Caixin
Oct 26, 2021 10:09 AM
CX DAILY

CX Daily: China’s Pilot Property Tax Reforms Benefit Markets Despite Short-Term Pain, Analysts Say

China is set to roll out a property tax pilot program in some regions. Photo: VCG
China is set to roll out a property tax pilot program in some regions. Photo: VCG

Property tax /

China’s pilot property tax reforms benefit markets despite short-term pain, analysts say

China’s recently announced property tax pilot program looks likely to disrupt participating real estate markets in the short term and produce economic dividends in the long term, though the rewards won’t be enough for the headline-grabbing policy to solve the country’s local government budgetary problems all in one go, analysts said.

The five-year pilot program, which the national legislature authorized Saturday, will be carried out in some regions, the state-run Xinhua News Agency reported, without specifying the regions. The State Council will later decide when to kick off the program and which regions will participate.

The program shows that the government is picking up the pace of long-discussed plans to roll out a nationwide tax on property ownership as policymakers have not waited for the legislature to pass a property tax law before moving ahead with the regional pilot tests.

Editorial: China should stick to its guns for regulating the housing market

NGO /

Cover Story: Blue Sky, please send help!

A week after a devastating flood hit the central Chinese city of Zhengzhou July 20, Zhang Yong received a call from Xinxiang’s flood control commanding office in Henan province asking for help in conducting rescues.

Zhang is the founder and head of Beijing Blue Sky Rescue, part of China’s largest nonprofit civil rescue organization. As heavy rains moved north from the provincial capital city of Zhengzhou, Weihui, a small city by the Yellow River with 500,000 residents, was flooded. The commanding office asked Zhang to send his whole team of 2,000 to Weihui “as soon as possible.”

Within four days, civilian rescuers together with firefighters and the military evacuated 200,000 people from Weihui.

FINANCE & ECONOMY

The guidance for China’s drive toward carbon neutrality contains general directions, timelines and measures for sectors including industry, energy, transportation, construction, carbon sinking, legislation and financial markets. Photo: Zheng Hongge

Carbon /

China issues roadmap for carbon neutrality by 2060

China’s leadership released wide-ranging guidance for the nation's drive toward carbon neutrality over the coming decades, laying out general plans for different segments of the economy and a transition away from fossil fuels.

The document contains general directions, timelines and measures for sectors including industry, energy, transportation, construction, carbon sinking, legislation and financial markets.

The “working guidance,” jointly released by the Communist Party’s Central Committee and the State Council Sunday, is the most recent of the many official documents on carbon reduction issued since President Xi Jinping last year announced the nation’s plan to peak carbon emissions by 2030 and reach net-zero carbon emissions before 2060.

Bonds /

China wants local governments to speed up annual special bond borrowing

China will direct local governments to speed up borrowing via special purpose bonds (SPBs) and meet the annual quota by November, according to the Ministry of Finance, a move that could result in a boost in infrastructure investment and support economic growth.

Issuance of these special bonds, which are debt instruments that partially pay for investments in government infrastructure projects, has been relatively slow this year and only quickened since August. In the first three quarters of this year, local governments sold 2.22 trillion yuan ($348 billion) of special bonds, accounting for 61% of the quota, senior ministry official Li Dawei said Friday at a press conference. In the first two weeks of October, 128.9 billion yuan of bonds were issued, according to Zhongtai Securities bond analyst Zhou Yue.

Personnel /

Foreign Ministry spokesperson promoted to assistant minister

Hua Chunying, Chinese Foreign Ministry spokesperson and head of the ministry’s department of information, was promoted to assistant foreign minister, the latest in a series of changes in the leadership of the ministry that began early this year.

Hua will oversee the ministry’s work related to information, protocol and translation. The 51-year-old is the youngest among “principal officials” in the Foreign Ministry, according to the ministry’s website. She was the 27th Foreign Ministry spokesperson since the post was established in 1983, the fifth woman to hold the job, and the second female director-general of the ministry’s Department of Information.

Covid-19 /

Chinese capital tightens controls on visitors as sprawling Covid surge grows

Beijing imposed entry restrictions on travelers from targeted regions with confirmed Covid-19 cases as local infections linked to trips to northern China continued to rise.

Since last week, more than a dozen cases have been found in the Chinese capital’s Changping, Haidian, and Fengtai districts, taking the national tally in the latest delta-driven outbreak to more than 160 and forcing local authorities to tighten restrictions in certain neighborhoods and close some public venues.

Quick hits /

China tightens online insurance rules in widened crackdown

BUSINESS & TECH

longread10

Kaisa’s debt plunged after it abruptly canceled a meeting with bond investors earlier this week

Real estate /

Joseph Lau eats $18.3 million loss on troubled developer Kaisa bonds

Chinese Estates Holdings Ltd., the Hong Kong real estate company controlled by billionaire Joseph Lau, sold bond holdings in Kaisa Group at 35% discount, joining a sell-off of the Chinese property developers’ offshore bonds.

While Lau’s company accepted $18.3 million less than it paid for the securities, Chinese Estates said the sale provides immediate liquidity and allows it to reallocate the proceeds for other investments.

Lau, a long-time backer and poker buddy of embattled China Evergrande Group’s chief Hui Ka Yan, has also been absorbing huge losses by cutting his stake in Evergrande as the developer’s debt crisis escalated. China Estates said earlier this month it could lose HK$10.4 billion ($1.33 billion) if it sells all its shares in China Evergrande.

Evergrande staves off default with last-minute bond payment

Potash fertilizer /

China potash fertilizer price dip could prove short-lived, analysts warn

As skyrocketing prices for agricultural fertilizer threatened to hurt farmers, endanger food security and fuel inflation fears, the Chinese government moved to release potash fertilizer reserves last week in the latest bid to rebalance prices of the essential plant nutrient.

Following the Oct. 15 announcement (link in Chinese) of planned auctions of state reserves Wednesday and Friday last week, potash fertilizer prices dropped around 10% from decade-high levels reached in August. The price declines also followed a crackdown on price-gouging by major players in the Chinese fertilizer industry including probes of senior executives.

Education /

Yuanfudao denies it’s pivoting from online education to winter jackets

Yuanfudao, which a year ago was China’s most highly valued private online tutoring startup, denied it plans to pivot out of edtech in the face of a sweeping crackdown on the sector, saying a recent investment in an apparel company set up by its parent company would not distract it from its education focus.

The Tencent-backed company’s human resources department posted online job listings this month for fashion designers, triggering rumors the Beijing-based online tutor was radically reforming its business model in the face of uncertainties in the digital education industry.

Huawei /

Huawei to launch HarmonyOS-powered cockpit as home-grown operating system reaches 150 million devices

The HarmonyOS operating system developed by Huawei Technologies Co. has come to power more than 150 million devices from mobile phones to tablets to smart speakers in two years since its debut, the Shenzhen-based company said.

By the end of this year, devices equipped with HarmonyOS will top 200 million, making it the world’s fastest-growing operating system, said Richard Yu, chief executive of Huawei’s Consumer Business Unit, at the company’s developer conference Friday.

Quick hits /

Luxury Chinese liquor giant reports 12% jump in earnings as regulators try to tame runaway prices

Evergrande EV unit soars 17% after boss pledges to shift business

GALLERY

longread10

China intensifies steps to contain delta

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