Beijing warns the European Union against “damaging its economic reputation”
China on Thursday warned the European Union against damaging its economic reputation after it unveiled new measures to protect sensitive technology from falling into the hands of geopolitical rivals.
Foreign Ministry spokesman Wang Wenbin said that “the European Union’s image in the areas of economics and international trade is at stake,” and urged the European Union not to “take anti-globalization steps.”
Brussels has strengthened its arsenal of trade restrictions to address what it sees as risks to European economic security, following Moscow’s invasion of Ukraine and global trade tensions.
On Wednesday, European Union officials announced a package of five initiatives on economic security, including tightening the vetting mechanism for foreign direct investments and starting discussions on coordination in the field of export controls.
The package comes in response to the many risks exposed by the Corona pandemic, the Russian invasion of Ukraine, cyberattacks, attacks on infrastructure, and escalating geopolitical tensions.
The plans do not mention countries by name, but the bloc compares “trusted partners” and “countries of concern,” and highlights the “de-risking” policy, which is a policy aimed at reducing economic dependence on China, which the bloc views with more suspicion due to its close ties to Russia. .
In response to a question about these steps, Wang warned that “the international community is deeply concerned about the European Union’s unilateral protectionism in the economic and trade fields.” He added that “current trends will only exacerbate these concerns,” and said: “We hope that the European Union will respect free trade, free competition and open cooperation, which are the basic standards of a market economy.”
On the internal front in China, an official with the country’s financial regulatory authority said in a press conference on Thursday that Chinese financial institutions must effectively meet reasonable financing requests for eligible real estate projects.
The regulator said non-performing loans of banking and financial institutions reached 3.95 trillion yuan ($551.38 billion) at the end of 2023, with the non-performing loan ratio at 1.62 percent.
Chinese real estate stocks rose on Thursday, supported by the latest easing of credit measures to support the struggling real estate sector, but few market participants expected the stocks to overcome banks’ reluctance to lend.
The authorities have eased the rules for bank loans on commercial real estate as part of their efforts to ease the liquidity crisis that real estate companies have suffered since mid-2021, when the government first sought to rein in ballooning debts.
New measures this week included allowing developers to use loans to repay installments of existing loans and bonds, while increasing the amount they can borrow to 70 percent of the estimated asset value, from the previous half.
The CSI 300 real estate index in China jumped by more than 5.7 percent, while the Hang Seng Real Estate Index in Hong Kong rose by 3.3 percent in afternoon trading.
Guangzhou R&F Real Estate shares rose by 17 percent, and Sino-Ocean Group shares rose by more than 12 percent, while the shares of two of the largest private development companies, “Country Garden” and “Longfor Group,” rose by more than 4 percent.
Although property developers and analysts welcomed the new measures, they were skeptical about their immediate impact, saying banks were reluctant to lend to most private developers, despite repeated calls from regulators to do so.
“While this could help mitigate liquidity risks for indebted developers, demand for real estate will need to be stronger in order to support home prices and sales, and thus the sector’s recovery,” John Lam, an analyst at UBS, said in a note.
To complicate matters, distressed real estate developers may have already pledged most of their high-quality commercial assets against other debt, developers and analysts say.
An executive at a company that defaulted on its debts, who spoke on condition of anonymity because he was not authorized to speak to the media, said: “We contacted some banks this morning. But they did not give a positive response. “Unless the central government forces banks to lend, they will not want to take risks.”
The executive added that banks have been very strict in not lending to commercial properties that are located in bad locations or have poor operations since the debt crisis.
China’s liquidity crisis has led to many developers defaulting on or delaying debt payments, as they struggle to sell apartments and raise money.
Despite Beijing’s recent support measures, such as easier access to cash for developers, cuts in mortgage rates and an easing of rules on home purchases, the market has shown little sign of stabilization, with sales remaining weak and more defaults.
Nomura Bank said the biggest obstacle to the real estate recovery is the large volume of pre-sold but unfinished homes in low-tier cities. The bank estimated that completing the construction of such homes across the country would require 3.2 trillion yuan.
“Given the huge financing gap that developers face to ensure the successful delivery of pre-sold homes, we doubt whether banks are the right choice to address this problem,” the bank explained in a research note.
2024-01-25 14:05:41
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