The cabinet’s financial stability committee meeting pledged to “propose supportive measures” for real estate, Xinhua said. It gave no details about possible initiatives.

The Chinese government tried to reassure nervous investors on Wednesday after a regulatory crackdown sent stock prices plummeting, promising support for the struggling real estate sector, internet companies and entrepreneurs looking to raise money abroad.

Regulators should enact market-friendly policies to “stimulate the economy,” officials said at a cabinet meeting led by Vice Premier Liu He, President Xi Jinping’s top economic adviser, the official Xinhua News Agency said. as the ruling Communist Party tries to revive economic growth that fell to 4% in the last quarter of 2021, compared to a full-year growth of 8.1%.

The downturn was sparked by a slump in home construction and sales after Beijing launched a crackdown on real estate debt, which officials worry is dangerously high.

That added to private sector concerns about the status of Chinese industries following anti-monopoly and data security investigations, multimillion-dollar fines and public criticism of e-commerce and other internet businesses — and a row with Washington over oversight of companies with US-traded stocks. .
Xi’s government has pledged to support entrepreneurs who generate new jobs and wealth. But crackdowns have shaken the private sector since 2020, with no indication of when the uncertainty could end.

Wednesday’s announcement gave no sign that the debt, anti-monopoly and other regulatory campaigns are over. But some economists suggested that enforcement may have peaked after leaders announced a “policy pivot” in December to focus on the short-term goal of supporting economic growth.
Share prices of companies, including e-commerce giant Alibaba Group, have fallen nearly half on foreign exchanges, wiping out more than $1 trillion in share value since early last year.

Liu, the deputy prime minister, “spoke to stop the stock market decline,” Macquarie Group’s Larry Hu and Xinyu Ji said in a report.
“The tone of the meeting is strong, suggesting that policymakers are very concerned about the recent market shutdown,” they said.

Chinese stocks recovered after the announcement. Hong Kong’s Hang Seng Index rose 9.1%, while the Shanghai Composite Index rose 3.5%.
Hong Kong-traded shares in Alibaba rose 25.8%. Tencent Holdings, operator of the popular WeChat messaging service, rose 23%. Live streaming site Kuaishou Technology added nearly 34%.

The Hang Seng Tech Index for technology stocks on the Hong Kong exchange ended the day at 22.2%.
“These announcements don’t mean much individually, but collectively they suggest that policymakers will not sit still,” Stephen Innes of SPI Asset Management said in a report.

The economy is also hampered by anti-coronavirus measures that have shut down the southern business center of Shenzhen and other cities, raising the risk of production and trade disruptions.

China’s No. 2 leader, Prime Minister Li Keqiang, said last week that the government hopes to create as many as 13 million new jobs this year but faces “many difficulties and challenges”. Forecasters say the ruling party will likely struggle to meet its official economic growth target of 5.5%, the lowest since the 1990s.
Abroad, Russia’s attack on Ukraine has pushed up oil and other commodity prices and increased the risk of more trade snags at a time when economies are recovering from the pandemic.

The cabinet’s financial stability committee meeting pledged to “propose supportive measures” for real estate, Xinhua said. It gave no details about possible initiatives.

Home sales and construction, industries that support millions of jobs, collapsed last year. The government has tried to boost demand by telling banks to lend more to home buyers, but economists say Beijing is proceeding cautiously to avoid a rise in housing costs and debt.

In a separate statement, the agency that regulates Chinese banks and insurers pledged to encourage lenders to “support the development of the real economy” through moderate credit growth.

It pledged to support the “healthy development” of real estate and reiterated the official slogan that housing is “for living, not speculating”. The agency said Chinese state insurers would be encouraged to invest more in stock markets.

The cabinet officials pledged to coordinate more closely on policies that will affect financial markets and to exercise caution when implementing policies that could disrupt them.

The government “will promote the development” of Internet industries and improve their competitiveness, Xinhua said, without giving details.
Entrepreneurs and investors are also concerned about the status of Chinese companies on US and other foreign exchanges after Beijing and Washington clashed over the amount of information US regulators can demand from those companies.

Tech companies with shares traded abroad are also subject to stricter scrutiny by regulators on their cross-border data flows.
In December, Didi Global Inc., China’s dominant taxi service, announced it was exiting the New York Stock Exchange and moving stock trading to Hong Kong. That followed a data security investigation by Didi that was launched by Chinese regulators shortly after its stock market debut on June 30.

Wednesday’s announcement sounded a positive note on Chinese companies and foreign exchanges, though it was vague, saying only Beijing will “continue to support foreign exchange listings”. It said Chinese and US regulators are having “good dialogue” about stock markets and are working on a plan for cooperation after disputes over audit requirements that led to some Chinese companies being thrown off US exchanges.

This post China tries to calm markets by promising support for the economy

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