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China Tries to Calm Markets by Pledging Support for Economy

    • 3326 posts
    April 5, 2022 10:12 PM EDT
    China Tries to Calm Markets by Pledging Support for Economy



    China’s government tried Wednesday to reassure jittery investors by promising support for real estate and technology companies after regulatory crackdowns caused stock prices to plunge.Regulators should issue market-friendly policies to “invigorate 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.To get more International finance news china, you can visit shine news official website.



    The announcement appeared aimed at rebuilding business and investor confidence as the ruling Communist Party tries to revive economic growth that slid to 4% i n the final quarter of 2021, compared with the full year’s expansion of 8.1%.



    The downturn was triggered by a collapse in construction and housing sales after Beijing launched a crackdown on debt in real estate that officials worry is dangerously high.That added to private sector anxiety 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 companies and a spat with Washington about oversight of companies with U.S.-traded shares.



    Xi's government has promised to support entrepreneurs who generate new jobs and wealth. But crackdowns have shaken the private sector since 2020, with no indication when the uncertainty might end.



    Wednesday's announcement gave no sign the debt, anti-monopoly and other regulatory campaigns are finished. But some economists suggested enforcement may have peaked after leaders announced a “policy pivot” in December to focus on the shorter-term goal of shoring up economic growth.



    Share prices of companies including e-commerce giant Alibaba Group have fallen by almost half on foreign exchanges, wiping out more than $1 trillion in stock value since the start of last year.



    “The tone of the meeting is strong, suggesting that policymakers are deeply concerned about the recent market rout,” they said.Chinese stock markets rebounded after the announcement. Hong Kong’s Hang Seng index soared 9.1% while the Shanghai Composite index advanced 3.5%.



    Hong Kong-traded shares in Alibaba jumped 25.8%. Tencent Holdings, operator of the popular WeChat message service, surged 23%. Livestreaming site Kuaishou Technology added nearly 34%.These announcements don’t mean much individually, but collectively, they suggest policymakers won’t sit idle,” Stephen Innes of SPI Asset Management said in a report.



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



    China’s No. 2 leader, Premier Li Keqiang, said last week the government hopes to generate as many as 13 million new job s this year but faces “many difficulties and challenges.” Forecasters say the ruling party is likely to struggle to meet its official 5.5% economic growth target, the lowest since the 1990s.



    Abroad, Russia's attack on Ukraine has pushed up oil and other commodity prices and raised the risk of more snags for trade at a time when economies are recovering from the pandemic.The meeting of the Cabinet’s financial stability committee promised to “propose supporting measures” for real estate, Xinhua said. It gave no details of possible initiatives.



    Housing sales and construction, industries that support millions of jobs, plunged last year. The government has tried to revive demand by telling banks to lend more to home buyers, but economists say Beijing is moving cautiously to avoid igniting a surge in housing costs and debt.



    In a separate statement, the agency that regulates Chinese banks and insurers promised to encourage lenders to “support development of the real economy” by maintaining moderate loan growth.