Xi, Henan, and China’s Growing Financial Crisis

Chinese regulators downplayed China’s real estate slump and slowing economic growth, while Hong Kong’s top leader portrayed Hong Kong as a unique link to the rest of China at a high-profile investment summit on Thursday. Wednesday.

Around 200 global finance executives gathered to network and discuss topics such as global risks and sustainable finance at Hong Kong’s first major conference since the city lifted COVID-19 lockdown restrictions.

Fang Xinghai, vice chairman of the China Securities Regulatory Commission, urged those visiting China to understand what is happening in the country and urged them not to “bet against” China and Hong Kong.

The international media “doesn’t really understand China very well” and has a “short-term focus,” he said, drawing laughter and applause from the audience.

Fang and other Chinese officials addressed the conference in prerecorded interviews: Travel to and from mainland China is restricted by strict quarantine requirements.

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China’s central bank Governor Yi Gang said inflation remains subdued, below 3 percent compared with 8 percent or more in many Western economies, and the country’s economic and reform policies will continue. . Such comments appeared to be aimed at countering concerns raised after a Communist Party congress last month, in which leader Xi Jinping was given an unprecedented third five-year term and key reformers were barred from the ruling party’s top leadership.

“China has a super big market as there is still a lot of room for urbanization and the demand from middle-class consumers continues to rise,” Yi said.

China’s economy grew at an annual rate of 3.9 percent in the latest quarter from a year earlier, well below the official target of more than 5 percent, and the vital real estate sector languished as regulators tried to curb the rise in debt to unsustainable levels.

Xiao Yuanqi, vice chairman of the China Banking and Insurance Regulatory Commission, tried to reassure conference attendees, saying real estate loans make up only 26 percent of banks’ total loans and 90 percent of real estate loans were of “good quality.”

Shares in both Hong Kong and Shanghai rose on Wednesday, with the Hang Seng gaining 2.4 percent while the Shanghai Composite Index rose 1.2 percent.

The speaker lineup at the Hong Kong conference includes Morgan Stanley CEO James Gorman, Goldman Sachs CEO David Solomon, and other leading executives from institutions such as Citigroup and Blackstone.

It is designed to highlight the role of the former British colony as an attractive and competitive financial center.

The city remains the “only place in the world where global advantage and China advantage come together in one city,” Hong Kong Chief Executive John Lee said as he opened the event.

“This unique convergence makes Hong Kong the irreplaceable connection between the mainland and the rest of the world as the world’s economic center of gravity shifts eastward,” he said.

The British handed over control of Hong Kong to China in 1997 with the understanding that Beijing would allow the small territory autonomy in its legal system and economic policies for at least 50 years. In recent years, Beijing has been expanding its influence. Such efforts gained momentum after mass protests in 2019 demanding a more democratic leadership system, culminating in the implementation of a security law designed to quell dissent.

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Combined with strict quarantine controls and a sharp drop in tourism, that has compounded the economic impact of the pandemic.

Lee said “the worst is behind” Hong Kong. A former security chief, he told the conference that “law and order have returned” and that social unrest was in the past.

Organizers went ahead with the long-planned conference despite tropical storm warnings that prompted authorities to close schools.

As Tropical Storm Nalgae closed in on the city, the Hong Kong Observatory said it would raise its T8 signal in the afternoon, effectively shutting down the city and delisting it from the stock market.

Hong Kong pulled out all the stops for the financial conference, tightening COVID-19 restrictions to allow participants to dine at specific restaurants. Most other incoming travelers are prohibited from doing so for three days after they arrive in the city.

Attendees who test positive for COVID-19 can depart on charter flights if they wish, rather than having to be isolated for at least seven days in Hong Kong.

Some US lawmakers have urged US companies not to participate in the meeting given tensions with China over trade and human rights. The United States has spoken out about Hong Kong’s crackdown on dissent following the implementation of the National Security Law.

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