JOE McDONALD, AP Business Writer
BEIJING (AP) — China’s government on Wednesday tried to reassure jittery investors by pledging support for its struggling real estate sector, internet companies and entrepreneurs after regulatory clampdowns sent stock prices plummeting.
Regulators should issue market-friendly policies to ‘reinvigorate the economy’, officials told a Cabinet meeting chaired by Vice Premier Liu He, President Xi Jinping’s top economic adviser, according to the agency. Xinhua official press.
Chinese leaders are trying to revive economic growth which slipped to 4% in the last quarter of 2021 from an 8.1% expansion for the year as a whole. It was triggered by a slump in housing construction and sales after Beijing launched a crackdown on home debt which officials say is dangerously high.
Recent coronavirus outbreaks have prompted cities to lock down, which has also raised concerns about the potential impact on manufacturing and trade.
China’s No. 2 Premier Li Keqiang said last week that the government hopes to create up to 13 million new jobs this year to help reverse a painful economic crisis, but faces “many difficulties and challenges “. Forecasters say the ruling Communist Party is likely to struggle to meet its official economic growth target of 5.5%, the lowest since the 1990s.
The main stock indexes in Shanghai and Hong Kong have fallen more than 10% this year after the debt crackdown. Tighter scrutiny of internet industries and a row with Washington over surveillance of Chinese companies whose shares trade on US exchanges added to the downward pressure.
Share prices of some companies, including e-commerce giant Alibaba Group, have fallen by almost half on foreign exchanges since the start of last year after being hit by anti-monopoly and other investigations.
Liu “spoke to stop the stock market rout,” Macquarie Group’s Larry Hu and Xinyu Ji said in a statement.
“The tone of the meeting is strong, suggesting policymakers are deeply concerned about the recent market rout,” they said.
Hong Kong’s Hang Seng Index climbed 9.1% while the Shanghai Composite Index rose 3.5% on Wednesday.
Hong Kong-traded shares of Alibaba jumped 25.8%, Tencent Holdings, operator of popular messaging service WeChat, jumped 23% and live-streaming site Kuaishou Technology added nearly 34%.
Xi’s government has promised to support entrepreneurs who are creating China’s new jobs and wealth. But companies and investors are uneasy following a series of anti-monopoly and data security investigations, multimillion-dollar fines and public criticism of internet companies.
The cabinet’s financial stability committee meeting promised to “propose support measures” for the real estate market, Xinhua said, but did not elaborate on possible initiatives.
Home sales and construction, industries that support millions of jobs, plunged last year after Beijing’s debt crackdown. The government has tried to spur demand by telling banks to lend more to homebuyers, but economists say Beijing is moving cautiously to avoid triggering higher housing costs and debt.
Officials vowed to coordinate policies that will affect financial markets more closely and act with caution in implementing those that could disrupt them.
The government will “promote the development” of internet industries and improve their competitiveness, Xinhua said, without giving details.
Beijing “will continue to support overseas stock listings,” the report said.
He said Chinese and US regulators were having a ‘good dialogue’ on stock markets and were working on a plan to cooperate following disputes over audit requirements that led to a threat of eviction of some Chinese companies. American stock exchanges.
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