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[#Briefing Hour: Six Key Developments to Know Today]

2024.1.22

It's time for the daily briefing from Briefing Hour building upon Anbound's Think Tank Insights:

1. In 2024, China's economy will still be in an overall "consolidation" and "stabilization" stage, but some sectors (such as real estate) may continue to deteriorate along inertia. If some major structural issues no longer deteriorate and systemic risks are not triggered, the overall economy gradually stabilizing at the "bottom" would be a good state. Stabilizing basics, avoiding deterioration, enhancing confidence, and waiting quietly for systemic improvements should be the realistic goals of macroeconomic policies in 2024.

2. In early 2023, the expected consumption rebound did not meet expectations as many had hoped. Some experts argued that stimulating the consumption potential of ordinary people in 2024 could solve China's economic problems. This thinking is too simplistic, emphasizing only consumption results without considering the root causes. The initial link of the entire social reproduction must be that enterprises are energetic and willing to invest, drive more employment, so that ordinary people can have expected income and thus possible purchasing power.

3. According to Reuters, in recent weeks, the State Council issued a notice to local governments and state-owned banks, requiring 12 regions nationwide to delay or stop construction projects that have invested less than half. The named regions included Liaoning, Jilin, Guizhou, Yunnan, Tianjin and Chongqing. The notice required these provinces and municipalities to make every effort to reduce debt risks to "medium-low levels." Once local governments achieve debt reduction targets, the National Development and Reform Commission will seek State Council approval to adjust their debt policies.

4. The People's Bank of China authorized the National Interbank Funding Center to issue an adjustment notice for the quotation of loan prime rates (LPR). This adjustment added China CITIC Bank and Jiangsu Bank, bringing the total number of commercial banks quoting rates from the previous 18 to 20. This adjustment will take effect from January 22, 2024. The 20 quoting banks include 6 large state-owned commercial banks, 5 joint-stock commercial banks, 3 city commercial banks, 2 rural commercial banks, 2 private Internet banks, and 2 foreign banks.

5. Data from the General Administration of Customs shows that in 2023, China imported 107 million tons of crude oil from Russia, an increase of 24%, making Russia once again China's largest source country of crude oil imports, surpassing Saudi Arabia. Imports of crude oil from Russia accounted for 18.97% of China's total crude oil imports for the year. The second to fourth largest source countries were Saudi Arabia (crude oil imports of 859.59 million tons), Iraq (imports of 592.6 million tons) and Malaysia (imports of 547.93 million tons).

6. As threats of attacks on commercial vessels in the Red Sea expand, some insurers have started avoiding war risks. Leading global insurance broker Marsh said underwriters encountering ship insurance involving the US, UK and Israel, and transiting the Red Sea, are seeking to add exclusions for the three countries, and many policies may include denoscriptions excluding coverage if ownership or interests are related to those three states.

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