Bank Deposits Not Safe; Big Japanese Manufacturer Withdraws From China

Terrifying Foreclosed Home Data, Bank Deposits Not Safe. A prominent Japanese construction machinery manufacturer withdraws from China. CCP allocates $41 billion from long-term bonds to stimulate consumption. CCP is applying a new anti-corruption model to tackle economic difficulties. Experts. Taiwan to hold F-16V airshow amid daily pressure from Chinese military. China gives false notion about resupply agreement with Philippines and South China Sea. It's all covered in today's China Truths. Terrifying Foreclosed Home Data, Bank Deposits Not Safe. China's real estate market continues its downward spiral, prompting authorities to implement various strategies to bolster the sector. As the National Business Daily reported on July 25, Chinese banks are aggressively seeking mortgage clients, even resorting to unconventional tactics such as offering gold bars as incentives for securing home loans. This practice was highlighted in the case of Shanghai resident Chen Qing, who, in June, received a 5-gram gold bar as a reward for taking out a mortgage exceeding 1 million yuan, nearly $138,000, to purchase a pre-owned property. Despite these efforts, the housing market is facing a new and alarming threat, a surge in foreclosed homes. A recent analysis by an independent media outlet has brought attention to this issue, revealing the rapid accumulation of foreclosed properties and their potential to cause significant damage to the market. The analysis paints a grim picture, with prices for foreclosed homes plummeting to a staggering 30% below market value. Auctions for these properties are increasingly failing, indicating waning buyer interest. This alarming trend signals a worsening crisis, as even heavily discounted homes struggle to find buyers. Additionally, the increasing number of foreclosed homes suggests a further decline in the second-hand housing market. The continued decrease in the prices of foreclosed properties highlights a worrying trend. Falling prices could potentially lead to more loan defaults, resulting in an increase in foreclosures. Each foreclosed property represents a defaulted loan, adding to the escalating burden of bad debts in the banking sector. Experts are now warning that the aftermath of the real estate crisis could lead to a banking industry crisis, potentially causing a more widespread financial catastrophe. While deposits up to 500,000 yuan, about $69,000, are supposedly insured, this protection does not extend to all depositors, especially those with accounts in smaller banks that do not participate in the deposit insurance scheme. Additionally, if banks have turned deposits into financial products or if deposits have been stolen or misappropriated by bank employees, depositors may find themselves without any recourse. A prominent Japanese construction machinery manufacturer withdraws from China. On July 12, Kato Manufacturing Company, Ltd., a prominent Japanese construction machinery manufacturer, announced its withdrawal from China. Kato confirmed the above news to the Chinese media Huaxia Times on July 26. The withdrawal involves dissolving and liquidating its hydraulic excavator manufacturing and sales subsidiaries in Kunshan City, Jiangsu Province, and Xiamen. Information on Kato Corporation's official website indicated the critical reasons The ongoing recession in China's real estate market. Declining demand for construction machinery. Intense competition from local low-cost manufacturers. A more challenging sales environment. Only four months ago, a mainland Chinese media outlet, Huashan Zhihua, revealed that Kato had previously announced that its marketing operations in China would continue, including selling The company's financial struggles in China are evident in its recent reports. In the first nine months of 2022, Kato's revenue in China was ¥1.884 billion, more than $1.2 billion, losing ¥589 million, nearly $4 million. By the same period in 2023, revenue had fallen to ¥1.489 billion, nearly $1 billion, with losses widening to ¥888 million, almost $6 million. These financial difficulties are compounded by a general decline in the Chinese construction machinery market, mainly due to the downturn in the real estate sector. The China Construction Machinery Industry Association reported that excavator sales in China dropped by 40.8% year-on-year in 2023. Despite the closure in China, Kato manufacturing plans to invest in other markets, particularly India. CCP allocates $41 billion from long-term bonds to stimulate consumption. To boost China's economy, Beijing has announced a direct allocation of 300 billion yuan, about $41.4 billion, of ultra-long-term treasury bonds to local governments. This funding aims to support equipment upgrades and consumer goods trade-in projects. However, analysts caution that the withdrawal of foreign capital, production overcapacity, sluggish domestic demand, and downgraded consumer spending may limit the effectiveness of these investments. Concerns also arise about potential embezzlement by local officials. On July 25, the National Development and Reform Commission and the Ministry of Finance announced that the funds, totaling 150 billion yuan about $20.7 billion, for consumer goods and enterprise equipment upgrades, are aimed at supporting large-scale equipment upgrades and trade-ins of old consumer goods. It is expected that the funds will be fully allocated before the end of August. Despite these measures, experts like Si Chin-ho of Taiwan's Wealth magazine argue that the 300 billion yuan is insufficient to address China's weak domestic demand, real estate market collapse, and reduced consumer confidence. With foreign investors, including Taiwanese businesspeople, withdrawing from China, the future economic landscape looks challenging. Authorities have emphasized the necessity of using the funds exclusively for their designated purposes to prevent illegal or irregular activities. However, due to the lack of transparency in local governments, there is apprehension that the allocated funds could be misappropriated. Su Xingfeng, from the CCP's Ministry of Commerce, acknowledged the pressure on domestic consumption. He highlighted potential subsidies for car trade-ins and home appliance purchases. However, Su Xin, a senior capital market analyst, expressed skepticism about the policy's effectiveness. He noted that similar past initiatives had limited impact. Amid the economic recession and shifting consumption trends, the lying-flat phenomenon persists, reflecting a broader lack of confidence in the future, posing a significant challenge for the CCP regime. CCP is applying a new anti-corruption model to tackle economic difficulties, experts. The website of the Central Commission for Discipline Inspection and the National Supervisory Commission announced on July 25 that Luo Baoming, 72, the vice-chairman of the Overseas Chinese Affairs Committee of the 13th National People's Congress of the Chinese Communist Party, CCP, has voluntarily surrendered and is currently under investigation for corruption. Luo Baoming surrendered a week after the third plenary session of the 20th CPC Central Committee, which took place from July 15 to 18. Luo is the first central government official to be investigated after the third plenary session, and the sixth ministerial-level official to be removed by the Central Commission for Discipline Inspection this year. Additionally, Luo Baoming is also the first former provincial party secretary to be investigated since the establishment of Hainan province. According to the Jiuan, 48 department-level and bureau-level officials in Hainan were dismissed in 2022, which rose to 53 in 2023. In 2024, the officialdom in Hainan continued to be shaken. In June alone, at least more than 30 officials were investigated. Wang Huntao, a democracy activist, said in an interview with the Deji Yuan on July 27 that given that the government of CCP leader Xi Jinping is conducting a retrospective investigation, Luo Baoming realized he had nowhere to escape, so he chose to surrender himself. Wang mentioned that the provincial party secretaries of the CCP typically belong to the factions of former General Secretary Jiang Zemin, the Youth League, and other groups. However, since Xi Jinping took office, the influence of these factions has been greatly diminished. Du Wen, former executive director of the Legal Advisory Office in the Inner Mongolia Autonomous Region Government, also shares Wang's view. He said that many provincial and ministerial officials had disappeared before the third plenary session of the 18th CCP Central Committee. Although everyone knew they were being investigated, the Chinese authorities did not make it public. Du Wen said, for those who have retired, have little influence, and do not pose much threat to Xi Jinping's regime, they often accumulate a lot of assets, especially in Hainan, where these officials own a lot of land. Now, the CPC is facing financial difficulties and needs these people to come up with money. I think Luo Baoming is this type. The so-called voluntary surrender is actually a chance for the CPC authorities to give them leniency, such as shortening their sentences, but they must hand over their assets. Du Wen also said that this is the new anti-corruption model of the CCP authorities, forcing these officials to hand over their assets in exchange for a way out. Taiwan to hold F-16V airshow amid daily pressure from Chinese military. Taiwan's Chiayi Air Base will host an airshow next month featuring the Taiwanese Air Force's American-manufactured F-16V. The F-16V demonstration takes place as the Chinese military frequently sends its aircraft and warships near Taiwan's airspace and waters. Taiwan's Ministry of National Defense, MND, reported tracking 14 Chinese military aircraft and nine Chinese naval vessels flying around Taiwan between 6 a.m. on Monday, July 29, and 6 a.m. on Tuesday, July 30, according to Taiwan News. A day earlier, the MND tracked 18 Chinese military aircraft and 14 Chinese naval vessels flying around Taiwan between 6 a.m. on Sunday, July 28, and 6 a.m. on Monday, July 29. The F-16V, the latest version of the F-16 Fighting Falcon, is manufactured by Lockheed Martin in the U.S. It features advanced radar systems, electronic warfare capabilities, and state-of-the-art weaponry, making it one of its class's most formidable fighter jets. Major General Yang Chuanwen of the 4th Tactical Fighter Wing at the base in Chiayi County, announced that the event will occur on Saturday, August 10. The airshow will feature a spectacular flyover with F-16s, Mirage 2000-5s, and Taiwan's indigenous defense fighter. In addition, the Air Force's Thunder Tiger aerobatics team will perform aerial stunts in their AT-3 jets, promising an exhilarating display for launching. On the ground, there will be exhibits of various fighters and transport planes, and an exceptional performance by Taiwan's tri-service honor guards. Major General Yang said the event aims to foster a deeper understanding among civilians about Taiwan's armed forces and show support for the service personnel dedicated to protecting Taiwan. China gives false notion about resupply agreement with Philippines and South China Sea. The Philippines has accused China of mischaracterizing a recent agreement about the South China Sea. The disagreement revolves around a temporary arrangement that allows the unimpeded resupply of Filipino troops stationed on the Sierra Madre, a naval vessel intentionally grounded at the Second Tomas Shoal in 1999 to assert Manila's maritime claims. According to Reuters, Teresita Daza, a spokesperson for the Philippine Foreign Ministry, reported that the resupply mission on July 27 was completed without incident, with Chinese Coast Guard vessels maintaining a reasonable distance. However, China claimed that their Coast Guard had been notified in advance and had permitted the vessels' passage after an on-the-scene confirmation. Daza responded on July 28, expressing regret over China's mischaracterization of the mission. She emphasized that the arrangement was meant to manage differences and avoid misunderstandings and criticized the Chinese spokesperson for misrepresenting the agreement. The Chinese embassy in Manila has not commented on the issue, and the details of the arrangement remain undisclosed. However, both nations agree that it aims to ease tensions in the disputed waters. Daza reiterated that the agreement was made in good faith and without compromising national positions. She urged against spreading false notions about the terms and their implementation. The South China Sea Task Force of the Philippines confirmed that Manila did not request Chinese permission for the resupply mission. They also stated that the Chinese Coast Guard did not board or inspect the vessel. The Second Tamas Shoal, located within the Philippines' Exclusive Economic Zone, is claimed by China based on historical maps. However, this claim was invalidated by a 2016 arbitral tribunal ruling. Tensions in the region continue to run high, with recent incidents highlighting the volatility of the situation. For example, last month, a Filipino Navy sailor lost a finger in a confrontation with the Chinese Coast Guard. Don't forget to leave a comment in the section below to share your opinions on today's topic with us. Make sure to like and subscribe to see more interesting topics from China Truths.