Wednesday , July 15 2020
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Karen Yeung

Articles by Karen Yeung

China’s financial market reform stokes rally in yuan to 4-month high

6 days ago

[unable to retrieve full-text content]The yuan’s exchange rate strengthened above the psychologically important level of 7 per US dollar on Thursday, as optimism over new policies liberalising China’s financial markets helped attract foreign capital.The benchmark Shanghai Stock Exchange has risen more than 9 per cent so far this week, putting it on a course for its best weekly performance in five years and helping drive the appreciation of the yuan.Analysts said the rally in stocks, reflecting funds flowing into China, was boosted…

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Severe backlog in Europe-bound trains at Chinese border, as coronavirus increases rail freight volume

9 days ago

[unable to retrieve full-text content]A Chinese rail freight operator has cut cargo services to central Europe amid a backlog of trains waiting at the Chinese border to leave the country, the 21st Century Business Herald reported on Saturday.Chengdu International Railway Service said it cut the number of its trains leaving Alashan in Xinjiang for central Europe to two from six between June 27 and 30, with the timetable for July to be adjusted depending on rail traffic conditions.The company said that its decision followed an…

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China province orders new checks on big cash transactions after bank runs

10 days ago

[unable to retrieve full-text content]China has launched a pilot programme in the northern province of Hebei requiring the public to apply for approval if they plan to make large cash deposits or withdrawals at commercial banks.

The regulation comes after a series of bank runs in the past year at debt-laden small lenders and as an unprecedented pandemic-related economic contraction starts to take a toll.

From July 1, residents in the province will need to provide information about the source of deposits or the purpose of…

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Could the China-US conflict evolve into two competing spheres of economic influence?

29 days ago

[unable to retrieve full-text content]The increasingly contentious relationship between China and the United States is putting pressure on countries to choose sides, with the Covid-19 pandemic accelerating the process of nations stepping away from each other rather than tackling the crisis together.If current trends continue in the long run, there could be a reordering of the global economy into two major competing spheres of influence, one centred on the US and the other on China, analysts said.Beijing and Washington’s already…

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China lets yuan drop to five-month low on US tensions, uncertain global economic outlook

June 9, 2020

[unable to retrieve full-text content]China is tolerating a gradual weakening of the yuan’s value against a basket of major currencies because of a worsening political confrontation with the United States and a challenging economic outlook, analysts said.Beijing could also allow the yuan to weaken against the US dollar if the Trump administration imposes severe sanctions on China for moving ahead with a new security law in Hong Kong.The yuan fell to 7.1778 against the US dollar at the end of May, near the rate it was trading at in…

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Could US sanctions over Hong Kong national security law worsen China’s US dollar shortage?

June 8, 2020

[unable to retrieve full-text content]US President Donald Trump’s recent threat to penalise China and Hong Kong for Beijing’s decision to impose a national security law on its special administrative region could mark the beginning of a process to cut off access to US dollars, analysts said.While the composition of the measures from the United States remains unclear, most analysts do not expect the Trump administration to impose extreme sanctions against Chinese financial institutions which would cut them off outright from the US…

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China’s manufacturing recovery stuttered in May, but PMI positive for third month in a row

May 31, 2020

[unable to retrieve full-text content]China’s factory activity fell back slightly in May, showing that while the recovery from coronavirus lockdown is continuing, challenges remain, according to new data released on Sunday.The National Bureau of Statistics (NBS)’s manufacturing purchasing managers’ index (PMI), a soft indicator of morale among the nation’s larger factories, stood at 50.6 in May, a slight drop from 50.8 in April.This was worse than the median forecast of a poll of analysts conducted by Reuters, which had expected a…

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Coronavirus: China, US consumers turn on each other’s goods as pandemic drives commercial nationalism

May 19, 2020

[unable to retrieve full-text content]The coronavirus pandemic is fuelling mistrust among consumers in China and the United States about each country’s products, as the momentum for a decoupling between the two world’s largest economies intensifies.A recent survey by Deutsche Bank’s big data platform dbDIG showed 41 per cent of Americans would not buy a “Made in China” product again and 35 per cent of Chinese would avoid buying products “Made in USA”.Even though most consumers were not ready to completely shun each other’s goods,…

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Chinese oil firm MIE defaults on US$248 million bond after value of its assets fall sharply

May 17, 2020

[unable to retrieve full-text content]The crash in international crude prices has not only burnt small Chinese investors who bought wealth management products from one of China’s largest banks but also a listed oil and gas firm that announced last week that it would default on a US$248 million bond.MIE Holdings, controlled by tycoon Zhang Ruilin, failed to make a US$17 million interest payment on its bonds which was initially due on April 12, it said in a statement to the Hong Kong stock exchange. It was still unable to make the…

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What is China’s cryptocurrency alternative sovereign digital currency and why is it not like bitcoin?

May 13, 2020

[unable to retrieve full-text content]What is China’s sovereign digital currency?China’s version of a sovereign digital currency, the so-called Digital Currency Electronic Payment (DCEP), will be used to simulate everyday banking activities including payments, deposits and withdrawals from a digital wallet.Once launched, consumers would download an electronic wallet application authorised by the People’s Bank of China (PBOC), which they would then link to a bank card to start to pay with or receive digital yuan using a mobile phone…

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Coronavirus, growing China-Southeast Asia trade ties could drive offshore use of yuan: FSDC economist

May 13, 2020

[unable to retrieve full-text content]The coronavirus pandemic and US-China trade tensions are pushing China towards increased regional coordination in trade that may become a catalyst for yuan internationalisation, according to professor Ba Shusong, Chief China Economist of Hong Kong Exchanges and Clearing.“Compared to previous years, we see something has changed,” Ba said on Tuesday at an online press conference organised by Hong Kong’s Financial Services Development Council (FSDC).“While US-China trade has declined, this year is…

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Coronavirus: China could cut US debt holdings in response to White House Covid-19 compensation threats, analysts say

May 6, 2020

[unable to retrieve full-text content]China may move to reduce its vast holdings of US Treasury securities in the coming months in response to a resurgence in trade tensions and a war of words between the world’s two largest economies over the origins and handling of the coronavirus outbreak, analysts said.US news reports indicated that White House officials have debated several measures to offset the cost of the coronavirus outbreak, including cancelling some or all of the nearly US$1.1 trillion debt that the United States…

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Coronavirus: as fear factor continues, Chinese consumers seek spending on family, emotional connections

May 3, 2020

[unable to retrieve full-text content]Since the start of the Covid-19 outbreak in China, Emma Wang has been setting aside the money she would normally have spent on going out and travelling but was unable to because of social distancing regulations.As the authorities gradually lift the containment measures across most of the country, Wang does not plan on keeping her spending subdued, but rather to spend differently. Chinese households have emerged from a lockdown into a domestic economic recession, rising unemployment and stagnant…

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China’s digital currency takes shape as trials begin with travel subsidies and Communist Party fees

April 19, 2020

[unable to retrieve full-text content]Trial programmes for China’s sovereign digital currency began last week as Libra, a cryptocurrency backed by Facebook, scaled back its ambitions to become a global currency.The first look at the planned digital currency emerged on Wednesday when a screen shot of a test version developed by the Agricultural Bank of China was leaked.The following day the National Business Daily reported that the Xiangcheng district of Suzhou was expected to put the currency to use in May by paying half the travel…

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Coronavirus: China refuses to be beholden to US dollar even as pandemic creates shortage

April 17, 2020

[unable to retrieve full-text content]China is reluctant to project an image to the international community that it needs the United States to provide it with easier access to US dollars, even though the coronavirus pandemic has created a shortage of the currency needed by non-American companies to pay their bills, analysts said.The US, in turn, is in no hurry to help China solve its economic problems, given the escalating rivalry between the world’s two largest economies.The result is that if a US dollar shortage in the global…

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Coronavirus: China tries to bolster confidence in banknotes as fears of contamination mount

April 14, 2020

[unable to retrieve full-text content]The coronavirus outbreak has further discouraged cash use in China’s increasingly cashless society over fears it can be transmitted by banknotes and coins, discomforting the country’s only money issuer, the People’s Bank of China.China’s central bank has been increasingly vocal in assuring the public that banknotes are safe from Covid-19, and that the nation’s banking system has taken sufficient precautionary measures to prevent the spread of the disease.In one extreme case, a Chinese citizen…

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Coronavirus: is China re-pegging the yuan to the US dollar to avert a financial crisis?

April 9, 2020

[unable to retrieve full-text content]China’s central bank may be re-pegging the yuan’s exchange rate against the US dollar to avert the threat of a financial crisis and create a sense of stability amid the huge economic and financial uncertainties resulting from the coronavirus pandemic, according to analysts.While the central bank has never publicly admitted that it would peg the yuan to the US dollar, in the current economic and financial environment, Chen Yulu, a deputy governor at the PBOC, said late last month that the yuan…

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Coronavirus: IMF, WHO say no trade-off between saving lives and livelihoods

April 7, 2020

[unable to retrieve full-text content]The International Monetary Fund and the World Health Organisation have urged political leaders, especially in emerging markets and developing economies, to prioritise public health expenditure as saving lives and protecting the economy go “hand in hand”.“At face value there is a trade-off to make: either save lives or save livelihoods. This is a false dilemma – getting the virus under control is, if anything, a prerequisite to saving livelihoods,” International Monetary Fund (IMF) managing…

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Coronavirus: China’s state pension fund under increasing pressure after fee cuts to help struggling businesses

April 6, 2020

[unable to retrieve full-text content]China’s short-term goal of pulling its economy out of the trouble created by the coronavirus pandemic is in danger of exacerbating the existing pressure on its national pension system already strained by an ageing population.Beijing announced in February that businesses could reduce or even stop contributions to provincial pension funds amid the outbreak in an effort to help them weather the current economic storm.This is part of a concentrated effort by governments at all levels with China’s…

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Coronavirus: Asian multilateral bank lends US$355m to Chinese public health projects

April 6, 2020

[unable to retrieve full-text content]The Asian Infrastructure Investment Bank (AIIB) has extended US$355 million in emergency financing to the Chinese cities of Beijing and Chongqing to upgrade their public health response capacities to help fight the current Covid-19 pandemic as well as future health crises.The AIIB said its funding would cover money spent by the two cities when the crisis was most acute in China.The funds will help improve the capacity of the centres for disease control and prevention in both cities, buy…

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World at risk of second Great Depression due to coronavirus, says Chinese central bank

April 5, 2020

[unable to retrieve full-text content]China’s central bank has warned the international community to be alert to the risk of a “Great Depression” in the wake of the Covid-19 outbreak, although it said the chances of this occurring was low.“The possibility of a ‘Great Depression’ cannot be ruled out if the epidemic continues to run out of control, and the deterioration of the real economy is compounded by an eruption of financial risks,” Zhu Jun, director of the international department of the People’s Bank of China, was quoted by…

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Coronavirus: China to open US$1.5 trillion distressed debt market as it braces for bad loan blowout

March 30, 2020

[unable to retrieve full-text content]Ever since the coronavirus outbreak began eating away at his business, Zhu Bo has been making plans about how to keep his small financial information and social media company afloat.He stopped paying rent for the office space his firm occupies in one in one of Shanghai’s oldest commercial districts about two months ago, and, as losses began piling up, he halted projects for the foreseeable future and asked staff to take a month’s unpaid leave.Now, with news that prominent customers plan to…

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China eases US dollar debt rules, but dollar squeeze presents new challenge for firms facing cash crunch

March 26, 2020

[unable to retrieve full-text content]China’s efforts to free up US dollar borrowing for private firms and small and medium-sized enterprises (SMEs) hit by the coronavirus pandemic are being hampered by a squeeze in the dollar market and concerns about the credit quality of Chinese businesses.The limit for cross-border financing has been raised from 2 to 2.5 times the value of net assets based on the risk-weighted ratios for these firms in China, Xuan Changneng, deputy administrator of the State Administration of Foreign Exchange …

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Coronavirus: US-China decoupling may diminish Beijing’s role in G20 economic response

March 20, 2020

[unable to retrieve full-text content]US-China decoupling and rising nationalism around the globe may prevent Beijing from taking a leading role in the international economic response to the coronavirus crisis at next week’s G20 summit, analysts said.Coordination among major powers, especially between the United States and China, has been fading since US President Donald Trump initiated his “American first” policy and the subsequent trade war with China two years ago, said Alex He Xingqiang, a research fellow at the Centre for…

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Coronavirus: global recession fears triggered by failure to contain Covid-19 spread

March 17, 2020

[unable to retrieve full-text content]A failure by governments in major western countries to contain the coronavirus outbreak is fuelling the perception in financial markets worldwide that the global economy is headed for a deep recession because of the severe, and in many cases, permanent damage being done to businesses.Financial markets had initially expected the economic trajectory of the current outbreak to mirror that of the severe acute respiratory syndrome (Sars) epidemic in 2002-2003, which sharply declined before enjoying…

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Coronavirus: China consumers, small firms shy away from borrowing even as Beijing readies more support

March 12, 2020

[unable to retrieve full-text content]Surprisingly low new lending by Chinese banks in February suggested that fears about the economic impact of the coronavirus on an already weak economy had caused households and small and microenterprises to avoid new borrowing despite the strong efforts by the central bank.China’s cabinet, the State Council, on Wednesday called for a further reduction in the reserve requirement ratio (RRR) – the amount of money banks are required to set aside at the central bank – to free up cash to lend to…

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Coronavirus: how epidemic could hurt China’s US dollar debt payments

March 11, 2020

[unable to retrieve full-text content]The recent plunge of global financial markets in response to the rapid spread of the coronavirus has heaped pressure on the US dollar bond market, making it difficult for non-American companies – including those in China – to raise funds to rollover their US dollar debt repayments, analysts said.The inability of Chinese companies to get their hands on new US dollar loans could add to China’s vulnerability if the yuan’s exchange rate comes under pressure due to a deterioration of the country’s…

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Coronavirus: China could become new investment safe haven as stocks, yuan rally while global markets suffer

March 5, 2020

[unable to retrieve full-text content]An ongoing Chinese stock market rally and a yuan exchange rate rebound over the last week have fanned speculation that, as the coronavirus appears to be coming under control, China could become a new safe-haven for investors with other major economies now the ones reeling from the outbreak.China’s equity benchmark, the Shanghai Composite Index, has risen around 10 per cent in the last month despite new data that showed the manufacturing and services sectors activity contracted sharply in…

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Coronavirus: first Chinese province that declared top-level emergency downgrades alert status

March 2, 2020

[unable to retrieve full-text content]China’s key export and manufacturing base of Zhejiang province, which was the first to declare the highest level of emergency in response to the coronavirus outbreak, downgraded its alert status on Monday.The coastal province of 57 million residents declared a Grade I emergency on January 23, a day before the epicentre of Hubei province, but is the latest in a number of provinces to ease restrictions in a bid to ramp up economic activities.According to the Zhejiang Health Commission, there have…

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Coronavirus: China offers under pressure small, medium-sized businesses lifeline by delaying loan payments

March 2, 2020

[unable to retrieve full-text content]China will offer temporary relief to small and medium-sized businesses under pressure from the coronavirus outbreak by allowing firms to delay loan or interest payments until the end of June, with many in danger of bankruptcy.Banks across China have been told to grant the extensions to eligible small and medium-sized enterprises (SMEs), as well as micro and self-employed businesses, who have payments or interest due between January 25 and June 30.The move, announced on Sunday by the People’s…

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