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MNI China Press Digest Nov 9: Leverage, Shanghai, Construction

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MNI summarises the key stories from the Chinese press.

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The following lists highlights from Chinese press reports on Wednesday:

  • China’s macro leverage (debt-to-GDP) ratio increased 0.8 percentage points to 273.9% in Q3, slower than the rise of 4.9 percentage points in Q2, as both the household and corporate sectors conservatively expanded debt, Yicai.com reported, citing a report by National Institution for Finance & Development. The leverage ratio of the household sector rose by 0.1 percentage points in Q3, as the growth rate of household debt dropped to a new low of 7.2% amid sluggish demand for housing mortgage and consumer loans. Companies still have limited willingness to raise funds, while the debt quota of local governments had been nearly fully used in the first half of the year. China should be alert to the risk of balance sheet recession and take measures to avoid the financial cycle peaking and falling too early, the report said.
  • Foreign direct investment in Shanghai fell 5.5% y/y to USD27.35 billion in the first three quarters, implying FDI across July to September was positive and a rebound from the 38.9% slump in the second quarter, Securities Daily reported. Foreign capital inflows in the pharmaceutical and new energy manufacturing increased significantly, more than doubling year-on-year, the newspaper said. Outbound direct investment (ODI) was USD7.03 billion in the first nine months, down 37.7% y/y, the newspaper added.
  • Local governments including Hefei, Fuzhou and Zhengzhou cities are trying to ensure the normal operation of construction activities amid Covid outbreaks, Yicai.com reported. The Hefei government said it is strictly forbidden to simply stop activity on construction sites in the name of Covid controls, and the payment of project deposits in Q4 can be deferred for one quarter, the newspaper said. The Zhengzhou government said it will control the outbreak in the industrial park that houses Foxconn Technology’s main plant to restore normal production as soon as possible, the newspaper said.
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The following lists highlights from Chinese press reports on Wednesday:

  • China’s macro leverage (debt-to-GDP) ratio increased 0.8 percentage points to 273.9% in Q3, slower than the rise of 4.9 percentage points in Q2, as both the household and corporate sectors conservatively expanded debt, Yicai.com reported, citing a report by National Institution for Finance & Development. The leverage ratio of the household sector rose by 0.1 percentage points in Q3, as the growth rate of household debt dropped to a new low of 7.2% amid sluggish demand for housing mortgage and consumer loans. Companies still have limited willingness to raise funds, while the debt quota of local governments had been nearly fully used in the first half of the year. China should be alert to the risk of balance sheet recession and take measures to avoid the financial cycle peaking and falling too early, the report said.
  • Foreign direct investment in Shanghai fell 5.5% y/y to USD27.35 billion in the first three quarters, implying FDI across July to September was positive and a rebound from the 38.9% slump in the second quarter, Securities Daily reported. Foreign capital inflows in the pharmaceutical and new energy manufacturing increased significantly, more than doubling year-on-year, the newspaper said. Outbound direct investment (ODI) was USD7.03 billion in the first nine months, down 37.7% y/y, the newspaper added.
  • Local governments including Hefei, Fuzhou and Zhengzhou cities are trying to ensure the normal operation of construction activities amid Covid outbreaks, Yicai.com reported. The Hefei government said it is strictly forbidden to simply stop activity on construction sites in the name of Covid controls, and the payment of project deposits in Q4 can be deferred for one quarter, the newspaper said. The Zhengzhou government said it will control the outbreak in the industrial park that houses Foxconn Technology’s main plant to restore normal production as soon as possible, the newspaper said.