Finance

China’s weeklong annual parliamentary meetings ended on Monday and for the first time in decades, the Chinese premier did not host a press conference.
President Xi Jinping did not speak at the closing ceremony.

A soldier in front of the Great Hall of the People on March 11, 2024, the closing day of the National People’s Congress in Beijing, China.
Yin Hon Chow | CNBC

BEIJING — China’s weeklong annual parliamentary meetings ended on Monday and for the first time in decades, the Chinese premier did not host a press conference.
In a break with tradition, the premier will no longer hold a press conference following this year’s parliamentary meetings — at least for the rest of the term, according to an official announcement last week.

Such press conferences were a rare instance of press interaction with the highest levels of China’s government.
President Xi Jinping did not speak at the closing ceremony. He typically speaks only at the closing ceremonies of the first session of each National People’s Congress, the nation’s highest authority which is elected every five years. This year is the second session of the 14th National People’s Congress.
To be clear, the annual gathering of the top leadership is typically ceremonial in nature. The real power lies with the ruling Communist Party, which is headed by Xi, who is general secretary of the party and president of China.
Still, announcements made during the Congress can shed some light on government policy.
Here are some highlights of what was announced at this year’s week-long parliamentary meeting, which started Tuesday last week and ended Monday.

Environment

“Along with the extensive discussions on environmental protection, the Government Work Report (GWR) explicitly pledged to lower energy consumption per unit of GDP by around -2.5% in 2024,” Citi analysts pointed out in a report Sunday.
The report “didn’t set such numeric targets in 2022-23, after the -3.0% target and ‘campaign-style’ execution led to the power outages in 2021,” the analysts said.
But they warned that investors “need to be mindful of the growth risks arising again from potential environmental policy tightening.”

Economic focus on manufacturing

China has set a 2024 growth target of around 5%, Premier Li Qiang at the start of the meetings on Tuesday when he released the much-anticipated government work report.
Industrial support clearly ranked first on Beijing’s priority list for the year ahead, according to three major plans released as part of the parliamentary meetings.
The top economic planner also noted how a push to upgrade equipment would generate a market of more than 5 trillion yuan (about $694.5 billion).
Real estate, in contrast, received less emphasis.
However, the Minister of Housing and Urban-Rural Development said property developers “that must go bankrupt should go bankrupt.” In a press conference on Saturday, Ni Hong warned that those who “harm the interests of the masses” will be probed and punished.

State Council changes

The Chinese Communist Party has increased its oversight of the government under Xi.
At the 2023 parliamentary meeting, Beijing announced an overhaul of finance and tech regulation by establishing party-led commissions to oversee the two sectors. Xi also gained an unprecedented third term as president at last year’s meeting.
This year, the National People’s Congress rubber stamped changes to revise the structure of the State Council, which has been the government’s top executive body led by the premier. At the ceremonial closing on Monday, the amended State Council Organic Law passed with 2,883 delegate votes — with eight rejecting the amendments and nine abstentions.
The changes include vice premiers and the head of the People’s Bank of China among the council’s top leadership group.
It was not immediately clear what impact such changes would have.
— CNBC’s Clement Tan contributed to this story. More

“For real estate companies that are seriously insolvent and have lost the ability to operate, those that must go bankrupt should go bankrupt, or be restructured, in accordance with the law and market principles,” Ni Hong, Minister of Housing and Urban-Rural Development, said at a press conference Saturday.
That’s according to a CNBC translation of his Mandarin-language remarks published in an official transcript of the press conference, held alongside China’s annual parliamentary meetings.
Ni’s comments come as major real estate developer from Evergrande to Country Garden have defaulted on their debt, while plunging new home sales have put future business into question.

China’s real estate sector has employed many construction workers, who typically live in temporary housing nearby.
Bloomberg | Bloomberg | Getty Images

BEIJING — China’s struggling real estate developers won’t be getting a major bailout, Chinese authorities have indicated, warning that those who “harm the interests of the masses” will be punished.
“For real estate companies that are seriously insolvent and have lost the ability to operate, those that must go bankrupt should go bankrupt, or be restructured, in accordance with the law and market principles,” Ni Hong, Minister of Housing and Urban-Rural Development, said at a press conference Saturday.

“Those who commit acts that harm the interests of the masses will be resolutely investigated and punished in accordance with the law,” he said. “They will be made to pay the due price.”
That’s according to a CNBC translation of his Mandarin-language remarks published in an official transcript of the press conference, held alongside China’s annual parliamentary meetings.
Ni’s comments come as major real estate developers from Evergrande to Country Garden have defaulted on their debt, while plunging new home sales have put future business into question.

In 2020, Beijing cracked down on developers’ high reliance on debt for growth in an attempt to clamp down on property market speculation. But many developers soon ran out of money to finish building apartments, which are typically sold to homebuyers in China ahead of completion. Some buyers stopped paying their mortgages in a boycott.
Authorities have since announced measures to provide some developers with financing. But the national stance on reducing the role of real estate in the economy hasn’t changed.

This year’s annual government gathering has emphasized the country’s focus on investing in and building up high-end manufacturing capabilities. In contrast, the leadership has not mentioned the massive real estate sector as much.
Real estate barely came up during a press conference focused on the economy last week, while Ni was speaking during a meeting that focused on “people’s livelihoods.”
Ni said authorities would promote housing sales and the development of affordable housing, while emphasizing the need to consider the longer term.
Near-term changes in the property sector have a significant impact on China’s overall economy.

Real estate was once about 25% of China’s GDP, when including related sectors such as construction. UBS analysts estimated late last year that property now accounts for about 22% of the economy.
Last week, Premier Li Qiang said in his government work report that in the year ahead, China would “move faster to foster a new development model for real estate.”
“We will scale up the building and supply of government-subsidized housing and improve the basic systems for commodity housing to meet people’s essential need for a home to live in and their different demands for better housing,” an English-language version of the report said. More

In the two years since Vladimir Putin’s invasion of Ukraine, Russia’s economy has repeatedly defied the doomsayers. A financial collapse, widely predicted in the spring of 2022, never came to pass. The economy fell into recession, but it was less severe than expected and did not last long. Inflation was the most recent scare. Last year prices accelerated rapidly; economists believed they could spiral out of control. Even Mr Putin was worried. In February he urged officials to give “special consideration” to rising prices.Once again, however, the Russian economy appears to be proving the pessimists wrong. Data to be published on March 13th are expected to show that prices rose by 0.6% month-on-month in February, down from 1.1% at the end of last year. On a year-on-year basis inflation is probably no longer rising, having hit 7.5% in November (see chart 1). Many forecasters expect the rate to fall to just 4% before long, and households’ expectations of future inflation have flattened. The result of Russia’s presidential election, which begins on March 15th, is a foregone conclusion. If it was competitive, these figures would do Mr Putin no harm.image: The EconomistRussian inflation surged last year owing to a fiscal splurge larger than the one implemented during the covid-19 pandemic. As Mr Putin doubled down on his invasion of Ukraine, he increased spending on everything from transportation equipment and weapons to soldiers’ salaries. Total government outlays rose by 8% in real terms. Demand for goods and services soared beyond the economy’s capacity to provide them, leading sellers to raise prices. Workers became particularly difficult to find, not least because hundreds of thousands were called up and tens of thousands fled the country. By October last year nominal wages were growing at an annual pace of 18%, up from 11% at the start of the year. This provoked price inflation in labour-intensive services such as health care and hospitality.Who deserves credit for the turnaround? The finance ministry is advancing its claim. Last year its officials successfully lobbied for exchange-rate controls, which compel exporters to deposit foreign currency in the Russian financial system. The wheeze has probably supported the rouble, which has appreciated in recent months, reducing the price of imports.Central-bank officials think that their peers in the finance ministry are economic know-nothings who mess with markets at their peril. They believe that their policy—of more than doubling interest rates since July 2023—should take the credit for the inflation slowdown, and they are probably right. Higher rates have encouraged Russians to put money in savings accounts rather than spending it. Tighter monetary policy has also curbed lending. In December retail lending grew by 0.6% month on month, down from 2% for most of 2023.image: The EconomistFew other central banks have been as tough. Yet Russia still seems to be heading for a “soft landing”, in which inflation slows without crushing the economy. The performance of the economy is now in line with its pre-invasion trend; gdp grew in real terms by more than 3% last year (see chart 2). Unemployment remains at a record low. And there is little evidence of corporate distress; indeed, the rate of business closures recently hit an eight-year low. The Moscow Exchange is hoping to see more than 20 initial public offerings this year, up from nine last year. The latest “real-time” data on economic activity are reasonably strong. Consensus forecasts for GDP growth this year of 1.7% look too pessimistic.Russia’s economic resilience is in part the consequence of past stimulus. In recent years corporations and households have built up large cash balances, allowing them to continue spending even in the face of high inflation, and avoid default in the face of high borrowing costs. As in other parts of the world, falling demand for labour has mostly resulted in a decline in unfilled vacancies rather than in a lower number of people in employment. Figures from HeadHunter, a recruitment site, suggest that the ratio of open positions to jobseekers has stopped rising. Having struggled to find workers in recent months, bosses are reluctant to let people go unless they absolutely must.Sanctions-busting has also juiced the economy. Russian production facilities formerly owned by Westerners have reopened under new management, points out the central bank in a recent report. At the start of the war, sanctions made it hard for Russian firms to source inputs, delaying production. Now, though, companies have set up durable supply chains with “friendly” countries. Well over half of goods imports come from China, twice the share from before the invasion.As new trading relationships have bedded in, Russian exporters have dared to raise prices, supporting revenues and profits. The discount on oil Russia offers to Chinese customers, for instance, has fallen from more than 10% in early 2022 to about 5% today. And it is not just oil. Mr Putin boasts about soaring ice-cream exports to China, noting last week that he “treated my friend, President Xi Jinping”, to a lick.As every Russian knows, inflation is never truly defeated. Central-bank officials continue to fret that inflation expectations remain too high. The biggest worry is that the rouble may depreciate, either because of lower oil prices, another round of serious sanctions or if China loses interest in supporting Mr Putin. These are serious concerns. Nevertheless, the world’s pariah economy is once again back on track. ■ More

An Alaska airlines Boeing 737 is taking off from Los Angeles International AirPort (LAX) in Los Angeles, California, on March 6, 2024.
Daniel Slim | Afp | Getty Images

The Justice Department has started a criminal investigation into the Alaska Airlines incident where a door panel blew out mid-air two months ago, The Wall Street Journal reported Saturday.
The newspaper, citing documents and people familiar with the matter, said investigators have contacted passengers, pilots and flight attendants on Flight 1282 on Jan. 5 heading to Ontario, California from Portland, Oregon, where a section of the plane ripped off midair, forcing the crew to make an emergency landing.

The investigation would help the DOJ its in review of whether Boeing complied with an previous settlement of a federal investigation into two fatal 737 Max crashes in 2018 and 2019, the Journal said.
“In an event like this, it’s normal for the DOJ to be conducting an investigation,” an Alaska Airlines spokesperson said. “We are fully cooperating and do not believe we are a target of the investigation.” 
The DOJ declined to comment. Boeing didn’t immediately respond to a CNBC request for comment.
Boeing 737 Max 9 planes flown by Alaska have resumed regular service after being grounded for inspections. Alaska and United Airlines, the two U.S. carriers that fly the Max 9, canceled thousands of flights in January after the incident.
Three passengers are suing Boeing and Alaska Airlines for $1 billion in damages, accusing Boeing and Alaska Airlines of negligence for allegedly having ignored warning signs.

Alaska Airlines earlier estimated that the weekslong grounding of the Boeing 737 Max 9 will cost the carrier $150 million.
— Read the original WSJ story here.
— CNBC’s Rebecca Picciotto contributed reporting. More

U.S. President Joe Biden delivers the State of the Union address to a joint session of Congress in the House Chamber of the U.S. Capitol in Washington, U.S., March 7, 2024. 
Elizabeth Frantz | Reuters

President Joe Biden on Saturday signed a $460 billion spending bill into law, averting a partial government shutdown that would have taken effect this weekend.
This partial budget deal covers funding for six major areas of government, which encompass military and veterans affairs departments, agriculture, commerce, justice, transportation, housing and urban development and energy.

On Friday evening, the Senate had voted 75 to 22 to approve the package after the House passed it earlier this week.
The agreement marks a step forward in the push to secure a permanent budget plan for the rest of the fiscal year, which started Oct. 1.The other six appropriations bills that keep the rest of the government funded are due to expire March 22.
This is the fourth time this fiscal year that Congress has had to pass a short-term spending bill to keep the government funded and avert a shutdown.
Democrats have been pushing for the continued full funding of a special food assistance program for women, infants and children. They also secured wins on rent assistance and pay for infrastructure employees like air traffic controllers and railway inspectors.
Meanwhile, Republicans also considered the first half of funding package as a win as they declared victories on veterans’ gun ownership and funding cuts to government agencies like the Environmental Protection Agency, the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
— CNBC’s Rebecca Picciotto contributed reporting. More

The top holdings of many ESG funds may be surprisingly familiar.
While these strategies consider a company’s environmental, social and governance factors, these funds still aim to invest in top performers across industry groups, DWS Group’s Arne Noack explained.

“The idea isn’t to be super concentrated and only select a handful of stocks that do the best from an ESG or from a climate principle, but [to] still have a portfolio that largely resembles the economic makeup of the US economy,” the firm’s head of systematic investment solutions for the Americas told CNBC’s “ETF Edge” earlier this week. 
Noack’s firm manages the Xtrackers MSCI USA Climate Action Equity ETF (USCA). Its top holdings include Nvidia, Amazon, Microsoft, Apple, Meta Platforms and Google’s parent company Alphabet — six of the “Magnificent Seven” mega-cap tech stocks that also lead ETFs that track the S&P 500.
ESG funds also tend to be more heavily invested in technology stocks because the sector is one of the “cleaner” industries, according to former VettaFi financial futurist Dave Nadig.
“If you solely look at climate as your window, you’ll probably not end up not owning a lot of energy companies, not owning a lot of miners [and] not owning a lot of steel companies,” Nadig said. “So, you end up with something that looks like services, health care and technology, which is a very strong bet to take.”
Information technology stocks currently account for more than 30% of USCA’s allocation, according to Xtracker’s website. That’s more than double the fund’s second largest sector allocation — 13.5% in health care.

But Noack considers the idea that ESG funds only invest in clean, sustainable sectors as misleading. 
“There’s sometimes a misperception that ESG funds cannot invest in energy companies. That’s absolutely wrong. Energy is a vital component of our economy,” he said. 
Is ESG still relevant?
Global ESG funds saw their first net quarterly outflows on record in the fourth quarter of 2023, according to Morningstar. However, Nadig points out while financial advisors may have pulled back from recommending ESG funds to clients, investor interest hasn’t gone anywhere. 
“[Advisors] pulled back. They probably aren’t coming back. The demand from individuals, however, never really waned,” Nadig said. “What went away was the hot money of people thinking this was going to be a momentum kind of play. It’s not a momentum play. This is a long-term way of approaching your allocation.”
The Xtrackers MSCI USA Climate Action Equity ETF is up nearly 9% so far this year.
Disclaimer More

Foreign visitors to China can now spend up to $2,000 a year using the mobile app Alipay without having to register their ID, the app operator said Friday.
Ant Group also announced that for international travelers who do register their ID with Alipay, they can use the app for single-transactions as large as $5,000, up from $1,000 previously.
The changes in those transaction amounts follow announcements this month from the People’s Bank of China for such increases.

Scanning QR codes with a mobile pay app has become the most common way to pay in mainland China.
Bloomberg | Bloomberg | Getty Images

BEIJING — Foreign visitors to China can now spend up to $2,000 a year using the mobile app Alipay without having to register their ID, the app operator said Friday.
That’s four times more than the previous limit of $500, a move that will impact international tourists the most. The number of foreign travelers to China had declined after the country temporarily imposed strict border controls during the pandemic.

The increased transaction limit reflects Beijing’s push this year to make it easier for foreign travelers to pay for daily purchases in a country in which mobile payment has become ubiquitous.
However, stringent real-name verification policies have often made it difficult for foreign visitors to China to use mobile pay.
Alipay, operated by Alibaba-affiliate Ant Group, is one of two major mobile payment apps in China. Tencent-owned WeChat Pay operates the other commonly used app.
Tencent did not confirm an exact figure for ID-free transactions using WeChat Pay, but noted foreigners could complete some payments without registering their ID.
Ant also announced Friday that international travelers who register their ID with Alipay can use the app for single transactions as large as $5,000, up from $1,000 previously.

The annual transaction limit for those who register their IDs is now $50,000 — five times more than the previous cumulative amount of $10,000, Ant said.
The changes in transaction amounts follow announcements this month from the People’s Bank of China for such increases.
Ant said the changes apply to foreign visitors to China who download Alipay, or who use 10 specific overseas mobile pay apps.
The program, called Alipay+, lets existing users of certain mobile payment apps from Singapore, South Korea, Thailand, Malaysia, Mongolia, Hong Kong and Macao scan Alipay QR codes directly to pay in China.
In early February, People’s Bank of China Deputy Governor Zhang Qingsong told CNBC that foreign visitors using Alipay or WeChat Pay did not need to provide ID information if the annual transaction volume was below $500.
“We are also looking at the possibility of raising the $500 threshold in the future,” he said at the time. More

Fed Chair Jerome Powell said inflation is “not far” from where it needs to be for the central bank to start cutting interest rates.
“I think we’re in the right place,” Powell said of the current policy stance.

Federal Reserve Chairman Jerome Powell testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Semiannual Monetary Policy Report to the Congress,” in Dirksen Building on Thursday, March 7, 2024.
Tom Williams | Cq-roll Call, Inc. | Getty Images

Federal Reserve Chair Jerome Powell on Thursday indicated that interest rate cuts may not be too far off if inflation signals cooperate.
In remarks to the Senate Banking Committee, the central bank leader didn’t provide a precise timetable of when he sees easing happening, but noted that the day could be coming soon.

“We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction,” Powell said in response to a question about rates and inflation. He said the cuts would be so the Fed doesn’t “drive the economy into recession rather than normalizing policy as the economy gets back to normal.”
Powell spoke at a time when financial markets have swung considerably in their expectations on Fed policy.
At the beginning of the year, futures traders were betting the Fed would start in March and keep going until it had cut six or seven times this year. The outlook now is for the first cut to come in June, with four reductions totaling a full percentage point by the end of 2024.
Inflation data recently has indicated the pace of price increases is continuing to slow, though the consumer price index rattled markets when it came in higher than expected for January. Still, Powell noted in congressional testimony this week that inflation is progressing lower, though not at the point yet where the Fed is ready to cut.
“I think we’re in the right place,” Powell said of the current policy stance. More