What’s new: The overall progress of rectification work at Ant Group Co. Ltd. has been smooth, said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, as regulators continue to implement sweeping restructuring plans imposed on 14 internet companies to overhaul their financial businesses.
Ant Group’s self-inspection work is nearly complete, but there are still some issues to be resolved, Guo told a press conference on Wednesday. He added that while the country encourages financial innovation, laws and regulations must be followed to ensure fair competition and avoid the disorderly expansion of capital.
At the same conference, Guo also commented on the current property market, saying that the trend of a real estate bubble has basically been reversed.
While the latest adjustments to property prices are beneficial to the financial sector, the government doesn’t want to see any drastic adjustments that could hurt the economy, he said.
As for China’s macro leverage ratio, which measures total outstanding nonfinancial debt as a share of nominal GDP, Guo said it went down by about eight percentage points in 2021, after climbing up in 2020 due to the impact of Covid-19.
Financial risks in key sectors were further contained, he said, noting the downsizing of shadow banking, and bad assets.
The background: Following a rectification plan imposed on Ant Group in early 2021, China’s top financial authorities summoned 13 other internet companies, including ByteDance Ltd. and Hong Kong-listed Tencent Holdings Ltd., to a meeting on April 29 that year and imposed a raft of strict compliance requirements on their financial businesses.
Guo’s latest comments on the property market contrast starkly with his statement in 2020 that “the real estate bubble is the biggest ‘grey rhino’ that threatens financial security.” Currently, Beijing and multiple local governments are loosening tough restrictions that have previously worsened developers’ liquidity and depressed the whole market.
Related: Chart of The Day: China’s Fintech Players Await Their Fate
Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Lin Jinbing (jinbinglin@caixin.com)
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