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Visitors walk down Nanjing Road in Shanghai in early October before the week-long Golden Week holiday, Photo: Bloomberg

Chinese state-run newspaper seeks to shore up confidence, highlighting pledges by top lenders to finance real economy

  • Market confidence is ‘neutral to contrarianly positive’, strategist Hong Hao says in a report on Sunday
  • Securities Times is one of four authorised newspapers for corporate filings and is ultimately controlled by the Communist Party’s propaganda department
As President Xi Jinping holds attention at the Communist Party’s congress, state-run media attempted to shore up confidence in the beleaguered Chinese economy, with the nation’s top lenders pledging to keep financing businesses. Stocks overturned losses.

China’s Big Six, from Industrial and Commercial Bank of China to Construction Bank and Postal Savings Bank, vowed to lend more money to support the real economy, the Securities Times reported on Monday. The newspaper is one of the four authorised publications for corporate filings and ultimately controlled by the Party’s propaganda department.

“With the supportive measures coming into effect in the fourth quarter, credit growth in infrastructure, manufacturing and real estate sectors will underpin a strong social financing growth,” the newspaper said. “This will help maintain economic operations within a reasonable range.”

Chinese lenders wrote 2.47 trillion yuan (US$344.6 billion) of new yuan-based loans in September, versus 1.25 trillion yuan in August, data published by the People’s Bank of China last week showed. Total social financing, a broad measure of credit and liquidity, expanded by 3.53 trillion yuan versus 2.43 trillion yuan in August.

The pledge follows a mixture of neutral to weaker data pointing to a further deceleration in growth, hobbled by Beijing’s zero-Covid policy, slowing exports and geopolitical hurdles. An underwhelming policy stimulus has led economists to cut their growth forecasts while funds retreat from the stock market.

“Going forward, Chinese policymakers are likely to continue to ease policy further to stimulate the domestic economy,” analysts at BCA Research said in a report. “However, weak private sector sentiment will reduce the effectiveness of these efforts. Moreover, deteriorating global demand for Chinese goods is a headwind for the country’s export sector.”

The Securities Times report came a day after Xi opened the Party’s 20th National Congress by touting the zero-Covid strategy, and saying China must brace for “dangerous storms” while it fosters new economic growth engines.

Stocks in Hong Kong and mainland China erased losses on Monday. The Hang Seng Index closed with a 0.2 per cent gain while the Shanghai Composite Index gained 0.4 per cent. Both gauges earlier fell by as much as 1.7 per cent and 0.6 per cent each.

Market confidence is now “neutral to contrarianly positive” with a better monetary environment, Hong Hao, market strategist and chief economist at Grow Investment Group, said in a research note on Sunday. But the last quarter of this year is likely to see continued market volatility and consolidation, he cautioned.