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Karen Yeung

Articles by Karen Yeung

Coronavirus highlights ‘urgent’ need for China’s digital currency, says state-owned bank

6 days ago

[unable to retrieve full-text content]The economic challenges caused by the coronavirus pandemic have increased the urgency for Chinese companies to adopt the use of a digital currency, Guo Weimin, chief scientist at the Bank of China, said on Tuesday.While there is no official timetable for the launch of China’s sovereign digital currency, the People’s Bank of China is reportedly aiming to release the e-yuan, also known as the Digital Currency Electronic Payment, before the start of the Winter Olympics – an event expected to take…

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China’s coronavirus success shows it has caught up with West in some areas of innovation, Nobel laureate Paul Romer says

6 days ago

[unable to retrieve full-text content]China’s success in combating the coronavirus is a sign that it has already caught up with the United States and other Western nations in some areas of innovation, including public health policy, according to Paul Romer, co-recipient of the 2018 Nobel Prize in economics.Romer warned that the West’s response to the coronavirus pandemic was evidence of a complacent mindset on innovation, particularly in public policy.“In the response to the pandemic, part of what we saw was more effective…

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China urged to tap RCEP trade deal for future digital payments system as US sanctions loom

10 days ago

[unable to retrieve full-text content]China should consider using digital technology to develop an alternative to the SWIFT financial payments system as a way of insulating itself from being cut off from the US-dominated financial messaging service, according to Liu Xiaochun, deputy dean of the Shanghai New Finance Research Institute.The SWIFT system – the world’s largest electronic payment messaging system – and the US-based Clearing House Interbank Payments System (CHIPS) have afforded Washington broad powers to impose economic…

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Is US coronavirus spending and ballooning debt at risk of stoking global asset bubbles?

12 days ago

[unable to retrieve full-text content]Another US economic stimulus package, coupled with the Federal Reserve’s willingness to keep its monetary tap on, could see trillions of dollars pumped into the global financial system and lead to a series of asset price bubbles, analysts have warned.On Tuesday, Asian stocks and currencies were holding near highs as capital continued to flow into the region after US president-elect Joe Biden said last week he would outline new pandemic relief measures of at least a trillion dollars on top of…

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US law targeting Chinese firms on American exchanges could trigger delistings and hurt investors, finance professor says

December 21, 2020

[unable to retrieve full-text content]Legislation that could see Chinese companies booted from US stock exchanges if they do not comply with auditing standards could lead to a wave of delistings and ultimately hurt American shareholders and the financial industry, a Cornell University finance professor has said.President Donald Trump on Friday signed the Holding Foreign Companies Accountable Act, applying more pressure on Beijing as he prepares to leave office next month. The Trump administration has already targeted a range of…

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US keeps China on currency manipulator watch list as trade surplus grows

December 17, 2020

[unable to retrieve full-text content]The US Department of the Treasury has kept China on its watch list for foreign-exchange manipulation in its final report before the Trump administration leaves office.Inclusion on the list is a step short of being named a currency manipulator, a designation the US rescinded as part of the phase one trade agreement signed in January. China promised not to manipulate the yuan’s exchange rate for competitive advantage as part of the deal.While the report covers the year to June 2020, the sharp…

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Will the US dollar’s slide erode its status as the world’s currency of choice?

December 15, 2020

[unable to retrieve full-text content]The US dollar’s sharp decline this year has raised questions about it losing its status as the pre-eminent reserve currency and dominant force in the global payments.The US dollar has weakened by 13 per cent against a basket of major currencies since its peak in March, fuelled by worries about expansionary US fiscal and monetary policies and a ballooning current account deficit in response to the Covid-19 pandemic.While an imminent collapse is very unlikely, there is risk of a prolonged…

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‘Star’ Chinese banker jailed for life for stealing US$400 million from clients in Ponzi scheme

December 13, 2020

[unable to retrieve full-text content]A “star” bank manager from Beijing has been jailed for life for stealing the equivalent of US$400 million from clients and using the money to finance her lavish lifestyle.Zhang Ying, the former head of the Hangtianqiao branch of China Minsheng Bank in Beijing, was found guilty of using fake wealth management contracts to cheat customers out of 2.7 billion yuan (US$412 million) in a Ponzi scheme between 2013 and 2017, according to a court ruling published last week.Zhang was convicted at the…

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China’s digital currency no threat to global monetary systems, former central bank chief says

December 13, 2020

[unable to retrieve full-text content]China’s new sovereign digital currency could be a boon for cross-border trade while also supporting Beijing’s efforts to promote the yuan as an international currency, the former head of the country’s central bank said on Sunday.Speaking at the Shanghai Financial Forum, Zhou Xiaochuan, who stepped down as governor of the People’s Bank of China in 2018, said that one of the major benefits of using a digital system is that it allowed both payments and currency conversions to happen in real time…

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China’s forex reserves growth in November exceeds expectations as US dollar weakens

December 8, 2020

[unable to retrieve full-text content]China’s foreign exchange reserves, the world’s largest war chest, rose more than expected in November, likely boosted by a weaker US dollar and gains from investments in global equities.The reserves value increased by about US$50 billion last month, to US$3.1785 trillion, reaching the highest level since August 2016, official data showed on Monday. The figure exceeded the US$3.150 trillion forecast by a Reuters poll of analysts. Meanwhile, the value of gold assets declined to US$110.4 billion,…

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China’s closer ties with Hong Kong’s bond market to create ‘enormous opportunities’ for city

December 4, 2020

[unable to retrieve full-text content]Discussions have begun to allow Chinese investors to trade bonds in Hong Kong, a move that will “generate enormous opportunities” for the city’s financial services industry and has the potential to strengthen its status as an international financial centre.The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBOC) will form a working group to study the framework for the so-called southbound leg of the current Bond Connect scheme, a HKMA spokesperson confirmed on Wednesday…

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China’s trade pivot from US could be a boon for South Korea, Japan and Taiwan

December 1, 2020

[unable to retrieve full-text content]China’s effort to cut its reliance on US imports – especially for advanced technologies – by shifting demand to other Asia nations is likely to make big winners out of South Korea, Japan and Taiwan, analysts said.China remains vulnerable to bottlenecks in cutting-edge computer chips and key components embedded with American intellectual property, something made apparent by US sanctions on Huawei Technologies Co. imposed by the Trump administration.Given their proximity, Asian hi-tech exporters…

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China’s yuan rises for sixth straight month, the longest streak since 2014, before Biden takes office

November 30, 2020

[unable to retrieve full-text content]The yuan’s exchange rate rose against the US dollar in November for the sixth straight month – its longest appreciation streak in six years, reflecting Beijing’s determination to boost the yuan’s international demand while also bracing for the incoming administration of US president-elect Joe Biden.The yuan is set for a gain of 1.6 per cent against the US dollar in November. The extended appreciation stretch is the yuan’s longest since the six-month period from May to October 2014. So far this…

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US dollar-yuan exchange rate: what is it and why is it important?

November 25, 2020

[unable to retrieve full-text content]What is the yuan’s exchange rate with the US dollar?The exchange rate between the Chinese yuan (CNY) and the US dollar (USD), as with other currency pairs, is the value of one currency against the other. Typically, the yuan’s exchange rate to the US dollar is quoted as USD/CNY to represent how many yuan it takes to buy one US dollar.The US dollar is freely convertible into the currencies of all developed economies without restrictions and its trade-weighted value – expressed by the dollar index…

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US Treasury Secretary pick Yellen faces huge challenge to reconcile China trade policy, support American economy

November 24, 2020

[unable to retrieve full-text content]Janet Yellen will step into a difficult role as US Treasury Secretary, facing the immediate need to support a domestic economy at risk of slowing significantly due to the latest surge in the coronavirus pandemic, while beginning the delicate task of reversing some Trump-era trade measures imposed on China and other countries, analysts said.President-elect Joe Biden’s reported choice of Yellen indicates a more orthodox, predictable US government approach towards China in the realms of economic…

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Coronavirus: Chinese President Xi Jinping proposes global QR code system to help free up travel

November 22, 2020

[unable to retrieve full-text content]Chinese President Xi Jinping has proposed using a global QR code system to enable cross-border movement of people amid the coronavirus pandemic.Addressing the virtual G20 summit on Saturday night, Xi said a global mechanism involving mutual recognition of health certificates, including nucleic acid test results in the form of QR codes, could be used to enable cross-border travel.“We hope more countries will join this mechanism,” Xi said, according to a transcript published by state news agency…

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China dumps US Treasuries for fifth consecutive month, sending holdings to lowest level since February 2017

November 19, 2020

[unable to retrieve full-text content]China’s holdings of US government debt have fallen to their lowest level since February 2017, following a fifth successive month of net US Treasury sales in September, according to a US government report.China sold US$6.22 billion of US Treasury securities in September, lowering its total holdings to US$1.062 trillion, according to the latest monthly Treasury International Capital (TIC) report from the US Department of the Treasury.Analysts cautioned that the reduction in China’s US Treasury…

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China’s R&D, tech investment inflows show deepening global economic integration despite US decoupling push

November 17, 2020

[unable to retrieve full-text content]China’s economy deepened its integration with the rest of the world in October, with foreign investment increasing amid strong spending in R&D and the tech sector, even as the Trump administration ramped up efforts to decouple the country from the United States.The pattern of investment mirrors ongoing changes in the world’s second biggest economy, notably a push by Beijing to accelerate innovation driven growth and gain technological independence in the face of pressure from Washington.China’s…

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China’s new trade strategy seeks to build on export boom amid fresh coronavirus lockdowns in the West

November 12, 2020

[unable to retrieve full-text content]Building on China’s success in getting its economy back up and running after the coronavirus pandemic, the government will push ahead with plans to create more secure trade links with other countries in response to the United States’ ongoing attempts to economically decouple the world’s two largest economies.The new trade strategy, released this week by the State Council, the government cabinet, does not mention the United States directly, but its strong focus on expediting new trade agreements…

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China’s yuan vs renminbi: what’s the difference?

November 12, 2020

[unable to retrieve full-text content]When did China first start using the renminbi?The history of Chinese money spans more than 3,000 years, but the official renminbi was first issued during the Chinese civil war in December 1948, after the establishment of the People’s Bank of China (PBOC) in Shijiazhuang city, Hebei province.In 1949, the Communist Party defeated the Kuomintang and Mao Zedong proclaimed the People’s Republic of China, making the renminbi the sole legal currency across the country.What’s the difference between the…

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How Joe Biden’s victory could entice Wall Street to increase investments in Chinese markets

November 10, 2020

[unable to retrieve full-text content]Joe Biden’s election victory could result in a more unified front by developed countries pushing China to further open up its domestic market, which in turn could encourage American and global financial firms to increase their presence in Chinese markets, according to analysts.Biden’s stance on China is far from certain for now, but his administration – set to begin with his swearing-in as president of the United States on January 20 – is less likely to use tariffs as a negotiating tactic while…

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US-China relations: rivalry in early stage and will only get ‘fiercer’, Harvard professor Graham Allison says

November 4, 2020

[unable to retrieve full-text content]China’s rivalry with the United States has only just started, and is only likely to get fiercer down the road regardless of who occupies the White House, said Harvard professor and author Graham Allison on Wednesday.The world’s largest economies have been locked in a trade war for over two years, with relations between Beijing and Washington have been further soured over issues including Hong Kong, Xinjiang and the South China Sea.“There has been a rolling wake up in the US to the fact that…

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Ant IPO: how US-China trade tensions are driving foreign investment in world’s largest public offering

November 2, 2020

[unable to retrieve full-text content]Despite the looming threat of US financial sanctions against Chinese technology companies, Ant Group’s upcoming dual listing in Hong Kong and Shanghai has sent investors into a frenzy.Thought by analysts to be an environment of mounting antagonism that could curb the ability of Chinese companies to raise foreign capital, the pipeline of stock activity is actually accelerating.Alibaba, NetEase and are among the US-listed Chinese companies that have sought secondary listings in Hong Kong…

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Will China’s self-sufficiency drive raise the risk of a US conflict?

November 1, 2020

[unable to retrieve full-text content]China’s new five-year road map to steer the nation towards self-sufficiency and spur growth through domestic demand could lead to even bigger conflicts with the United States.That was the assessment of a number of observers after the Communist Party’s top policymaking body, the Central Committee, last week endorsed the country’s 14th five-year plan and a set of long-term development objectives for China by 2035.The plan and the objectives outlined a shift in priorities towards industrial and…

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China discards black box exchange rate factor as foreign investors pour money in

October 28, 2020

[unable to retrieve full-text content]China has taken another step to let the yuan’s exchange rate against the US dollar be more determined by market forces, reflecting policymakers’ confidence it will continue to appreciate as foreign investors pour money into mainland financial markets and the economy continues its strong recovery from the effects of the coronavirus pandemic, analysts said.The People’s Bank of China (PBOC), the country’s central bank, asked banks on Tuesday to remove the countercyclical factor (CCF) from the…

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China’s foreign exchange reserves have been remarkably stable. Puzzled economists wonder why

October 23, 2020

[unable to retrieve full-text content]China’s foreign exchange reserves have shown surprisingly little change in recent years despite volatile economic conditions and exchange rates among its major trading partners.China’s reserve assets held in foreign currencies, the world’s largest war chest, have been stuck between US$3.0 trillion and US$3.2 trillion since 2017 because the People’s Bank of China (PBOC) appears to have largely stopped using them in market intervention to manage the yuan’s value.“We will continue to refrain from…

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China’s US dollar debt market showing cracks from US sanctions and prospect of more

October 21, 2020

[unable to retrieve full-text content]As US-China tensions show no sign of abating, the threat of new Washington-imposed tariffs and sanctions on Chinese firms are starting to reveal cracks in China’s US dollar corporate bond market.Since the Trump administration started the trade war with China in 2018, the United States has imposed tariffs on US$550 billion worth of Chinese products, while China has countered with tariffs on US$185 billion worth of American goods.The Pentagon this year also designated 31 leading Chinese companies…

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China slows yuan’s rise on asset bubble concerns, signalling new battle against excessive appreciation

October 12, 2020

[unable to retrieve full-text content]A decision by China’s central bank at the weekend to curb a rally in the yuan’s exchange rate signals concern over a rush of hot money fuelling an asset bubble amid heightened price risks in the country’s rapidly growing property market, according to analysts.The move suggests the central bank was tweaking its policy stance on fears of excessive appreciation pressure on the yuan, following a sharp rise on Friday – the first working day following the “golden week” holiday – when it hit its…

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China not among major central banks in talks on global digital currency principles

October 9, 2020

[unable to retrieve full-text content]China was not included in recent talks among central bankers from developed nations on potential collaboration involving central bank digital currencies (CBDCs) that are technologically complementary and can coexist within a wider international payments ecosystem.A working group was formed by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, Sweden’s Riksbank, the Swiss National Bank and the US Federal Reserve, along with the Bank for International…

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Why did China’s forex reserves fall by US$22 billion in September?

October 7, 2020

[unable to retrieve full-text content]China’s foreign exchange (forex) reserves, by far the world’s largest, unexpectedly dropped by US$22 billion in September to US$3.1426 trillion, according to data released by the State Administration of Foreign Exchange (SAFE) on Wednesday.Why does China’s drop in forex reserves matter?The monthly change in China’s forex reserves is released on the seventh day of every month and is read as a measure of capital flows. Given China’s current account surplus, a drop in reserves could mean that…

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