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Chinese state media initially deleted an article reporting that the Chinese government was planning a merger between the country’s largest state-owned bad debt asset management company and China Investment Co., one of the world’s largest sovereign wealth funds.
The first report was released by Xinhua Finance on Sunday.
Citing anonymous sources, the paper said, China Cinda Asset ManagementThe creation of China Orient Asset Management and China Great Wall Asset Management under CIC could be realized in the “near future” as part of an institutional reform plan.
No other details were disclosed.
The original article, written in Chinese, then appeared to be removed from Xinhua’s website late Monday and is no longer available online. China Investment Corporation did not immediately respond to CNBC’s request for comment.
This initial announcement, along with another announcement by China’s securities regulator on Sunday to suspend restricted stock lending starting Monday, strengthens the “essential stability” of capital markets and improves market confidence. This underscores the Chinese government’s pledge last week.
The Chinese government’s action comes in the wake of a stock market crash amid heightened financial risks stemming from the real estate sector’s debt crisis. Last week, the People’s Bank of China announced the biggest reduction in mandatory reserves for banks since 2021. It also announced new policy mandates aimed at easing funding shortages for Chinese developers.
The real estate market slumped after the Chinese government cracked down on developers’ heavy reliance on debt for growth in 2020, leading to consumer growth and widespread demand in the world’s second-largest economy. It weighed on my growth.
China’s real estate issues are closely intertwined with local government finances. Local governments typically rely on land sales to developers for a significant portion of their income.
— CNBC’s Evelyn Cheng contributed reporting to this article.
This article has been updated to reflect that the original Xinhua report is no longer available online.
