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China tries to calm markets by pledging support for economy

BEIJING (AP) – China’s government tried yesterday to reassure jittery investors by promising support for its struggling real estate industry, Internet companies and entrepreneurs who want to raise money abroad after regulatory crackdowns caused stock prices to plunge.

Regulators should issue market-friendly policies to “invigorate the economy,” officials said at a Cabinet meeting led by Vice Premier Liu He, President Xi Jinping’s top economic adviser, according to the official Xinhua News Agency.

The ruling Communist Party is trying to revive economic growth that slid to four per cent in the final quarter of 2021, compared with the full year’s expansion of 8.1 per cent. That was triggered by a collapse in construction and housing sales after Beijing launched a crackdown on debt in real estate that officials worry is dangerously high.

The economy also is under pressure from anti-coronavirus measures that shut down the southern business centre of Shenzhen and other cities. That has fuelled worries about possible disruption of manufacturing and trade.

China’s number two leader, Premier Li Keqiang, said last week the government hopes to generate as many as 13 million new job s this year but faces “many difficulties and challenges”. Forecasters said the ruling Communist Party is likely to struggle to meet its official 5.5 per cent economic growth target, the lowest since the 1990s.

The main stock market indexes in Shanghai and Hong Kong have slid by more than 10 per cent this year after the debt crackdown. Tighter control of internet industries and a spat with Washington about oversight of Chinese companies with shares traded on United States (US) exchanges have added to pressures on the leadership.

Liu “spoke to stop the stock market rout”, Larry Hu and Xinyu Ji of Macquarie Group said in a report.

“The tone of the meeting is strong, suggesting that policymakers are deeply concerned about the recent market rout,” they said.

Share prices of some companies including e-commerce giant Alibaba Group have fallen by almost half on foreign stock exchanges since the start of last year after they were hit by anti-monopoly and other investigations.

Chinese stock markets rebounded after the announcement.

Hong Kong’s Hang Seng index soared 9.1 per cent while the Shanghai Composite index advanced 3.5 per cent.

Hong Kong-traded shares in Alibaba jumped 25.8 per cent. Tencent Holdings, operator of the popular WeChat message service, surged 23 per cent.

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