It’s all over for 5.5% growth:
China will keep its economic policy vigorous, targeted, reasonable and appropriate and will not introduce super stimulus measures and monetary easing to achieve “excessively higher” growth target, said Chinese Premier Li Keqiang on Wednesday.
The country will maintain consistence of the macro economic policy and continue to help market entities to address difficulties in a bid to keep the foundation of the economic development intact, said Li at the World Economic Forum Special Virtual Dialogue with Global Business Leaders.
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Li said that China is willing to strengthen international cooperations on epidemic containment and will make its epidemic control measures more targeted and precise under the premise of ensuring safety against Covid infections.
How generous of it. Is it happy to shut the Wuhan lab and pay compensation? Meanwhile, Frankenstein’s monster won’t leave its master alone:
China’s road freight volume declines again as more than 20 provincial-level regions have been hit by a new wave of Covid-19 infections.
According to data from G7, a provider of IoT SaaS services for the trucking industry, China‘s national road freight traffic index hit 101.3 in the week of July 11- 17, a drop of 1.3% from the previous week, falling for the third consecutive week, and slumping 18.3% from the same period last year.
Earlier, in May and June, the index had improved significantly amid production resumption from the previous round of outbreaks, rising by more than 16% in May from the previous month and rising 4.4% on month in June, according to G7 data.
More than 20 provincial-level regions in China have reported locally transmitted COVID-19 cases in the latest wave of infections. Read more …
Last week, the Covid outbreak in Southwest China’s Sichuan province worsened, with several cities including Chengdu, Leshan, Meishan and Guangyuan taking a hit. On the same week, the province’s road freight traffic index declined by more than 6% from the previous week and down more than 15% from a year earlier, showed G7 data.
In contrast, in East China’s Anhui province, as the Covid outbreak eased last week and daily confirmed cases dropped to 36 from 234, its road freight index rose by 3.5% on week, according to the data.
In South China’s Hainan province, the road freight traffic index had tumbled in July 1 – 3 due to rainstorms, before quickly recovering in July 4 – 10. However, due to Covid-19 resurgence, the index declined again last week by 12.5% from the previous week.
In order to contain the latest round of outbreaks, local governments have stepped up entry inspections. For instance, in Chengdu city, capital of Southwest China’s Sichuan province, the local authority set up check points at its airports, railway stations, expressway entry points。
The index for cargo throughout at China’s large public logistics parks stood at 95.4 last week, falling 0.3% from the previous week, and slumping 23.4% from a year earlier, hitting a new low since June, showed G7 data.
The problem is huge:
The mortgage boycott started in late June with a single China Evergrande Group project in the city of Jingdezhen. That became 28, then 58, then at least 100 developments in more than 50 cities by July 13. As of Sunday, the tally was at least 301 projects in about 91 cities. Capital Economics estimates that construction has been halted on around 13 million apartments in the past year, potentially affecting more than 4 trillion yuan in mortgage debt. Even if all this could be backstopped, there is no telling how such a loss of confidence might mutate and infect other parts of the financial system.
Authorities are trying to fix it:
A number of Chinese cities including Zhengzhou, Ningbo and Xianyang have taken various actions to help property developers resume constructions of stalled projects after a growing number of homebuyers across the country threaten to stop making mortgage payments for unfinished properties.
Zhengzhou city, capital of central China’s Henan province, is creating a property developer bailout fund as increasing numbers of homeowners join a nationwide boycott of mortgage payments on stalled property projects.
The bailout, one of the first to deal with the intensifying mortgage revolt in the country, will be jointly established by Henan Asset Management and developer Zhengzhou Real Estate Group, according to a statement from the asset manager. The two entities are backed by the financing arms of the local government.
The fund aims to help “revitalise problematic property projects and rescue developers with difficulties”, Henan Asset Management said, without disclosing the size of the fund.
Zhengzhou is one of the most exposed city to the mortgage boycott out of 19 affected cities, according to data compiled by the E-House China R&D Institute, a real estate consultancy.
Other Chinese cities have also took various measures to deal with the mortgage boycott.
The housing authority in the city Xianyang, Northwest China’s Shaanxi province, recently summoned property developers, urging them to strengthen business management, take social responsibility and promote steady and healthy development of the real estate sector, according to a notice on Wednesday.
The authority pledged to take a “one-to-one” policy, referring to an approach in which each department of the housing regulator is responsible for helping one property developer address difficulties, and urged homebuilders to accelerate property construction and ensure home deliveries while ensuring project quality.
On the same day, the housing regulator in Suining city, Southwest China’s Sichuan province, pledged to set up a mechanism, under which each senior government official is responsible for one of 83 ongoing and pending property projects in the city, asking the officials to get thorough understanding of the situation of the projects and conduct regular communications to address the developers’ difficulties.
Suining unveiled nine measures including stepping up support to quality homebuilders, asking financial institutions not to withdraw and withhold loans to property developers and to maintain steady lending to the sector, etc, according to the notice.
But how can any of this be lifting buyer confidence? It isn’t and no recovery is coming.
Au contraire! China is odds-on to be epicenter of the unfolding global bust.