BEIJING (AP) — The Chinese government on Wednesday tried to reassure jittery investors by pledging support for its ailing real estate industry, internet companies and entrepreneurs looking to raise funds overseas after a regulatory crackdown dragged down stock prices.
Regulators should issue market-friendly policies to ‘reinvigorate the economy’, officials told a Cabinet meeting chaired by Vice Premier Liu He, President Xi Jinping’s top economic adviser, according to the agency. Xinhua official press.
The ruling Communist Party is trying to revive the economic growth that slipped to 4% i n the last quarter of 2021, compared to a full-year expansion of 8.1%. It was triggered by a slump in housing construction and sales after Beijing launched a repression of debt in real estate that officials worry about is dangerously high.
The economy is also under pressure from anti-coronavirus measures that have shut down the southern business center of Shenzhen and other cities. This has fueled concerns about a possible disruption of manufacturing and trade.
China’s No. 2, Premier Li Keqiang, said last week that the government hoped to generate as much as possible. 13 million new jobs s this year, but faces “many difficulties and challenges”. Forecasters say the ruling Communist Party is likely to struggle to meet its official economic growth target of 5.5%, the lowest since the 1990s.
The main stock indexes in Shanghai and Hong Kong have fallen more than 10% this year after the debt crackdown. Tighter control of internet industries and a spat with Washington over surveillance of Chinese companies whose shares trade on US stock exchanges have added to the pressures on leaders.
Liu “spoke to stop the stock market rout,” Macquarie Group’s Larry Hu and Xinyu Ji said in a report.
“The tone of the meeting is strong, suggesting policymakers are deeply concerned about the recent market rout,” they said.
Share prices of some companies, including e-commerce giant Alibaba Group, have fallen by almost half on foreign exchanges since the start of last year after being hit by anti-monopoly and other investigations.
Chinese stock markets rebounded after the announcement. Hong Kong’s Hang Seng Index climbed 9.1% while the Shanghai Composite Index rose 3.5%.
Hong Kong-traded shares of Alibaba jumped 25.8%. Tencent Holdings, operator of popular messaging service WeChat, jumped 23%. Live streaming site Kuaishou Technology added almost 34%.
Xi’s government has promised to support entrepreneurs who are creating China’s new jobs and wealth. But companies and investors are uneasy following a series of anti-monopoly and data security investigations, multimillion-dollar fines and public criticism of internet companies.
More generally, global markets are in a particularly volatile state given the uncertainties brought about by Russia’s invasion of Ukraine, which has driven commodity prices up sharply and increased the risks of even more disruptions to markets. trading at a time when economies are just beginning to recover from the pandemic.
The cabinet’s financial stability committee meeting promised to “propose support measures” for the real estate market, Xinhua said, but did not elaborate on possible initiatives.
Home sales and construction, industries that support millions of jobs, plunged last year after Beijing’s debt crackdown. The government has tried to spur demand by telling banks to lend more to homebuyers, but economists say Beijing is moving cautiously to avoid triggering higher housing costs and debt.
The agency that regulates China’s banks and insurers promised in a separate announcement to encourage lenders to “support the development of the real economy” by maintaining moderate loan growth.
He promised to support “healthy development” in real estate while repeating the official slogan that housing is “for living, not for speculation”.
The agency said China’s state-owned insurers would be encouraged to increase their investment in stock markets.
Cabinet officials vowed to coordinate policies that will affect financial markets more closely and to act with caution in implementing those that could disrupt them.
The government will “promote the development” of internet industries and improve their competitiveness, Xinhua said, without giving details.
Beijing “will continue to support overseas stock listings,” the report said.
He said Chinese and U.S. regulators were having a “good dialogue” on the stock markets and were working on a cooperation plan following disputes over audit requirements that led to a threat of eviction of some Chinese companies excluding US exchanges.
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