion piece in the state-owned Economic Information Daily on Tuesday morning urged the central government to actively manage sections of the property market that behave “irrationally” by increasing in value even as supply rises. The report said that despite property curbs and increased supply, secondary transaction prices in Beijing, Xiamen and Guangzhou had risen 2.2%, 4.9% and 3.3% in March this year compared to February, while new residential property prices rose 0.4% month in in March in third tier cities. The article blamed speculative forces at work and urged the authorities to vary real estate taxes based on property prices and introduce more stringent tax audits to tackle the sources of capital being used for property speculation.

Mortgages exceed one third of total loans: CBRC

Guo Shuqing, head of the China Banking Regulatory Commission, said has warned of risks in the housing market as mortgages now exceed one third of total loans in China, the Securities Daily reported on Monday night. Total housing loans now stand at 36 trillion yuan (US$5.2 billion), more than a third of the 110 trillion yuan in loans the CBRC recorded last year.

Banks should film sale of asset management products to customers: CBRC

Banks should make sound and video recordings of sales of asset management products to customers, according to the head of the China Banking Regulatory Commission’s, Guo Shuqing, as reported by Caixin on Monday night. Urging banks to raise their standards, he explained that they must be transparent about providing full information and warning about potential risks when selling such products.

Securities law is being reviewed by NPC standing committee

A revision of China’s national securities law is going through its second audit by the standing committee of National People’s Congress. According to Xinhua, the audit is focused on revisions in seven areas, including reform of the registration system, supervision expansion, market manipulation, investor protection, introducing a multi-level capital market, continuous company information disclosure, and disclosure of capital sources in M&A.

New national resolution centre to deal with securities disputes

A new national resolution center for securities and futures disputes is currently under construction and expected to be operational by the end of this year, according to the medium and small investors’ service centre under the China Securities Regulatory Commission. According to Caixin, the CSRC was only able to deal with 17,000 cases, out of a total of around 100,000 complaints, made in 2015.

CBRC investigating financial firms over entrusted funds

Three provincial branches of the China Banking Regulatory Commission are investigating five financial firms over their entrusted fund practices, the 21st Century Business Herald reported on Monday evening. Entrusted funds are typically where banks farm out investments to third-party asset management entities such as hedge funds. Other than the three provincial branches, five other city branches are under investigation, the report said. The move comes amid rumours of a 10 billion yuan sum being entrusted by an unspecified bank last week, the same report said.

Third round of environmental inspections to start in seven provinces

The environment ministry will start its third round of inspections in seven provinces from Monday onwards, the Shanghai Securities Journal reported on Tuesday morning. The provinces are Tianjin, Shanxi, Liaoning, Anhui, Fujian, Hunan and Guizhou, the report said. Two previous rounds of environmental inspections – in November last year and February this year – have seen more than 6,500 people questioned and 8,897 companies and people punished, the report added, indicating that the current round will see a new wave of crackdowns.

No lack of appetite for wealth management products after bank scandal

A random survey conducted by Securities Daily of investors at various bank branches found that they are not more wary of wealth management products (WMPs) after the China Minsheng bank scandal in which more than 2.75 billion yuan (US$400 million) of investors’ money disappeared. As reported by the paper on Tuesday morning, customers said they were more concerned with returns than whether the products were “safe”.