China Offers Policy Loans for Off-plan Homes

Tomorrow’s Headlines Today 08/23/2022

Here is a summary of the local financial news from China that you need to know. For more information about this column, please read this. To stay in the loop and be the first to know, hit the subscribe button now.

China Faces Droughts and Power Shortages…Again

Policy Loans to Ensure the Completion of Off-plan Homes

Asymmetric Rate Cuts to Boost Consumer Credit

Huawei to Launch New Phones on September 6

Bank Asset Quality Unexpectedly Improved in First Half

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China Faces Droughts and Power Shortages…Again

Extreme temperatures and droughts are causing power shortages and production problems in parts of China, including Sichuan.  The province’s power system is experiencing exceptionally high loads while facing a 50% reduction in hydropower supply. Since last week, the Sichuan government ordered a full production shutdown to ensure the power grid safety and the electricity supply to homes. Source: The Paper (澎湃新闻)

Qi’s take: A similar situation last year caused brownouts in China, yet it did not have much impact on industrial production given the strong economy. This year we aren’t so lucky. The economic recovery is already so fragile…

Sichuan is the sixth largest province in China ranked by GDP. It is equivalent to a Turkey in terms of the GDP (USD 786 billion in 2021) and population (91 million in 2022). Sichuan is also home to a number of industrial leaders like Tongwei (600438.SH), Tianqi Lithium (002466.SZ), Pangang Steel (000629.SZ) and Dongfang Electric (600875.SH) etc.

The supply chain impact goes beyond Sichuan, since this is also a manufacturing hub for auto parts. The Shanghai government reportedly wrote to Sichuan recently, petition Sichuan to ensure the flow of supplies to Shanghai Auto (600104.SH) and Tesla (TSLA).

Policy Loans to Ensure the Completion of Off-plan Homes