In the past week, it is worth noting political and economic news such as the centralized closure of the gold exchange, the reduction of the down payment ratio for the first home in Beijing, and the merger or dissolution of a number of small and medium-sized banks.
Another key word this week is "data". The National Audit Office released the 2023 audit report of the State Council, and data on the national fiscal revenue and expenditure from January to May have been released one after another.
Let's take a look at what kind of stories and trends are behind these events and data, and how they will affect the national economy and people's livelihood.
The Political Bureau of the Central Committee of the Communist Party of China (CPC) held a meeting on June 27, 2024 to study the issue of further comprehensively deepening reform and promoting Chinese-style modernization. The meeting decided that the Third Plenary Session of the 20th Central Committee of the Communist Party of China will be held in Beijing from 15 to 18 July.
According to the Chinese government website, since the introduction of large-scale equipment renewal and consumer goods trade-in policies, various fields have ushered in rapid growth.
From January to May, the trade-in sales of home appliances on major e-commerce platforms increased by more than 80%, and trade-in has become an important factor in promoting the growth of household appliance consumption. In May, the retail sales of communication equipment, household appliances and audio-visual equipment above designated size increased by 16.6 percent and 12.9 percent year-on-year respectively, and the growth rate was 3.3 and 8.4 percentage points faster than that in April, respectively. In the same month, the transaction volume of new energy passenger vehicles increased by 38.4% year-on-year.
Interpretation: Judging from the initial policy effect, the subsidy measures of real money have indeed benefited consumers, reduced purchase costs, and stimulated consumption in various fields.
On June 21, the financial regulatory authorities of Tianjin, Shanxi, Heilongjiang, Henan, Guangdong, Hainan, Xiamen, Ningbo and other eight places issued an announcement announcing the cancellation of the business qualifications of a total of 8 gold exchanges under their respective jurisdictions. Since 2024, 16 gold exchanges have been disqualified.
Interpretation: In the past few years, local urban investment platforms have had difficulty in financing, and some urban investment companies have not hesitated to take risks and issue high-interest financing products through a large number of local financial exchanges, resulting in high debts. As the central and local governments strengthen the control of urban investment debt, the financial exchange is gradually withdrawing from the historical stage.
It is worth noting that some urban investment platforms are looking for other channels to replace the financing of the gold exchange. An employee of the financing department of an urban investment platform in a northern province told Southern Weekend that after the gold exchange was shut down one after another, some urban investment platforms are using auction institutions to issue high-interest financing products.
How to plug the financing loopholes of urban investment platforms should be the next focus of the regulatory authorities.
Entrusted by the State Council, Hou Kai, Auditor General of the National Audit Administration, made the "Audit Report of the State Council on the Implementation of the Central Budget and Other Financial Revenues and Expenditures in 2023" to the 10th meeting of the Standing Committee of the 14th National People's Congress on the morning of June 25.
Routine audit directions include budget implementation of central departments, major projects and livelihood funds, state-owned asset management, etc. Since May 2023, more than 310 clues on major issues have been transferred, involving more than 1,200 people.
The problems identified in the audit include: 78 enterprises or individuals won the bid for 101 rural student nutritious meal projects in 35 counties through illegal borrowing of qualifications, falsification of materials, bid-rigging and collusion; The 27.924 billion yuan bond proceeds of 522 projects were idle or misappropriated in the same year, and 2 subordinate enterprises helped 870 private enterprises to become fake state-owned enterprises.
(For details, see Southern Weekly's report "The State Council's 2023 Audit Report: More than 310 Clues on Major Issues Transferred, Involving More Than 1,200 People")
The Economic Observer reported that recently, the Ministry of Natural Resources and relevant departments are studying how to revitalize the policy of using the undeveloped land that has been transferred, and support local governments to reclaim and acquire idle land.
In May 2024, Dong Jianguo, Vice Minister of the Ministry of Housing and Urban-Rural Development, introduced that one of the key tasks of ensuring the delivery of housing is to properly dispose of and revitalize the stock of land. At present, the stock of land that has not yet been developed or has been started but not completed shall be properly disposed of and revitalized through government recovery and acquisition, market circulation and transfer, and continued development of enterprises, so as to promote real estate enterprises to alleviate difficulties and reduce debts, and promote the efficient use of land resources.
Interpretation: For real estate companies, the government's recycling of idle land can bring them a lot of cash flow and alleviate the difficulties of the capital chain, but how to set the purchase price needs to further clarify the detailed rules to avoid corruption.
In addition, according to the regulations, government special bonds should be invested in areas with positive cash flow, which puts forward higher requirements for the quality of the project itself.
From January to May, the national general public budget revenue was 9,691.2 billion yuan, a year-on-year decrease of 2.8%, after deducting the impact of special factors such as the tax deferral, storage and storage of small, medium and micro enterprises in the same period last year, and the tax reduction policy introduced in the middle of last year, the comparable growth rate was about 2%.
General public budget revenues are divided into two categories: tax revenues and non-tax revenues. From January to May, the national tax revenue was 8,046.2 billion yuan, a year-on-year decrease of 5.1 percent, and a comparable increase of about 0.5 percent after deducting the impact of special factors; Non-tax revenue was 1,645 billion yuan, a year-on-year increase of 10.3 percent.
Among the tax revenues, the brighter data is the domestic consumption tax, which totaled 760.7 billion yuan, a year-on-year increase of 7.2%.
Interpretation: Since 2024, after the introduction of policies such as the trade-in of consumer goods, the effect has begun to appear, stimulating consumption growth and stabilizing the economy.
On June 27, the website of the Beijing Municipal Commission of Housing and Urban-Rural Development announced the adjustment of relevant policies for commercial personal housing loans: the minimum down payment ratio was adjusted to no less than 20%, the lower limit of the loan interest rate was adjusted to not be lower than the corresponding term loan prime rate (LPR) minus 45 basis points, and the current lower limit of the adjusted mortgage interest rate for more than 5 years is 3.5%.
Interpretation: So far, the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen have all lowered the down payment ratio for the first home in 2024. Among them, the down payment ratio of the first house in Beijing, Shanghai and Shenzhen has been reduced to no less than 20%, and that in Guangzhou it is not less than 15%.
On June 27, data from the Ministry of Finance showed that from January to May, the total number of local government bonds issued nationwide was 2.8 trillion yuan, a year-on-year increase of 27%. Among them, 903.6 billion yuan of bonds were issued in May, and the speed of bond issuance increased significantly.
Of the 2.8 trillion yuan of debt funds, about half of the funds will be used to repay the mature principal or existing debts, and the other half will be new bonds, which will be invested in major public welfare projects, and the new special bonds will be about 1.16 trillion yuan.
Interpretation: In the first quarter of 2024, the market generally reflects the slow issuance of special bonds, which has a certain impact on the construction of major projects in various places. Since the beginning of the second quarter, the pace of issuance has accelerated significantly.
According to the regulations, special bonds should be invested in industries with positive cash flows, and local governments should strictly implement the list of prohibited projects for special bonds. In the past few years, special bonds have been idle and misappropriated repeatedly, and local governments should do a good job of supervision to ensure that special bond funds are earmarked and disbursed in a timely manner.
Xinhua News Agency reported that on June 28, the 10th meeting of the Standing Committee of the 14th National People's Congress voted to pass the "Law of the People's Republic of China on Rural Collective Economic Organizations", which will come into force on May 1, 2025.
The Law on Rural Collective Economic Organizations clearly stipulates that the State shall protect the legitimate rights and interests of rural collective economic organizations and their members, and no organization or individual may infringe upon them. The State promotes the development of rural collective economic organizations and strengthens the new type of rural collective economy through fiscal, tax, financial, land, talent, and industrial policy support measures.
Interpretation: The report of the 20th National Congress of the Communist Party of China proposed to consolidate and improve the basic rural management system and develop a new type of rural collective economy. However, in many localities, rural collective economic organizations have problems such as imperfect organizational structures, imperfect operational mechanisms, and inadequate supervision and management systems, resulting in aggravated debts at the village level.
The enactment of the Law on Rural Collective Economic Organizations can improve the corresponding legal system, protect the legitimate rights and interests of collective organizations and their members, and help the vast number of farmers share the fruits of reform and development and promote common prosperity for rural farmers.
On June 19, the Liaoning Supervision Bureau of the State Administration of Financial Supervision approved the absorption and merger of 36 rural small and medium-sized banking institutions including Liaoning Xinmin Rural Commercial Bank Co., Ltd. by Liaoning Rural Commercial Bank Co., Ltd.
The next day, the Guangdong Supervision Bureau of the State Administration of Financial Supervision issued two announcements, approving the merger of Huizhou Zhongkai Dongying Village Bank and Dongguan Dalang Dongying Village Bank by Dongguan Rural Commercial Bank.
According to the data of Enterprise Early Warning, since 2024 (as of June 27), 83 small and medium-sized banks across the country have been merged and reorganized. Among them, there are 32 village and township banks, 35 rural commercial banks, 15 rural credit cooperatives and 1 urban commercial bank. In June alone, more than 40 small and medium-sized banks received approval for merger and reorganization.
Interpretation: On April 28, the Political Bureau of the Central Committee of the Communist Party of China pointed out that it is necessary to effectively prevent and resolve risks in key areas, and coordinate the reform of small and medium-sized banks, insurance and trust institutions.
The merger and reorganization of small and medium-sized banks is conducive to preventing and defusing financial risks. In addition, it can aggregate the high-quality resources of small and medium-sized banks, rationalize the company's equity structure, and strengthen governance capabilities.
Southern Weekly reporter Wu Chao
Editor-in-charge: Zhang Yue