Page 340 - 2021 White Paper
P. 340
1 White Paper on the Business Environment in China
than one gigaton of additional carbon dioxide. At the sector going into 2021. Issuers could also face
the same time, both rural and urban environments weak investor appetite (Tan).
have deteriorated. Most of China’s major cities
suffer from filthy air and poor water quality. About Works Cited
90% of China’s grasslands and 40% of its major
wetlands are experiencing degradation. In 2012, AP. “2020 Insights on the China Construction
President Xi Jinping began stressing his theory of Industry - Market Size & Forecast by Value and
an “eco-civilization,” where development takes Volume, Opportunities in Top 10 Cities, and Risk
environmental costs into consideration. The Assessment - ResearchAndMarkets.com.” AP
aspiration hasn’t always translated into concrete NEWS, Associated Press, 27 Mar. 2020, apnews.
policies. Government guidelines on building com/press-release/pr-businesswire/425b194035b
new cities contain buzzwords like “low-carbon” 7400abcefee8dab70d691.
and “environmental protection,” but few specific
requirements in terms of energy efficiency and Bloomberg. “China Is Building Green Cities, But
building materials (Bloomberg). Struggling to Find Residents.” Bloomberg.com,
Bloomberg, 24 Sept. 2020, www.bloomberg.com/
Real Estate news/features/2020-11-22/china-s-2060-climate-
pledge-inside-xi-jinping-s-secret-plan-to-end-
China’s property rebounded quickly as the emissions?sref=ChcKRUCF.
economy reopened after the worst of the pandemic
passed. Still, authorities are expected to officially Chen, Sharon, and Lin Zhu. “China Returns
rein in on borrowing costs of developers, outlining to Old Construction Playbook to Boost Growth.”
rules that cap the rations of their debt in relation Bloomberg.com, Bloomberg, 6 Sept. 2020, www.
to their cash flows, assets and capital levels. The bloomberg.com/news/articles/2020-09-06/china-
country’s property developers are among the returns-to-old-construction-playbook-to-boost-
biggest junk bond issuers in Asia, with a total of growth?sref=ChcKRUCF.
US$46.23 billion being issued last year — double
that of 2018. Junk bonds are non-investment grade Cision. “China Building Construction Industry
debt securities that carry a high default risk, and Report 2020: China Is Expected to Record Negative
therefore, usually come with higher interest rates Growth Over the Next 8 Quarters, Driven by Covid-19.”
to compensate for that risk. With the Chinese PR Newswire: News Distribution, Targeting and
government also set to introduce those rules that Monitoring, 29 Sept. 2020, www.prnewswire.
would force companies to limit their debt, that com/news-releases/china-building-construction-
may pose even more problems. Chinese property industry-report-2020-china-is-expected-to-record-
developers could face mounting bond repayment negative-growth-over-the-next-8-quarters-driven-
pressure in 2021. ANZ Research shows that 526 by-covid-19-301139816.html.
billion RMB (US$ 77.46 billion) of onshore bonds
will mature in 2021, that’s 16% higher than those FTI. “Impact of COVID-19 Construction Industry
due in 2020; while some US$50 billion of offshore China: FTI Consulting.” Impact of COVID-19
dollar bonds are also due next year, or 47% more Construction Industry China | FTI Consulting, 19
than 2020. Tens of billions of dollars of bonds are Aug. 2020, www.fticonsulting.com/insights/articles/
set to mature in 2021, and analysts warn that amid impact-covid-19-construction-industry-china.
such tightening financing conditions, developers
who need to re-issue bonds to raise cash may face R&M. “China Construction Trends and
obstacles. The new regulations may limit developers’
ability to roll over their debts, fueling a demand for Opportunities Report 2020-2024: Market Is
cash and dampening property investment activity.
Limiting bank loan growth could lower growth Still Expected to Grow in 2020 Despite the
prospects, especially for more aggressive players.
Dollar refinancing needs are higher than ever for Severe Disruptions Caused by COVID-19 -
ResearchAndMarkets.com.” Business Wire,
340
than one gigaton of additional carbon dioxide. At the sector going into 2021. Issuers could also face
the same time, both rural and urban environments weak investor appetite (Tan).
have deteriorated. Most of China’s major cities
suffer from filthy air and poor water quality. About Works Cited
90% of China’s grasslands and 40% of its major
wetlands are experiencing degradation. In 2012, AP. “2020 Insights on the China Construction
President Xi Jinping began stressing his theory of Industry - Market Size & Forecast by Value and
an “eco-civilization,” where development takes Volume, Opportunities in Top 10 Cities, and Risk
environmental costs into consideration. The Assessment - ResearchAndMarkets.com.” AP
aspiration hasn’t always translated into concrete NEWS, Associated Press, 27 Mar. 2020, apnews.
policies. Government guidelines on building com/press-release/pr-businesswire/425b194035b
new cities contain buzzwords like “low-carbon” 7400abcefee8dab70d691.
and “environmental protection,” but few specific
requirements in terms of energy efficiency and Bloomberg. “China Is Building Green Cities, But
building materials (Bloomberg). Struggling to Find Residents.” Bloomberg.com,
Bloomberg, 24 Sept. 2020, www.bloomberg.com/
Real Estate news/features/2020-11-22/china-s-2060-climate-
pledge-inside-xi-jinping-s-secret-plan-to-end-
China’s property rebounded quickly as the emissions?sref=ChcKRUCF.
economy reopened after the worst of the pandemic
passed. Still, authorities are expected to officially Chen, Sharon, and Lin Zhu. “China Returns
rein in on borrowing costs of developers, outlining to Old Construction Playbook to Boost Growth.”
rules that cap the rations of their debt in relation Bloomberg.com, Bloomberg, 6 Sept. 2020, www.
to their cash flows, assets and capital levels. The bloomberg.com/news/articles/2020-09-06/china-
country’s property developers are among the returns-to-old-construction-playbook-to-boost-
biggest junk bond issuers in Asia, with a total of growth?sref=ChcKRUCF.
US$46.23 billion being issued last year — double
that of 2018. Junk bonds are non-investment grade Cision. “China Building Construction Industry
debt securities that carry a high default risk, and Report 2020: China Is Expected to Record Negative
therefore, usually come with higher interest rates Growth Over the Next 8 Quarters, Driven by Covid-19.”
to compensate for that risk. With the Chinese PR Newswire: News Distribution, Targeting and
government also set to introduce those rules that Monitoring, 29 Sept. 2020, www.prnewswire.
would force companies to limit their debt, that com/news-releases/china-building-construction-
may pose even more problems. Chinese property industry-report-2020-china-is-expected-to-record-
developers could face mounting bond repayment negative-growth-over-the-next-8-quarters-driven-
pressure in 2021. ANZ Research shows that 526 by-covid-19-301139816.html.
billion RMB (US$ 77.46 billion) of onshore bonds
will mature in 2021, that’s 16% higher than those FTI. “Impact of COVID-19 Construction Industry
due in 2020; while some US$50 billion of offshore China: FTI Consulting.” Impact of COVID-19
dollar bonds are also due next year, or 47% more Construction Industry China | FTI Consulting, 19
than 2020. Tens of billions of dollars of bonds are Aug. 2020, www.fticonsulting.com/insights/articles/
set to mature in 2021, and analysts warn that amid impact-covid-19-construction-industry-china.
such tightening financing conditions, developers
who need to re-issue bonds to raise cash may face R&M. “China Construction Trends and
obstacles. The new regulations may limit developers’
ability to roll over their debts, fueling a demand for Opportunities Report 2020-2024: Market Is
cash and dampening property investment activity.
Limiting bank loan growth could lower growth Still Expected to Grow in 2020 Despite the
prospects, especially for more aggressive players.
Dollar refinancing needs are higher than ever for Severe Disruptions Caused by COVID-19 -
ResearchAndMarkets.com.” Business Wire,
340
