A decision by the Shenzhen Stock Exchange last week enabling one rental apartment operator to issue asset-backed securities may reflect a turning point in the industry’s push for financial innovation, including the eventual establishment of real estate investment trusts (reits), according to experts. China Young Professional Apartments (CYPA), a Beijing-based condominium operator catering to urban professionals in first-tier cities, won approval to issue CNY270 million worth of securities backed by its rental flats.

China’s securities regulator over the past two years has approved a number of asset-backed securities (ABS), giving developers and asset-owners an alternative financing channel. However the asset approval granted to CYPA is the first to be backed by rental properties for public distribution. Mofang, a Shanghai-based rental apartment company backed by Warburg Pincus, in January issued asset-backed securities through a private placement.

“The issuance is a boost for China’s leasing market, which without reits has long operated in an asset-heavy model,” said Chen Baolin, an asset-backed securities analyst with Tianfeng Securities. “This also suggests the supportive attitude of the regulator, and will encourage more operators to prepare ABS issuance.” Jin Wei, Investment Banker with Huafu Securities, said the CYPA deal is largely symbolic. “The real big deals will be from developers, which have much bigger inventory.”

After years of surging residential prices, the yields on urban rental properties in major Chinese cities are relatively small compared to world peers. Yields on rentals in first-tier cities average less than 2%, according to Savills. As a result, many property investors in China look for asset appreciation instead of income through long term management, the South China Morning Post reports. The China Securities Regulatory Commission (CSRC) is drafting rules for China’s first reit that will be sold to retail investors.

Picture from a previous Party Congress, which is held every five years

Beijing is likely to increase its intervention in China’s economy after the 19th Communist Party Congress – which opens on October 18 – hampering any effort by U.S. President Donald Trump to wring substantial trade and investment concessions from China during his visit to the country in November, analysts say.

Scott Kennedy, a China expert at the Washington-based Center for Security and International Studies, told the South China Morning Post that rather than overall market liberalization, the Party Congress “is likely to be followed by even greater government and party intervention in industries and markets”. Beijing would make “modest, largely symbolic concessions” on some areas of market liberalization ahead of Trump’s visit, Kennedy said. But “China Incorporated is likely to get more support and made more powerful, not dismantled. Interventionism works and China has paid little diplomatic or economic price for it. So why not continue?,” he said.

Markus Rodlauer, Deputy Director of the International Monetary Fund’s Asia and the Pacific Department, told an Asia Society Policy Institute think tank event in Washington that he expected no overall economic policy changes to come out of China’s Party Congress, owing to the ruling elite’s desire for stability as leaders are reshuffled. “The reasonable expectation is that things won’t change dramatically,” Rodlauer said. The congress might provide “some clues” to possible policy changes, but no specific economic policies could be set until the Economic Work Conference in December and the National People’s Congress (NPC) session next March, the IMF official said.

Washington China-watchers have speculated about the extent to which China’s ruling elite will proceed with economic reform. Four years ago, at a Central Committee session of the 18th Party Congress, the leadership pledged to let markets play a “decisive” role in the economy and unveiled a comprehensive reform agenda towards achieving “decisive results” by 2020, but the outcome so far has disappointed U.S. observers.

“We have not seen the kind of overall economic reforms we are seeking,” said Erin Ennis, Vice President of the U.S.-China Business Council. “China is falling short of reforms for the benefits of foreign companies,” she told the Asia Society Policy Institute event. With a huge surplus on the government’s balance sheet, sufficient foreign reserves and liquidity in its banks, China still has “a very strong system even if they have problems,” Rodlauer said.

The IMF this week raised its 2017 and 2018 economic growth forecasts for China but warned that the nation’s long-term growing debt load raised the risks of a “sharp growth slowdown”. The IMF urged China to “de-emphasize near-term growth targets and focus on reforms that would enhance the sustainability of growth”, the South China Morning Post reports.

China’s producer prices rose 6.9% in September from a year earlier, beating market expectations of a rise of 6.3%, the same pace as in the previous month. China’s consumer price index (CPI) rose 1.6% in September on-year, in line with forecasts. “China’s economic growth has slowed over the past few years, but economic growth has rebounded this year, with GDP reaching 6.9% in the first half, and may achieve 7% in the second half,” People’s Bank of China Governor Zhou Xiaochuan told the G30 International Banking Seminar in Washington on October 15.

Profound, fundamental changes were made over the last five years indicating the nation’s development stands at a “new historical starting point,” according to the communique of the four-day Seventh Plenary Session of the 18th Central Committee of the Communist Party of China (CPC), published on October 13. The plenary meeting made final preparations for the 19th National Communist Party Congress.

Evergrande Group Chairman Xu Jiayin (No 1, left) and Alibaba Chief Executive Jack Ma (No 3, right)

A group of 2,130 Chinese individuals now have a combined fortune equivalent to the economy of the UK, according to the Hurun Report’s 2017 Rich List. At least 74 individuals joined the group with fortunes of at least USD300 million in this year’s list, adding to the 2,056 who made last year’s list, and bringing their combined assets to USD2.6 trillion. Xu Jiayin, Chairman of real estate developer Evergrande Group, has emerged as China’s richest man with assets worth USD43 billion. Last year’s leader, Wang Jianlin, dropped to fifth after declines in the share price of his embattled Wanda Group saw his family’s net worth slump 28% to USD23 billion.

Pony Ma, Founder and Chief Executive of Tencent took the No 2 spot on the rich list with a net worth of USD37 billion, overtaking Alibaba Chief Executive Jack Ma at USD30 billion, who ranked third. Fourth on the list, and also China’s richest woman, Yang Huiyan, Vice Chairman and the largest shareholder of real estate developer Country Garden, saw her wealth triple to USD24 billion. Aside from real estate, technology names continued to dominate the wealth rankings with Baidu’s Robin Li, and NetEase’s Ding Lei both making the top 10.

“Overall, the Hurun Rich List has grown faster than any year since 2007, with the possible exception of 2015,” said Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher. “China’s entrepreneurs have come a long way. Back in 1999, when I put out the first list, I managed to rank 50 people. Today we have almost that number just from Alibaba,” said Hoogewerf. Of the 2,130 individuals with assets above USD300 million, 43 came from Alibaba and its affiliate Ant Financial, the South China Morning Post reports.

Alibaba briefly surpassed its U.S. counterpart Amazon as the world’s biggest e-commerce company as it reached a market capitalization of USD472.1 billion, while Amazon’s market value dropped to USD471.9 billion. As one of the top performers on the New York Stock Exchange, Alibaba’s stock has gained over 100% since January, while Amazon rose nearly 30%. Alibaba’s cloud computing business is also on track to surpassing Amazon Web Service (AWS) to become the world’s top provider of cloud services.

Dai Wei, 26, founder and CEO of bike sharing service provider Ofo, appears on the list for the first time with personal wealth of CNY3.5 billion. He is the youngest self-made entrepreneur in the 19-year history of Hurun Rich List. Li Bin, 43, who invested CNY1.5 million in Mobike, Ofo’s chief rival, in 2015, saw his wealth rise by 235% in the past 12 months to CNY6.7 billion.

Hoogewerf predicts those linked to companies specializing in artificial intelligence, driverless cars and biotech will be the next wave of additions.

China is set to be the global leader in digital payments by 2020, overtaking the U.S. in a market predicted to grow by double-digit rates over the next few years, according to the “World Payments Report 2017” by French technology consulting firm Capgemini and banking group BNP Paribas. The study predicts that the number of global non-cash transactions will increase at a compound annual growth rate of 10.9% until 2020, when they will reach USD726 billion. Developing economies as a whole will grow at 19.6% a year, with emerging Asia, led by China and India, set to record the highest growth worldwide – 30.9% – due to sustained digital innovation and adoption of digital payments.

“By 2020, it is highly likely that emerging economies will be the powerhouses of global non-cash transaction volumes growth, with China most likely challenging the U.S. as the leading market,” the report said. China alone will see growth of 36% over the next five years, it added. The study comes shortly after a United Nations report that predicted online, mobile, and digital currency payment systems would overtake credit and debit cards as the most popular ways to pay for e-commerce worldwide by 2019.

China is currently in third position in terms of the total non-cash transaction volumes. Its growth would be driven by multiple initiatives designed to create a cashless economy. “Chinese shoppers are more willing to store their payment information on their smartphones and are also willing to experiment with alternative payment methods, suggesting higher growth rates of mobile payments in the near future,” the report said. Chinese financial technology firms have already begun to export their services. Ant Financial, an Alibaba affiliate, has been trying to buy U.S.-based MoneyGram International. It has filed for clearance from the Committee on Foreign Investment in the U.S. (CFIUS).

Tencent, Alibaba’s rival in China, has also made a push into India’s e-commerce and online payment industry. It led a USD175 million funding of Indian messaging app Hike last year, along with Taiwanese tech firm Foxconn, and partnered with Microsoft and eBay earlier this year to invest USD1.4 billion in Indian online retailer Flipkart.

China’s mobile payment market had reached CNY23 trillion by the end of the second quarter, up 22.5% from the previous quarter, according to Analysys International. “The development of non-cash payments and the decrease in the use of cash are an irreversible trend,” Wang Xin and Guo Dongsheng of the People’s Bank of China (PBOC) said, as reported by the South China Morning Post.

China must press on with a “trinity” of reforms to fully realize an open economy, Zhou Xiaochuan, Governor of the People’s Bank of China (PBOC) for the last decade-and-a-half, told financial magazine Caijing in what could be one of his last major interviews in the job. He said China must embrace free trade and investment, let the market decide the yuan’s value, and scrap capital account controls, adding that the three elements were interlinked and could not be separated. “It’s very clear that they are conditional on each other and none of the three can be spared,” he was quoted as saying in the interview.

Zhou has designed and promoted a series of economic liberalizations over the last 15 years, including freeing up interest rates at home and giving the yuan a nominal international reserve currency status abroad. Zhou has now reached the unofficial retirement age for Chinese officials and could step down when the Communist Party convenes its five-yearly National Congress in Beijing this week.

Reflecting on China’s opening up since the early 1980s, Zhou said China’s position in the global economy was the result of a combination of the three liberalizations. “No country can create an open economy with heavy foreign exchange controls, and an exchange rate set under capital account controls won’t be a true market equilibrium rate,” he said.

Zhou’s advocacy of economic liberalization comes amid concerns at home about the risks of a freer exchange rate and flow of capital in the aftermath of a stock market rout and rapid capital outflows two years ago. As a result of those concerns, the central government has imposed capital account controls to stem outflows and intervened in the yuan exchange rate through a “countercyclical” factor. But Zhou said China should not wait for “conditions” to be ripe to free up the exchange rate system, nor should China drag its feet for fear of mistiming other reforms, the South China Morning Post reports.

China’s foreign exchange reserves hit an 11-month high of USD3.1 trillion at the end of September – rising for an eighth straight month – in a fresh sign of economic stability. The purchasing managers’ index (PMI) rose to a five-year high last month, while retailers saw a double-digit increase in sales during the “Golden Week” holiday. But business activity in China’s services sector grew at its slowest pace in 21 months in September as the Caixin/Markit services purchasing managers’ index (PMI) fell to 50.6 in September.

Some economists now expect Beijing may soon relax controls on outbound payments and individual foreign currency purchases. Caixin’s composite manufacturing and services PMI fell to 51.4 in September from 52.4 in August and was at the lowest level since June.