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Chinese regulators Sunday urged banks to extend loans to qualified real estate projects and meet developers financing needs where reasonable, in their latest effort to ease concerns triggered by a widening mortgage-payment boycott on unfinished houses.

The remarks by the China Banking and Insurance Regulatory Commission (CBIRC) came after a growing number of home buyers across China threatened to stop making their mortgage payments for stalled property projects, aggravating a real estate crisis that has already hit the economy. 

Investors have continued to dump Chinese banking stocks as well as developers’ shares and bonds, even after the CBIRC vowed Thursday to strengthen its coordination with other regulators to “guarantee the delivery of homes.” 

In an interview with the official China Banking and Insurance News on Sunday, the CBIRC reiterated that it will support local governments to promote home delivery, and expressed confidence that with concerted efforts, “all the difficulties and problems will be properly solved.”

More specifically, the regulator urged banks to “shoulder social responsibility” and actively participate in the study of plans to fill the funding gap, so that the construction of stalled real estate projects can be resumed swiftly, and homes can be delivered to buyers early.

It also urged banks to strengthen communication with mortgage clients and support acquisitions of real estate projects to help stabilize the property market.

In addition, the watchdog said that financial risks in the northeastern province of Liaoning has been growing recently but were under control, and the government will take measures to prevent risks at China’s small lenders.
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Thailand’s recent pledge to finish a long-delayed high-speed rail line linking it to China through Laos within six years is reigniting doubts about the country’s commitment and whether the $12 billion megaproject will pay off.

Transport and Foreign Affairs ministries officials told reporters July 6 Thailand will complete the 609-kilometer line from the capital, Bangkok, to the Lao border at Nong Khai, now only 5% built, by 2028. Nong Khai is just across the Mekong River from the Lao capital of Vientiane, where a high-speed train to the Lao-China border started service in December.

With trains running at a maximum speed of 250 km/h, the new line will collapse the time the Bangkok-Nong Khai journey takes now on existing standard-gauge tracks.

The 2028 announcement came a day after Chinese Foreign Minister Wang Yi met with Thai Prime Minister Prayut Chan-ocha and Foreign Affairs Minister Don Pramudwinai in Bangkok. A Thai Foreign Affairs Ministry statement on Wang’s visit says the meeting included talks on a “Thailand-Laos-China Connectivity Development Corridor.”

The project is part of Beijing’s long-term plans to link China’s Yunnan province to the bustling ports of Singapore via high-speed trains cutting through Laos, Thailand and Malaysia in a key piece of its grand Belt and Road initiative.

Cautious commitment

When Thailand started planning its portion of the line with China over a decade ago, the goal was to have it done by about the same time as Laos finished its own 414-kilometer stretch, Ruth Banomyong, a professor of international trade, transport and logistics at Thailand’s Thammasat University, told VOA. But with that target long since abandoned, he said top government transport officials were still noncommittal on a new goal just last month at a seminar he attended, making the announcement on July 6 “a bit confusing.”

Ruth said the new target was feasible but may be more of a political statement than a “technical” one, made with an eye on national elections due next year and Prayut’s fractious coalition government looking increasingly unsteady.

“The prime minister is probably at his lowest in terms of various [opinion] polls that have been published, and he wants to stay in power, but he needs to have something to show for himself,” said Ruth. “So, they need to re-put this project in the public eye, saying that, oh yes, it is going to be done.”

He said growing frustration in Beijing with the pace of Thailand’s progress may have played a part in the announcement, too.

“The fact that it’s announced after a meeting with the Chinese foreign minister, Wang Yi, it does make it look like they’re feeling some pressure to be at least looking like they’re moving forward with this project,” said Greg Raymond, a lecturer at Australian National University studying China’s growing connections with mainland Southeast Asia.

“But when you look at the pattern of [Thailand’s] decision-making, the pattern of action … the degree of commitment has to be questioned,” he added.

Analysts say the line, once complete, will help plug some of Southeast Asia’s largest and most dynamic economies into China’s landlocked south, giving the underdeveloped region a much-needed boost.

As with much of the Belt and Road Initiative, Raymond said, it also builds on Beijing’s broader goal of forging a regional economy centered on China, and of wielding that position to bend the foreign policies of other countries to its will. He pointed to Thailand’s scrapping of plans years ago to host a NASA climate change monitoring program, which he said was probably because China would not like having something like that so close. At the same time, he added, linking southern China to some of mainland Southeast Asia’s main ports would ease the pressure on China’s vital sea trade routes in case of conflict.

“If there’s a conflict between China and the United States, I think one of the things that China’s vulnerable to is a blockade by the [U.S. Navy’s] 7th Fleet, particularly at the Malacca Strait, so I think there is that sort of strategic imperative,” Raymond said.

Cost and benefit

For Thailand, the new line could mean more exports to, and investment from, China.

Ruth, though, said it will take decades, not years, for the $12 billion project to pay for itself, and only if the government also invests in the additional freight and passenger services needed to bring out the line’s full potential. Done right, he added, the line could also spur new growth and development along its route through Thailand’s rural northeast.

But Ruth said the government has yet to share its forecasts for key factors such as passenger numbers or freight traffic, making a hard-nosed assessment of the project impossible.

“What we tend to see is that a lot of these forecasts are very, very optimistic, and that’s why you sometimes end up with having white elephants … nice infrastructure that is not utilized fully, so that’s really the risk,” he warned.

Bryan Tse, Southeast Asia analyst for the Economist Intelligence Unit, said the high-speed train line’s focus, for now, appears to be on passengers, not freight, dimming the odds that Thailand can make the $12 billion back in 10 or even 20 years. If the main goal were boosting freight traffic, he said China would probably have focused on upgrading the network of regular train tracks crisscrossing Southeast Asia already, which would be cheaper.

But the project need not necessarily pay for itself directly to pay off for Thailand in other ways, Tse added.

“If getting this railway done means that you get the good will of the Chinese government … then you may get a lot of things in return politically and economically, in terms of investment, for instance,” he said.

Still, the analysts say Thailand is likely to remain hesitant about the project; $12 billion is a lot, and the added strain the pandemic has put on the country’s economy will only make it harder to move forward on the line to Laos, not to mention any high-speed line that might eventually be built south of Bangkok to Malaysia.

Raymond said Thailand is also wary of any moves, the high-speed rail line included, that might draw China too close for comfort.

“They don’t want to be drawn in, really, to a Beijing-centered economy if they think it’s going to reduce their freedom of maneuver,” he said. “They’re always seeking to balance their relationships; they don’t want to become too dependent on any of them. This is the classic hedging behavior, but it’s very strong with Thailand.”

Now that Laos is done with its stretch of the line, the analysts agreed that China is likely to focus its attention on seeing that Thailand picks up the pace.

Whatever their reservations, Raymond said, their Thai partners “might eventually feel like they have to do it.”

 
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Long lines are back at food banks around the U.S. as working Americans overwhelmed by inflation turn to handouts to help feed their families.

With gas prices soaring along with grocery costs, many people are seeking charitable food for the first time, and more are arriving on foot.

Inflation in the U.S. is at a 40-year high and gas prices have been surging since April 2020, with the average cost nationwide briefly hitting $5 a gallon in June. Rapidly rising rents and an end to federal COVID-19 relief have also taken a financial toll.

The food banks, which had started to see some relief as people returned to work after pandemic shutdowns, are struggling to meet the latest need even as federal programs provide less food to distribute, grocery store donations wane and cash gifts don’t go nearly as far.

Tomasina John was among hundreds of families lined up in several lanes of cars that went around the block one recent day outside St. Mary’s Food Bank in Phoenix. John said her family had never visited a food bank before because her husband had easily supported her and their four children with his construction work.

“But it’s really impossible to get by now without some help,” said John, who traveled with a neighbor to share gas costs as they idled under a scorching desert sun. “The prices are way too high.”

Jesus Pascual was also in the queue.

“It’s a real struggle,” said Pascual, a janitor who estimated he spends several hundred dollars a month on groceries for him, his wife and their five children aged 11 to 19.

The same scene is repeated across the nation, where food bank workers predict a rough summer keeping ahead of demand.

The surge in food prices comes after state governments ended COVID-19 disaster declarations that temporarily allowed increased benefits under SNAP, the federal food stamp program covering some 40 million Americans .

“It does not look like it’s going to get better overnight,” said Katie Fitzgerald, president and chief operating officer for the national food bank network Feeding America. “Demand is really making the supply challenges complex.”

Charitable food distribution has remained far above amounts given away before the coronavirus pandemic, even though demand tapered off somewhat late last year.

Feeding America officials say second quarter data won’t be ready until August, but they are hearing anecdotally from food banks nationwide that demand is soaring.

The Phoenix food bank’s main distribution center doled out food packages to 4,271 families during the third week in June, a 78% increase over the 2,396 families served during the same week last year, said St. Mary’s spokesman Jerry Brown.

More than 900 families line up at the distribution center every weekday for an emergency government food box stuffed with goods such as canned beans, peanut butter and rice, said Brown. St. Mary’s adds products purchased with cash donations, as well as food provided by local supermarkets like bread, carrots and pork chops for a combined package worth about $75.

Distribution by the Alameda County Community Food Bank in Northern California has ticked up since hitting a pandemic low at the beginning of this year, increasing from 890 households served on the third Friday in January to 1,410 households on the third Friday in June, said marketing director Michael Altfest.

At the Houston Food Bank, the largest food bank in the U.S. where food distribution levels earlier in the pandemic briefly peaked at a staggering 1 million pounds a day, an average of 610,000 pounds is now being given out daily.

That’s up from about 500,000 pounds a day before the pandemic, said spokeswoman Paula Murphy said.

Murphy said cash donations have not eased, but inflation ensures they don’t go as far.

Food bank executives said the sudden surge in demand caught them off guard.

“Last year, we had expected a decrease in demand for 2022 because the economy had been doing so well,” said Michael Flood, CEO for the Los Angeles Regional Food Bank. “This issue with inflation came on pretty suddenly.”

“A lot of these are people who are working and did OK during the pandemic and maybe even saw their wages go up,” said Flood. “But they have also seen food prices go up beyond their budgets.”

The Los Angeles bank gave away about 30 million pounds of food during the first three months of this year, slightly less than the previous quarter but still far more than the 22 million pounds given away during the first quarter of 2020.

Feeding America’s Fitzgerald is calling on USDA and Congress to find a way to restore hundreds of millions of dollars worth of commodities recently lost with the end of several temporary programs to provide food to people in need. USDA commodities, which generally can represent as much as 30% of the food the banks disperse, accounted for more than 40% of all food distributed in fiscal year 2021 by the Feeding America network.

“There is a critical need for the public sector to purchase more food now,” said Fitzgerald.

During the Trump administration, USDA bought several billions of dollars in pork, apples, dairy, potatoes and other products in a program that gave most of it to food banks. The “Food Purchase & Distribution Program” designed to help American farmers harmed by tariffs and other practices of U.S. trade partners has since ended. There was $1.2 billion authorized for the 2019 fiscal year and another $1.4 billion authorized for fiscal 2020.

Another temporary USDA “Farmers to Families” program that provided emergency relief provided more than 155 million food boxes for families in need across the U.S. during the height of the pandemic before ending May 31, 2021.

A USDA spokesperson noted the agency is using $400 million from the Build Back Better initiative to establish agreements with states, territories and tribal governments t o buy food from local, regional and underserved producers that can be given to food banks, schools and other feeding programs.

For now, there’s enough food, but there might not be in the future, said Michael G. Manning, president and CEO at Greater Baton Rouge Food Bank in Louisiana. He said high fuel costs also make it far more expensive to collect and distribute food.

The USDA’s Coronavirus Food Assistance Program, which included Farmers to Families, was “a boon” for the Alameda County Community Food Bank, providing 5 billion pounds of commodities over a single year, said spokesman Altfest.

“So losing that was a big hit,” he said.

Altfest said as many as 10% of the people now seeking food are first timers, and a growing number are showing up on foot rather than in cars to save gas.

“The food they get from us is helping them save already-stretched budgets for other expenses like gas, rent, diapers and baby formula,” he said.

Meanwhile, food purchases by the bank have jumped from a monthly average of $250,000 before the pandemic to as high as $1.5 million now because of food prices. Rocketing gasoline costs forced the bank to increase its fuel budget by 66%, Altfest said.

Supply chain issues are also a problem, requiring the food bank to become more aggressive with procurement.

“We used to reorder when our inventory dropped to three weeks’ worth, now we reorder up to six weeks out,” said Altfest.

He said the food bank has already ordered and paid for whole chickens, stuffing, cranberries and other holiday feast items it will distribute for Thanksgiving, the busiest time of the year.

At the Mexican American Opportunity Foundation in Montebello east of Los Angeles, workers say they are seeing many families along with older people like Diane Martinez, who lined up one recent morning on foot.

Some of the hundreds of mostly Spanish-speaking recipients had cars parked nearby. They carried cloth bags, cardboard boxes or shoved pushcarts to pick up their food packages from the distribution site the Los Angeles bank serves.

“The prices of food are so high and they’re going up higher every day,” said Martinez, who expressed gratitude for the bags of black beans, ground beef and other groceries. “I’m so glad that they’re able to help us.”
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China’s economy contracted in the three months ending in June compared with the previous quarter after Shanghai and other cities shut down to fight coronavirus outbreaks, but the government said a “stable recovery” is under way after businesses reopened.

The world’s second-largest economy shrank by 2.6%, down from the January-March period’s already weak 1.4%, official data showed Friday. Compared with a year earlier, which can hide recent fluctuations, growth slid to 0.4% from the earlier quarter’s 4.8%.

Activity was “much weaker than expected,” Rajiv Biswas of S&P Global Market Intelligence said in a report.

Asian stock markets were mixed following the news. Hong Kong was down 0.8% at mid-morning while Shanghai, Tokyo and Seoul gained.

Anti-virus controls shut down Shanghai, site of the world’s busiest port, and other industrial centers starting in late March, fueling concerns global trade and manufacturing might be disrupted. Millions of families were confined to their homes, depressing consumer spending.

“The resurgence of the pandemic was effectively contained,” the statistics bureau said in a statement. “The national economy registered a stable recovery.”

Data on factory output, consumer spending and other activity suggest overall growth was even weaker than the headline figure, Julian Evans-Pritchard of Capital Economics said in a report.

“Even accounting for June’s strength, the data are consistent with negative y/y (year-on-year) growth last quarter,” Evans-Pritchard wrote. “This isn’t the first time that the official GDP figures have seemingly understated the extent of an economic downturn.”

The slump hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.

China’s infection numbers are relatively low, but Beijing responded to its biggest outbreak since the 2020 start of the pandemic with a “zero-COVID” policy that aims to isolate every person who tests positive. The ruling party has switched to quarantining individual buildings or neighborhoods with infections but those restrictions covered areas with millions of people.

Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs who generate China’s new wealth and jobs. Small retailers and restaurants have closed. Others say they are struggling to stay afloat.

Cheng Hong, a mother of one who owns the Qifei Travel Agency in Shijiazhuang, southwest of Beijing, said business is down more than 80%.

“I almost couldn’t hold on, but I am lucky to see the start of a recovery,” said Cheng.

The ruling Communist Party is promising tax refunds, free rent and other aid to get companies back on their feet, but most forecasters expect China to fail to hit the ruling party’s 5.5% growth target this year.

Other major economies report growth compared with the previous quarter, which makes their levels look lower than China. Beijing for decades reported only growth compared with the previous year, which hid short-term fluctuations, but has started to release quarter-on-quarter figures.

Forecasters say Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt they worry is dangerously high.

Growth for the first half of the year was 2.5% over a year earlier, one of the weakest levels in the past three decades.

Retails sales were off 0.7% from a year earlier in the first half after plunging 11% in April.

Song Haixia, a shopkeeper who sells food and cigarettes in the northern city of Taiyuan, said sales have fallen by up to 70% to as little as 300 yuan ($45) a day. She said migrant workers who were among her customers were driven away by anti-virus measures.

“People are just not making money,” said Song, 45, the mother of two children. “I am not very optimistic about future prospects.”

Investment in factories, real estate and other fixed assets climbed 6.1%, reflecting the ruling party’s effort to stimulate growth by boosting spending on public works construction and ordering state-owned companies to spend more.

China also faces headwinds from weak global demand. Exports jumped 17.9% in June over a year earlier, but forecasters say that reflected ports clearing out cargo after anti-virus curbs lifted. They say growth is likely to fall back.

Slowing growth in the United States and Europe “could weaken demand for China’s manufacturing exports,” said Biswas.

China rebounded quickly from the pandemic in 2020, but activity weakened as the government tightened controls on use of debt by its vast real estate industry, which supports millions of jobs. Economic growth slid due to a slump in construction and housing sales.

Investors are waiting to see what happens to one of China’s biggest developers, Evergrande Group. It has struggled since last year to avoid defaulting on $310 billion owed to banks and bondholders.
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