1 MONGOLIA MARKS CENTENNIAL WITH A NEW COURSE FOR CHANGE WWW.EASTASIAFORUM.ORG PUBLISHED:2024/12/20      2 E-MART OPENS FIFTH STORE IN ULAANBAATAR, MONGOLIA, TARGETING K-FOOD CRAZE WWW.BIZ.CHOSUN.COM PUBLISHED:2024/12/20      3 JAPAN AND MONGOLIA FORGE HISTORIC DEFENSE PACT UNDER THIRD NEIGHBOR STRATEGY WWW.ARMYRECOGNITION.COM  PUBLISHED:2024/12/20      4 CENTRAL BANK LOWERS ECONOMIC GROWTH FORECAST TO 5.2% WWW.UBPOST.MN PUBLISHED:2024/12/20      5 L. OYUN-ERDENE: EVERY CITIZEN WILL RECEIVE 350,000 MNT IN DIVIDENDS WWW.GOGO.MN PUBLISHED:2024/12/20      6 THE BILL TO ELIMINATE THE QUOTA FOR FOREIGN WORKERS IN MONGOLIA HAS BEEN SUBMITTED WWW.GOGO.MN PUBLISHED:2024/12/20      7 THE SECOND NATIONAL ONCOLOGY CENTER TO BE CONSTRUCTED IN ULAANBAATAR WWW.MONTSAME.MN PUBLISHED:2024/12/20      8 GREEN BOND ISSUED FOR WASTE RECYCLING WWW.MONTSAME.MN PUBLISHED:2024/12/19      9 BAGANUUR 50 MW BATTERY STORAGE POWER STATION SUPPLIES ENERGY TO CENTRAL SYSTEM WWW.MONTSAME.MN PUBLISHED:2024/12/19      10 THE PENSION AMOUNT INCREASED BY SIX PERCENT WWW.GOGO.MN PUBLISHED:2024/12/19      КОКС ХИМИЙН ҮЙЛДВЭРИЙН БҮТЭЭН БАЙГУУЛАЛТЫГ ИРЭХ ОНЫ ХОЁРДУГААР УЛИРАЛД ЭХЛҮҮЛНЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2024/12/20     "ЭРДЭНЭС ТАВАНТОЛГОЙ” ХК-ИЙН ХУВЬЦАА ЭЗЭМШИГЧ ИРГЭН БҮРД 135 МЯНГАН ТӨГРӨГ ӨНӨӨДӨР ОЛГОНО WWW.MONTSAME.MN НИЙТЭЛСЭН:2024/12/20     ХУРИМТЛАЛЫН САНГИЙН ОРЛОГО 2040 ОНД 38 ИХ НАЯДАД ХҮРЭХ ТӨСӨӨЛӨЛ ГАРСАН WWW.NEWS.MN НИЙТЭЛСЭН:2024/12/20     “ЭРДЭНЭС ОЮУ ТОЛГОЙ” ХХК-ИАС ХЭРЛЭН ТООНО ТӨСЛИЙГ ӨМНӨГОВЬ АЙМАГТ ТАНИЛЦУУЛЛАА WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/20     Л.ОЮУН-ЭРДЭНЭ: ХУРИМТЛАЛЫН САНГААС НЭГ ИРГЭНД 135 МЯНГАН ТӨГРӨГИЙН ХАДГАЛАМЖ ҮҮСЛЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/20     “ENTRÉE RESOURCES” 2 ЖИЛ ГАРУЙ ҮРГЭЛЖИЛСЭН АРБИТРЫН МАРГААНД ЯЛАЛТ БАЙГУУЛАВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/20     “ORANO MINING”-ИЙН ГЭРЭЭ БОЛОН ГАШУУНСУХАЙТ-ГАНЦМОД БООМТЫН ТӨСЛИЙН АСУУДЛААР ЗАСГИЙН ГАЗАР ХУРАЛДАЖ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/20     АЖИЛЧДЫН САРЫН ГОЛЧ ЦАЛИН III УЛИРЛЫН БАЙДЛААР ₮2 САЯ ОРЧИМ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/19     PROGRESSIVE EQUITY RESEARCH: 2025 ОН “PETRO MATAD” КОМПАНИД ЭЭЛТЭЙ БАЙХААР БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/19     2026 ОНЫГ ДУУСТАЛ ГАДААД АЖИЛТНЫ ТОО, ХУВЬ ХЭМЖЭЭГ ХЯЗГААРЛАХГҮЙ БАЙХ ХУУЛИЙН ТӨСӨЛ ӨРГӨН МЭДҮҮЛЭВ WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/19    

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MBCC “Doing Business with Mongolia seminar and Christmas Receptiom” Dec 10. 2024 London UK MBCCI London UK Goodman LLC

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Minister of Economy explores stronger economic cooperation with Mongolia www.wam.ae

ABU DHABI, 2nd August, 2022 (WAM) -- Abdullah bin Touq Al Marri, Minister of Economy, has held a meeting with Odonbaatar Shijeekhuu, Ambassador Extraordinary and Plenipotentiary of Mongolia to the UAE, to explore opportunities to strengthen trade and economic cooperation between the two countries.
During the meeting, which took place at the Ministry's headquarters in Dubai, Al Marri emphasised the UAE's commitment to solidifying its economic and trade partnership with Mongolia in fields of shared interest to support both countries' developmental agendas as well as their sustainable economic growth.
Bin Touq said, "Mongolia is a promising market with which we aspire to increase trade and investment exchanges, especially in sectors such as tourism, aviation, logistics, agriculture and animal food trade, food security, apart from other strategic areas of shared interest. The partnership further aims to boost private sector cooperation between the two sides by highlighting the available opportunities in our markets, exploring new collaboration mechanisms and facilitating the exchange of expertise."
He also reviewed the UAE's ambitious strategy to attract talent and competencies from all vital sectors, in addition to its advanced infrastructure, attractive business environment, the recently issued flexible legislations, and the incentives offered to companies to encourage FDI in the country's promising market.
The discussions also shed light on the Comprehensive Economic Partnership Agreements (CEPA) model pursued by the UAE, through which the country has signed three agreements so far with India, Indonesia, and Israel. Through these agreements, the UAE aims to expand its partnerships to reach strategic global markets, in line with the Principles of the 50 and the UAE Centennial 2071 goals to build a highly competitive national economy based on knowledge and innovation.
The UAE is Mongolia's number one Arab and GCC trade partner as of 2021. The non-oil trade between the two countries witnessed a 119 percent growth in Q1 2022 compared to the same period in 2021. During this period, the UAE's non-oil exports to Mongolia saw an 81 percent growth, led by medical and pharmaceutical industry supplies, construction materials, food materials such as tea and petrol and mineral oil.
WAM/Esraa Ismail/Rola Alghoul
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Tourists in Mongolia spend an average of USD 1463 in nine days www.mongolia.gogo.mn

National Statistics Office of Mongolia made following information related to tourists in Mongolia. The largest number of tourists come from our neighboring countries, Russian Federation and People’s Republic of China. According to the statistics of the last 10 years, about 130,000 tourists of China and 80,000 tourists of Russia visited Mongolia every year before pandemic.
Tourists from South Korea, Japan, the United States, Kazakhstan, Germany, France, Australia, and the United Kingdom are next on the list. According to the study of the Bank of Mongolia, tourists who come to Mongolia spend an average of USD 1,463 in 9 days, depending on the country where they come from. 56% of tourists take service from tourist companies, and 44% organize their own trips.
As of the first half of 2022, 73.7 thousand tourists came to Mongolia. This is an increase of 6.4 times from the same period of the previous year and a decrease of 66.1 percent compared to the period before the pandemic.
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China-Mongolia border port re-opens after near 11 months of COVID shutdown www.sxcoal.com

China's Zhuengadabuqi border port, connecting Mongolia through Bichigt gateway, has resumed operation after it was shut down on September 15, 2021 due to COVID-19 outbursts, according to the Global Times.
The border crossing mainly imports coking coal, crude oil and iron ore, with the intakes of the three goods at 379,700 tonnes, 145,000 tonnes and 1,270 tonnes respectively in 2021, data showed.
Zhuengadabuqi port opened a green passage on July 25, allowing the mobility of cargoes and people, in a bid to accelerate the recovery of port capacity.
(Writing by Emma Yang Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.
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Mongolian tests show waste recovery potential for Xanadu www.thewest.com.au

Xanadu Mines has competed metallurgical recoveries of up to 91 per cent gold and 46 per cent copper from preliminary glycine and cyanide leach testing at its Kharmagtai copper-gold project in Mongolia.
The tests were performed on partially oxidised material from surface to 30m depth and returned head grades between 0.52 and 2.25 grams per tonne gold and from 0.12 up to 0.67 per cent copper.
Xanadu says the results show a potential treatment path for about 90 million tonnes of oxidised material treated as waste in the company’s scoping study due to low flotation recovery.
The company added that if the material was processed as ore rather than pre-stripping, it could reduce waste rock production by around 10 per cent.
The base case assumed that all ore is processed through a standard sulphide circuit, which means that the partially oxidised material at the surface, which does not float, ends up being treated as zero value waste. If we can turn that material into cash generating ore by leaching with glycine and cyanide, it has potential to drive significant value uplift for the Kharmagtai project.
Xanadu Mines Executive Chairman and Managing Director, Colin Moorhead
Four composite samples — coarse rejects of mixed oxide and sulphide material from previously drilled diamond core holes — were collected from the company’s Stockwork Hill, White Hill and Golden Eagle deposits that were identified as representations of each of the zones.
The leach tests aimed to determine metallurgical recovery of gold and copper and gauge the potential of additional glycine to enhance recovery and reduce cyanide consumption.
Xanadu says the results are the first step in evaluating a material uplift opportunity identified in the scoping study, to generate additional cash flow by leaching partially oxidised, near-surface material.
The latest test results follow an independent assessment by equities firm MST Access — paid for by Xanadu — that valued the company at 0.08c per share based on factors including the life of the Kharmagtai asset, the size of the resource and the company’s long-term strategy.
Xanadu shares are currently trading at 0.026c on the ASX, up more than 8 per cent on intraday trading.
Xanadu’s Kharmagtai project has a mineral resource estimate identified at a massive 1.1b tonnes for three million tonnes of contained copper and eight million ounces of gold.
Based on the company’s scoping study predictions for the first five years of production, Kharmagtai shows a diminutive strip ratio of just 0.9, an averaged milled copper grade of 0.29 per cent and the company expects to produce an average of 37,000 tonnes of copper per year.
Xanadu has also attracted the interest of Chinese copper miner Zijin Mining Group with planned investment from the deal to be delivered across three phases.
The first phase has been completed, with Zijin investing $5.6m for a total of 139 million fully paid ordinary shares, giving it a 9.9 per cent minority stake in Xanadu.
At phase two, Zijin will invest another $5.7 million to increase its stake to 19.99 per cent.
Through the third phase, Zijin will create a 50-50 joint venture with Khuiten Metals, currently wholly owned by Xanadu.
Khuiten owns a 76.5 per cent stake in the Kharmagtai mine.
The investment includes US$20 million to fully fund a prefeasibility study and an additional US$15 million to fund continued exploration at Kharmagtai.
Xanadu also has a 100 per cent share in its Red Mountain project in southern Mongolia, where early exploration has defined broad zones of strong quartz stockwork veining and associated high-grade gold mineralisation of about 0.5 to more than 5 grams per tonne gold and 0.3 to 1.5 per cent copper.
Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au
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Globally more is being spent on coal than copper mining www.mining.com

New data from Industrial Info Resources show 4,790 metals and minerals capital projects (including mining, processing and refining) with a combined investment value of $443 billion are currently under construction around the world. A further 10,586 projects are under active planning and engineering – for a combined total of $1.11 trillion.
Joe Govreau, VP of Research at Industrial Info Resources, says that is an 8% increase from the preceding period as projects delayed by the pandemic are being restarted. Mining projects – from early exploration through to construction – make up half the global total.
The top seven miners have now upped capital outlays by more than 50% from the depths of the industry downturn in 2017. Govreau sees “no reason why expenditures won’t continue to be elevated for the next several years or more as companies look to increase production to meet expected demand growth from the energy transition.”
Red metal goes green
The decarbonisation revolution is not off to a great start though, not if you compare investments in the worst of the fossil fuels in terms of emissions – coal – with that of copper, without which there simply is no green energy transition.
Copper’s metal intensity – kilograms required per MW produced – of renewable energy sources like solar and wind is nowhere near that of coal or gas. To generate 1MW of offshore wind energy around 8.2 tonnes of copper have to be installed. The same figure for coal is 882kg.
According to one study, in order to reach net-zero by 2050, 19 million tonnes of additional copper need to be delivered. That implies a new La Escondida – the world’s largest copper operation by a wide margin – must be discovered and enter production every year for the next 20 years.
IIR tracks 708 active copper projects with construction kickoff in 2022/2023 around the globe. The combined value of these projects, which includes mining, processing and smelting, is $68.5 billion.
Globally more is being spent on coal than copper mining
Unsurprisingly, Chile, the world’s largest copper producer and reserves holder, leads the way with 123 projects worth $18.3 billion followed by China boasting 119 projects with a combined value of $13 billion and Russia which is spending $12.7 billion on 24 new copper projects.
In contrast, the US is spending $3.8 billion while Canadian spending on new copper ventures is a paltry $484 million, behind Iran and Vietnam. Govreau also points to Peru, the world’s number two producer, which is spending only $602 million after pandemic lockdowns and social unrest brought development to a standstill.
Back in black
In contrast to copper, coal has a pipeline of 1,863 projects around the globe with a value of $80.8 billion.
Govreau says coal consumption and production jumped over the past year on the back of increased demand for power generation and steelmaking. Consumption of metallurgical coal is expected to be strong again this year.
The Chinese ban on Australian coal is a boost for swing suppliers – US coal exports were up 26% last year, says Govreau. Asian nations are also upping investment in coal mining, and in contrast to Europe and the US, more coal-fired plants are being built than are being retired.
China derives 65% of its electricity from coal, has vast amounts of reserves and is heavily investing in consolidating and automating its coal mines to supply its massive power generation fleet. Coal mining is also attracting investment in the near term because soaring gas prices makes it a cheaper alternative for electricity generation.
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ADB commissions off-grid renewable hybrid energy system in Altai, Mongolia www.montsame.mn

On August 1, the Asian Development Bank (ADB) and the Government of Mongolia inaugurated a new hybrid energy system in Altai soum, in the western Gobi-Altai aimag. The project provides power in the remote soum, which is 400 kilometers away from the Altai-Uliastai energy system, with the Altai Mountains lying in between.
“This new hybrid energy system will supply over 1,500 local residents, 350 households, and 25 organizations in one of Mongolia’s most isolated soums with high-quality renewable energy using inexhaustible solar energy,” said Deputy Minister of Energy M. Bayarmagnai. “This project is an example of how the government is working to provide the most essential services by bringing innovative technologies to the benefit of the people.”
The Altai soum hybrid project is one of the renewable energy projects supported under ADB’s Upscaling Renewable Energy Sector Project, which will support 41 megawatts of distributed renewable energy systems. These subprojects will use a range of renewable energy technologies to supply clean electricity and heat in geographically scattered load centers in the less-developed region of Western Mongolia. The project was approved in September 2018 with ADB loan financing and grant cofinancing from the Strategic Climate Fund and Japan Fund for the Joint Crediting Mechanism.
The project features the latest innovative technologies of off-grid solar power plants such as BMS (battery management system) and EMS (energy management system), a first-of-its kind application in the country, and advances Mongolia’s efforts to expand renewable energy capacity.
“The new hybrid system is a demonstration of the government’s commitment to shift to use of more modern and cleaner technologies in the country,” said ADB Principal Energy Specialist Shannon Cowlin. “Not only will the system provide secure power supply to the people, it will do so without contributing to localized air pollution, which can affect even isolated regions of Mongolia during winter months.”
The Ministry of Energy of Mongolia signed the engineering, procurement, and construction contract with the winning bidder, a joint venture of Shuangdeng Group from the People’s Republic of China and ESPM International from Mongolia, for the hybrid system in the third quarter of 2021 and construction spanned October 2021­­–July 2022. The contract award of $1.1 million covered expansion and upgrade of the previous hybrid system serving the community.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
Source: ADB Mongolia
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Nuclear annihilation just one miscalculation away, UN chief warns www.bbc.com

The world is one misstep from devastating nuclear war and in peril not seen since the Cold War, the UN Secretary General has warned.
"We have been extraordinarily lucky so far," Antonio Guterres said.
Amid rising global tensions, "humanity is just one misunderstanding, one miscalculation away from nuclear annihilation", he added.
His remarks came at the opening of a conference for countries signed up to the nuclear Non-Proliferation Treaty.
The 1968 deal was introduced after the Cuban missile crisis, an event often portrayed as the closest the world ever came to nuclear war. The treaty was designed to stop the spread of nuclear weapons to more countries, and to pursue the ultimate goal of complete nuclear disarmament.
Almost every nation on Earth is signed up to the NPT, including the five biggest nuclear powers. But among the handful of states never to sign are four known or suspected to have nuclear weapons: India, Israel, North Korea and Pakistan.
Secretary General Guterres said the "luck" the world had enjoyed so far in avoiding a nuclear catastrophe may not last - and urged the world to renew a push towards eliminating all such weapons.
"Luck is not a strategy. Nor is it a shield from geopolitical tensions boiling over into nuclear conflict," he said.
And he warned that those international tensions were "reaching new highs" - pointing specifically to the invasion of Ukraine, tensions on the Korean peninsula and in the Middle East as examples.
Russia was widely accused of escalating tensions when days after his invasion of Ukraine in February, President Vladimir Putin put Russia's substantial nuclear forces on high alert.
He also threatened anyone standing in Russia's way with consequences "you have never seen in your history". Russia's nuclear strategy includes the use of nuclear weapons if the state's existence is under threat.
On Monday, Mr Putin wrote to the same non-proliferation conference Mr Guterres opened, declaring that "there can be no winners in a nuclear war and it should never be unleashed".
But Russia still found itself criticised at the NPT conference.
US Secretary of State Antony Blinken condemned what he called Russia's sabre-rattling - and pointed out that Ukraine had handed over its Soviet-era nuclear weapons in 1994, after receiving assurances of its future security from Russia and others.
"What message does this send to any country around the world that may think that it needs to have nuclear weapons - to protect, to defend, to deter aggression against its sovereignty and independence?" he asked. "The worst possible message".
Today, some 13,000 nuclear weapons are thought to remain in service in the arsenals of the nine nuclear-armed states - far lower than the estimated 60,000 stockpiled during the peak of the mid-1980s.
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Russia boosts gas flow to China www.rt.com

Russia has increased natural gas deliveries to China via the Power of Siberia pipeline this year, Russian energy major Gazprom said on its official Telegram channel on Monday.
Deliveries were up 60.9% compared to the same period last year.
“In particular, in July deliveries were regularly in excess of the daily contract quantities, with the historical record of the daily export volume being surpassed three times,” Gazprom said.
Meanwhile, Gazprom’s export to non-CIS countries amounted to 75.3 billion cubic meters, which is 34.7% (40 billion cubic meters) less than during the same period in 2021. The company stressed, however, that it was supplying gas “in accordance with customer requests.”
According to preliminary data, global demand in Gazprom’s supplies in the first seven months of 2022 fell by about 35 billion cubic meters compared to the same period in 2021. Most of the decline, totaling 31 billion cubic meters, came from EU buyers, Gazprom noted. This is due to several factors including the conflict in Ukraine, EU sanctions and Russia’s counter-sanctions, and the bloc’s new policy towards reducing its reliance on Russian energy.
The Power of Siberia pipeline supplies natural gas from Russia’s Yakutia to the countries of the Asia-Pacific region. It is a joint project of Gazprom and the China National Petroleum Corporation (CNPC), which supplies China with Russian energy under a 30-year-contract signed in 2014.
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Mongolia-Japan joint military engineering exercise kicks off www.montsame.mn

A joint military engineering exercise, ‘Road-2022’, between the Mongolian Armed Forces and the Japan Self-Defense Forces started today.
The 20-day exercise will be based on the military unit No. 014 to build road dams and drainage facilities. In practice, some engineering techniques and equipment supplied by the U.S. Ministry of Defense to the Ministry of Defense of Mongolia with a grant will be put into operation and used.
Brigadier General Ts.Tsogtjargal pointed out that the joint exercise has an important place in the military cooperation of the two countries, and noted that it makes a valuable contribution to strengthening the military engineering capabilities of Mongolia. He also emphasized that it provides great support to the preparations for the participation of an engineering military company from the Mongolian Armed Forces in the United Nations peacekeeping operations.
Ambassador Extraordinary and Plenipotentiary of Japan to Mongolia Kobayashi Hiroyuki said, “The exercise used to be conducted under the supervision of the Japanese trainers in the previous years. However, this year, the Mongolian participants will conduct it independently. This proves that Mongolian soldiers have unparalleled skills in learning and adapting”, while wishing for success to the participants.
The opening ceremony of the joint military exercise was attended by Commander of the Land Forces of the Mongolian Armed Forces Brigadier General Ch.Tsogtjargal, Director of the International Cooperation Department of the Ministry of Defense B.Bat-Erdene, Ambassador Extraordinary and Plenipotentiary of Japan to Mongolia Kobayashi Hiroyuki and other relevant officials and participants in the exercise.
The ‘Road’ joint military exercise is held as part of the program – ‘Increasing the capacity of the engineering sector of the Mongolian Armed Forces’, within the framework of the agreement established between the Ministries of Defense of Mongolia and Japan. With aims to upskill military engineers in road construction methods, prepare teaching staff, and exchange experience, the exercise has been organized annually since 2014.
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China Banks May Face $350 Billion in Losses From Property Crisis www.bloomberg.com

China’s banks face mortgage losses of $350 billion in a worst-case scenario as confidence plunges in the nation’s property market and authorities struggle to contain deepening turmoil.
A spiraling crisis of stalled projects has dented the confidence of hundreds of thousands of homebuyers, triggering a mortgage boycott across more than 90 cities and warnings of broader systemic risks. The big question now is not if, but how much it will batter the nation’s $56 trillion banking system.
In a worst-case scenario, S&P Global Ratings estimated that 2.4 trillion yuan ($356 billion), or 6.4% of mortgages, are at risk while Deutsche Bank AG is warning that at least 7% of home loans are in danger. So far, listed banks have reported just 2.1 billion yuan in delinquent mortgages as directly affected by the boycotts.
“Banks are caught in the middle,” said Zhiwu Chen, a professor of finance at the University of Hong Kong Business School. “If they don’t help the developers finish the projects, they would end up losing much more. If they do, that of course would make the government happy, but they add more to their exposure to delayed real estate projects.”
Already rattled by headwinds from slowing economic growth, Covid disruptions and record high youth unemployment, Beijing is placing financial and social stability at the top of its priorities. Efforts that have been contemplated so far included a grace period on mortgage payments and a central bank-backed fund to lend financial support to developers. Either way, banks are expected to play an active role in a concerted state bailout.
The exposure of Chinese banks to the property sector tops that of any other industry. There were 39 trillion yuan of outstanding mortgages and another 13 trillion yuan of loans to developers at the end of March, according to data from the People’s Bank of China.
The real estate market is “the ultimate foundation” for financial stability in China, Teneo Holdings managing director Gabriel Wildau said in a note this month.
As authorities move to keep risks in check, lenders with high exposure could come under greater scrutiny. Mortgages accounted for about 34% of total loans at Postal Savings Bank of China Co. and China Construction Bank Corp. at the end of 2021, above a regulatory cap of 32.5% for the biggest banks.
About 7% of outstanding mortgage loans could be impacted if the defaults spread, according to Deutsche Bank analyst Lucia Kwong. That estimate may still be conservative given the limited access to information on the unfinished projects, she said.
To limit the fallout, China could tap into the excess capital and surplus loan provisions at its 10 biggest lenders, which amounts to a combined 4.8 trillion yuan, according to a report by Francis Chan and Kristy Hung, analysts at Bloomberg Intelligence.
Local banks -- city and rural commercial lenders -- could shoulder more responsibility than state peers, based on earlier bailouts and also due to their stronger ties with local governments, though their capital buffers lag far behind industry average.
Chinese banks have raised a record amount of capital in the first half from bond sales as they prepare for a potential spike in soured loans.
Bad loans at lenders, which amounted to 2.9 trillion yuan at the end of March, are poised to reach new records and further strain an economy that’s expanding at the slowest pace since the onset of the Covid outbreak.
While China’s total debt-to-GDP is forecast to climb to a fresh record this year, consumers have been reluctant to take on more leverage. That has ignited a debate over the risk of China falling into a “balance sheet recession,” with households and companies cutting back on spending and investing.
Disposable income growth is slowing, further hurting the ability of homebuyers to service their debts. China’s home price weakness had spread to 48 of 70 major cities in June, up from 20 in January.
S&P Global forecast home sales could drop as much as 33% this year amid the mortgage boycott, further squeezing the liquidity of distressed developers and leading to more defaults. Some 28 of the top 100 developers by sales have either defaulted on bonds or negotiated debt extensions with creditors over the past year, according to Teneo.
Property investments, which drive demand for goods and services that account for about 20% of the nation’s gross domestic product, plunged 9.4% in June.
Bank earnings are at stake. After recording the fastest profit expansion in nearly a decade last year, the nation’s lenders face a challenging 2022 as the government pressures them to support the economy at the cost of earnings.
A 10 percentage-point slowdown in real estate investment growth translates into a 28 basis-point increase in overall bad loans, meaning a 17% decline in their 2022 earnings, Citigroup analysts led by Judy Zhang estimated in a July 19 report.
The Hang Seng index of mainland banks has plunged 12% this month.
— With assistance by Charlie Zhu, Amanda Wang, Emma Dong, Lisa Du, and Yujing Liu
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