Chinese Vice Premier Liu He, China’s economic czar, on Wednesday called for market-friendly policies to support the economy and caution in introducing measures that risk hurting markets, increasing battered stocks in China and Hong Kong. [March 16].

The outlook for the world’s second-biggest economy has wavered amid fears of a backlash on China over its ties with sanctions-hit Russia, global demand uncertainty and, in recent days,… surge in national COVID-19 cases that threatens to disrupt economic activity.

Liu’s call for policies from government bodies to support the economy and markets came a day after Chinese stocks fell to 21-month lows and mainland Hong Kong-listed companies slumped. hit 2008 lows. In the wake of his comments [on Wednesday]Hong Kong’s Hang Seng index jumped 9.1% and China’s CSI300 blue chip index jumped 4.3%.

“All policies that have a significant impact on capital markets should be coordinated with financial management departments in advance to maintain stability and consistency in policy expectations,” Liu said, adding that officials would be held responsible. responsible.

Citi Hong Kong’s Asia-Pacific business strategist Mohammed Apabhai compared the timing to the Federal Reserve’s market support in 2020 or the “whatever it takes” speech by the head of the European Central Bank. time, Mario Draghi, who stemmed the eurozone crisis in 2012.

“It’s not quite that order of magnitude, but it’s not that far off either,” he said.

Chinese stock markets have been the worst performers outside of Russia since the start of the war in Ukraine last month.

On financial market stability in Hong Kong, China and Hong Kong regulators would step up coordination, Liu said.

Acting as a drag on markets is continued regulatory repression, including the risk that more companies from the continent will be delisted from US stock exchanges.

Tech stocks in particular have been the target of panic selling as investors fret over Beijing’s regulations and Sino-US decoupling risks.

China will strive to promote healthy development of the internet platform economy and complete the rectification of major platform companies as soon as possible, Xinhua News Agency quoted Liu as saying at a meeting of the Committee of Financial Stability and Development, a regulatory body under the State Council. , which is the Chinese Cabinet.

China will also strive to reinvigorate its economy and defuse risks in the real estate sector, he said.

The real estate sector, a key driver of economic growth, slumped for months as Beijing’s campaign to reduce high debt levels sparked a liquidity crunch at some major property developers, leading to defaults. obligations and projects suspended or left unfinished.

Later on Wednesday, the official Xinhua news agency reported that China was putting a trial land tax project this year on ice, citing the Ministry of Finance.

Progress

Liu said Wednesday that talks between Chinese and U.S. regulators on Chinese companies listed in the U.S. have made positive progress and regulators are working on specific cooperation plans.

The government will continue to support local businesses looking to list overseas, he said.

China’s securities regulator said Wednesday it will continue to communicate with U.S. regulators and strive to reach an agreement on China-U.S. cooperation in audit oversight as soon as possible.

Liu also urged financial institutions to support the real economy and encouraged long-term institutional investors to increase their stock holdings.

Responding to Liu’s pleas, Guo Shuqing, head of China’s Banking and Insurance Regulatory Commission, urged banks to increase the supply of funding and maintain “appropriate growth” in new loans.

Guo pledged to vigorously support direct funding, encouraging insurers and wealth management companies to allocate more funds to stocks.

In a separate meeting, central bank governor Yi Gang pledged to take monetary policy initiatives, increase new lending and resolutely support the economy.

(Reporting by Kevin Yao, Ryan Woo and Beijing newsroom; additional reporting by Tom Westbrook in Singapore; Editing by Edwina Gibbs, Jason Neely and Alex Richardson)

Photograph: A Chinese tourist peeks inside a red door of the Palace Museum inside the Forbidden City, which was China’s imperial palace from the mid-Ming Dynasty to the late Qing dynasty on May 18, 2011 in Beijing, China. (Photo credit: Feng Li/Getty Images)

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