China scraps article on merging bad debt asset managers with sovereign wealth fund.
- According to Xinhua Finance, it is reported that China Investment Corp will manage China Cinda Asset Management, China Orient Asset Management, and China Great Wall Asset Management in the near future.
- The debt crisis in Beijing's real estate sector has led to a stock market rout and increasing financial risks, prompting the city to take action.
Beijing plans to merge its largest state-owned bad debt asset managers with China Investment Corp, one of the world's largest sovereign funds, according to a report by China state media. However, the story was later removed.
The initial report was published Sunday by Xinhua Finance.
According to unidentified sources, the plan to merge China Orient Asset Management and China Great Wall Asset Management under the China Investment Corporation (CIC) is expected to occur in the near future as part of a broader institutional reform initiative.
No other details were provided.
The Chinese story, which was initially posted on Xinhua's website, was later removed and is no longer accessible online. CNBC reached out to China Investment Corp for comment but did not receive a response.
The suspension of lending of restricted shares by China's securities regulator on Sunday, following the initial announcement, highlights Beijing's commitment to enhancing the "inherent stability" of its capital markets and boosting market confidence.
Amid rising financial risks due to a debt crisis in its real estate sector, Beijing has taken actions following a stock market rout. Last week, China's central bank made its largest cut in mandatory cash reserves for banks since 2021 and introduced a new policy to ease the cash crunch faced by Chinese developers.
Beijing's crackdown on developers' debt-driven growth in 2020 led to a slump in the property market, which in turn affected consumer growth and the broader economy in China, the world's second-largest economy.
Local government finances in China are closely linked to real estate troubles since they heavily depend on land sales to developers for a substantial portion of their revenue.
— CNBC’s Evelyn Cheng contributed reporting to this story.
The original Xinhua report is no longer accessible online.
china-economy
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