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Chinese Premier Li Qiang said Friday at a conference focused on local government debt risk mitigation that China will make greater efforts to diversify debt risks of lending platforms.
“China will resolutely prevent the circulation of fraudulent debts and disguised debts, and strictly prevent the risk of adding new debts,” Li said.
Foreign investment in China fell 19.9% from January to February last year to 215 billion yuan ($30 billion) in the first two months of 2024, the Ministry of Commerce said on Friday.
China on Tuesday announced new measures to stem a slowdown in overseas investment, including expanding market access and relaxing some rules.
Since China enacted ultra-strict COVID-19 control measures during the pandemic and then abruptly abandoned them in late 2022, foreign companies have behaved poorly toward China, causing a negative impact on the business environment. A steady economic recovery and rising geopolitical tensions with the West are weighing on confidence.
A series of long-running regulatory crackdowns on sectors from technology to education have also spooked investors at home and abroad, raising concerns about the transparency of China’s policies.
U.S. Commerce Secretary Gina Raimondo said last year that U.S. companies told her China was becoming “uninvestable.”
Foreign direct investment in China in 2023 decreased by 8% from the previous year.
According to the ministry, 71.44 billion yuan, or one-third of the total, of overseas investment in the first two months was invested in China’s high-tech industries, including high-tech manufacturing.
It added that China’s foreign investment in the construction sector increased by 43.6% year-on-year, while investment in wholesale and retail trade increased by 14.5%.
In return, China’s central government accelerated spending at the beginning of the year, a sign that China is taking on more financing responsibilities to support the economy and avoid exacerbating local government debt risks. Bloomberg reported that there is.
General public spending rose 14% year-on-year to 482.8 billion yuan ($66.8 billion) in January and February, the fastest pace for the period in five years, according to data provided by the Ministry of Finance. .
Bloomberg said the Chinese government is gradually shifting responsibility for supporting economic growth from local authorities to the central government, a way to maintain investment levels while reducing local debt risk.
Local governments have been struggling since the real estate crisis cut into a key source of income from land sales and the economic slowdown squeezed tax revenues.
Xin Zhaopeng, senior China strategist at Australia and New Zealand Banking Group, said the latest data showed Beijing intended to “support growth while avoiding risks”.
In the first two months, central and local authorities spent about 700 billion yuan on agriculture, forestry, irrigation-related issues, and urban and rural community development. This is a 22% increase over the previous year.
In a separate development, China’s securities regulator has begun on-site inspections of some mutual fund companies as part of tightening controls on the industry, rattling fund managers.
A week ago, the securities watchdog under newly appointed Chairman Wu Qing established a “textbook” supervisory model to regulate China’s $3.8 trillion mutual fund industry, according to Reuters. I swore that I would.
The unannounced inspection by a branch of the China Securities Regulatory Commission (CSRC) covered routine operations, training and internal enhancements to the Communist Party of China, 21st Century Business Herald reported on Friday. Ta. The name of the asset management company that was inspected was not disclosed.
In response to questions from Reuters, the CSRC said: “This is a regular on-site inspection that we carry out annually.”
CSRC branches inspect fund companies based outside the region, which helps prevent local interference, the article said. Regulators have recently cracked down on private computer-based “quantitative” funds.
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