CBN丨China launches tax policies to support property market

Hi everyone. I’m Stephanie LI.

Coming up on today’s program

• China unveils new tax breaks to boost property sales;
• Tencent logs 47% jump in Q3 profit on strong gaming growth.

Here’s what you need to know about China in the past 24 hours

China is amending its tax structure on residential property transactions, effectively lowering the cost of ownership and extending fresh incentives to a wider pool of buyers, in a round of measures to arrest a four-year slump.

First-time buyers will enjoy a 1 percent deed tax on homes measuring 140 square meters and below from December 1, the Ministry of Finance said on Wednesday, while a 1.5 percent rate will be taxed on purchase of units above that size. The existing threshold is 90 square meters.

The revised regulation on home transaction deed tax will mainly benefit those who plan to purchase bigger homes, said Zhang Dawei, chief analyst with real estate agency Centaline Property.

Home buyers planning to buy second homes in Beijing, Shanghai, Guangzhou and Shenzhen will benefit most from the revised deed tax, as a previous rate of 3 percent had been applied to all four of these first-tier cities, Zhang said.

Under the new policy, buyers planning to buy a second home with a floor area of 140 square meters or less will enjoy a lowered deed tax of 1 percent, while for those intending to buy a second home with a floor area above 140 square meters, the revised deed tax has been lowered to 2 percent.

More impactful policies are expected to roll out in the future, which will help stabilize real estate market expectations.

The transaction volume of new homes went up 0.9 percent year on year in China in October, reversing a decline that started in June last year, while second-hand home transactions rose for the seventh consecutive month and by 8.9 percent year on year.

Additionally, authorities will clarify policies on value-added taxes and land appreciation taxes in line with the scrapping of standards for ordinary and non-ordinary housing, reduce second-hand housing transaction costs, and keep tax burdens on real estate companies stable.

Warming home sales, along with further trade improvement in October and vibrant manufacturing activity, have added to evidence proving that the Chinese economy is gaining more traction thanks to pro-growth measures.

• China's trade with Asia-Pacific Economic Cooperation (APEC) economies reached a historic high, surpassing 21 trillion yuan in the first 10 months of 2024, underscoring their deepening economic integration and strong trade connections. According to China Customs, trade with APEC economies accounted for 59.1 percent of China's total trade, which grew by 5.7 percent year-on-year, outpacing China's overall trade growth rate by 0.5 percentage points.

Greater Bay Area, Greater future

• Several Chinese aviation companies, including Aero Engine Corp. of China and Xpeng AeroHT, reported record-breaking orders at the ongoing Zhuhai airshow. AECC signed procurement contracts of intent for over 1,500 general aviation power products with 10 major clients that valued at more than 10 billion yuan, marking the largest order sum ever for the civil aviation engine manufacturer. EV startup Xpeng’s flying car unit Xpeng AeroHT signed cooperation and pre-order agreements with 12 prospective clients, totaling nearly 2,010 units.
• Hong Kong Chief Executive John Lee has confirmed that a free-trade agreement between the SAR and Peru will be signed this week during the APEC Economic Leaders’ meeting, with the agreement to cover goods and services, as well as investment and a dispute settlement mechanism.
• Hong Kong climbed to seventh in a survey of countries ranking their global digital competitiveness. According to the latest World Digital Competitiveness Ranking compiled by the Switzerland-based International Institute for Management Development, Hong Kong had advanced three places following an improvement in three areas - technology, knowledge and future readiness.

Next on industry and company news

• China’s annual production of new energy vehicles surpassed 10 million units for the first time, marking a global milestone, said the China Association of Automobile Manufacturers. Experts predict production could exceed 12 million by year-end.
• Dingdong Maicai has chosen Saudi Arabia as its first overseas destination for international expansion and is in the process of building a team there, sources said. The Chinese online grocer will focus on selling prepared meals in the Middle East, alongside fresh produce and frozen goods.

Earnings reports express

• Chinese social media and gaming company Tencent on Wednesday reported better-than-expected profit in the third quarter, spurred by growth in games, advertising and cloud services. Tencent reported profit attributable to shareholders surged by 47 percent year-on-year to 53.23 billion yuan in the third quarter, while revenue rose by an annual 8 percent to 167.19 billion yuan. Gaming remained the company's backbone, with the unit's domestic revenue up 14 percent year-on-year to 37.3 billion yuan, while that for online advertising surged by an annual 17 percent to 29.99 billion yuan, making it one of the fastest-growing categories outside gaming.
• Alibaba Health’s net profit soared 73 percent to 769 million yuan in the six months ended Sept. 30 from a year earlier, the Chinese online healthcare provider latest earnings report showed yesterday. Revenue rose 10 percent to 14.27 billion yuan.
• Geely-backed Zeekr today reported a 22 percent reduction in net loss to 1.1 billion yuan in the third quarter from a year earlier. Revenue surged 31 percent to 18.4 billion yuan, with vehicle sales rising 42 percent to 14.4 billion yuan during the period.
• Seres Group announced yesterday that it would distribute 500 million yuan worth of cash dividends to all shareholders. The NEV maker reported its operating revenue surged 636 percent in the third quarter from a year earlier to 41.6 billion yuan.

Wrapping up with a quick look at the stock market

• Chinese stocks declined on Thursday as the benchmark Shanghai Composite dropped 1.7 percent and the Shenzhen Component tumbled 2.8 percent. Hong Kong’s Hang Seng index also closed 2 percent lower, and the TECH index fell 2.2 percent.
  

Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI

Sound Editor: Stephanie LI

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

Produced by 21st Century Business Herald Dept. of Overseas News.

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