Briefing: Chinese Home Prices Fall at Faster Pace

The summary of the key developments in China over the last 24 hours covers various economic and societal issues tailored for global investors and the business community.

Firstly, in the property market, China's housing prices saw an accelerated decline last month, dropping by 5.3% from a year earlier. This marks the fastest rate of decline since May 2015. Despite government interventions to stabilize the market, the real estate sector continues to struggle with falling sales, rising inventories, and growing debt pressures on developers[para. 2][para. 3].

In societal news, a Japanese elementary school student was attacked in Shenzhen, southern China, adding to mounting security concerns. This incident is the second assault on Japanese nationals in China within three months, following a stabbing incident in Suzhou that injured a Japanese mother and her child. Authorities have apprehended a suspect in the recent attack, and the victim is receiving medical treatment[para. 4][para. 5].

On the regulatory front, China’s National Financial Regulatory Administration issued a new notice urging financial institutions to better track their mobile apps. This move is part of China's broader campaign to clean up the finance industry. Financial institutions are now required to maintain a ledger for their apps and to impose a reasonable limit on the number of apps they develop[para. 8][para. 9].

Further, in international trade, China's commerce minister voiced dissatisfaction to an Italian cabinet member about the European Commission's rigid stance in discussions regarding the EU's proposed tariff hikes on China-made electric vehicles (EVs). The minister highlighted China's effort to leverage differing opinions among EU member states to address the proposed levies, which are expected to be voted on by the end of October[para. 11][para. 12].

Regarding holiday travel, the Mid-Autumn Festival saw over 5 million air passenger trips, marking a more than 21% daily average drop from 2023. This was mainly due to Typhoon Bebinca causing thousands of cancellations and a higher comparison base from the previous year, which benefited from a coinciding extended National Day holiday. Consequently, domestic passenger flights during the three-day break were down 12% from last year, while more than 10,000 flights were canceled[para. 14][para. 15][para. 16].

In terms of government debt, China’s State Council released a report on official government debt to the national legislature for the first time. By the end of 2023, central government debt stood at 30 trillion yuan ($4.24 trillion), with local government debt totaling 40.7 trillion yuan. The report emphasized the need for local governments to enforce strict financial discipline, reinforce budget constraints, and prohibit illegal debt-funded government investment projects[para. 18][para. 19][para. 20].

The summary also includes quick updates on other issues. China’s electric vehicle (EV) market is rapidly growing, offering potential for using EV batteries to balance the electricity load on the power grid. However, more incentives are needed for automakers and motorists to participate[para. 24]. A survey of foreign companies operating in China highlighted rising supply-chain costs and perceived unfair treatment, indicating a deteriorating business climate. Lastly, Jessica Tan, former Co-CEO of Ping An Insurance, has been named president of Sun Life Canada[para. 27][para. 29][para. 30].

Compiled by the Caixin newsroom, these updates provide a comprehensive view of recent developments impacting various sectors within China. [para. 1][para. 28][para. 30]