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Karen Yeung



Articles by Karen Yeung

Australia, Malaysia Singapore join forces to test digital currencies ‘blueprint’ but US remains ‘sceptical’

23 days ago

[unable to retrieve full-text content]Central banks in Australia, Singapore, Malaysia and South Africa will join forces to test the use of multiple central bank digital currencies (CBDCs) on a shared platform for cross border payments and settlements.Led by the Bank for International Settlements (BIS) Innovation Hub in Singapore, Project Dunbar is aimed at allowing financial institutions to transact with each other in the digital currencies issued by participating central banks, cutting the time and cost of transactions, the BIS…

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Huaxia joins Chinese banks halting forex services amid currency volatility concerns, but move leaves customers anxious

23 days ago

[unable to retrieve full-text content]A tier-one state-owned lender that drew Beijing’s ire earlier this year for running afoul of rules and regulations has abruptly announced it will halt its foreign exchange trading business – the latest such curbing of services by major Chinese banks this year.Huaxia Bank attempted to downplay concerns and confusion that arose after it pulled its original announcement posted online on Monday and issued a revised statement on Tuesday.In its first statement, the Beijing-based bank said it would…

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China’s yuan internationalisation faces coronavirus, geopolitical threats despite record cross-border use

August 24, 2021

[unable to retrieve full-text content]Geopolitical tensions and the coronavirus are expected to challenge Beijing’s bid to further increase the global use of the yuan even after its share of China’s cross-border payments hit a record high last year.China’s cross-border settlements denominated in yuan accounted for 47.4 per cent of all of domestic and foreign currency transactions last year, 9.28 percentage points higher than 2019, according to a report on the yuan’s internationalisation by the China Banking Association.Cross-border…

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Couples in China can now have up to three children, but who is going to take care of them?

August 22, 2021

[unable to retrieve full-text content]China will now allow couples to have up to three children, marking a major shift from the strict policies of the past four decades, but a lack of childcare options may limit the number of people willing to take up this option.While China’s birth rates have been on a downward trend in recent years, they may hit the lowest level on record this year as families delay pregnancy plans due to concerns over access to medical support or the safety of Covid-19 vaccines, according to a recent analysis by…

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China’s 2015 yuan reform sent shock waves through financial markets, now it’s ‘learning its lesson’

August 12, 2021

[unable to retrieve full-text content]China’s central bank has shed some light on its latest foreign exchange policy six years on from a devaluation of the yuan that was meant to be a free-market reform but instead sent shock waves through global financial markets.

The People’s Bank of China (PBOC) has pledged to guide financial institutions to provide businesses with exchange rate risk management services based on the principals of “actual needs” for holding foreign currencies and balanced “neutral risk” to prevent sharp currency…

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China’s economic recovery normalising after coronavirus, but consumers still suffering from ‘psychological shock’

August 11, 2021

[unable to retrieve full-text content]This is the seventh part in a series of stories looking at China’s economic outlook in the second half of 2021 as it continues its recovery from a coronavirus-hit 2020.China’s economy is normalising after bouncing back from the worst of the coronavirus pandemic last year, but anxiety about new virus variants and accompanying economic disruption are dragging on overall consumption.While China’s retail sales were strong in the first half of the year, consumer confidence has not yet fully…

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Why China’s economic slowdown could spell bad news for Asian currencies

August 6, 2021

[unable to retrieve full-text content]China’s strong economic recovery is expected to fade in the months ahead, putting downward pressure on the yuan exchange rate and consequently creating headwinds for other Asian currencies, analysts said.China is a net importer of goods from many Southeast Asian countries such as Malaysia, Thailand, Vietnam, Singapore and Indonesia, so a slowdown in demand would have knock-on effects for their currencies.Generally the Chinese yuan acts as an important anchor in the regional foreign exchange…

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China’s economy downshifts to slower growth path as focus turns to social equality, national safety

August 3, 2021

[unable to retrieve full-text content]This is the first part in a series of stories looking at China’s economic outlook in the second half of 2021 as it continues its recovery from a coronavirus-hit 2020.As US-China relations continue to deteriorate, Beijing is making a major policy shift towards social and economic governance that looks to be setting up a long-term decline in the nation’s corporate productivity and economic growth, according to analysts.For starters, a number of restrictive factors – including demographic…

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China’s central bank keeps sights set on monopolies

July 31, 2021

[unable to retrieve full-text content]China’s central bank has pledged to oppose monopolies and unfair competition in the second half of the year as it continues its crackdown on tech giants and internet platform firms.In a statement on Saturday, the People’s Bank of China said it would “supervise and guide platform companies to make comprehensive rectifications in accordance with regulatory requirements”.“[The central bank] will cooperate with relevant departments to resolutely implement the decisions … of the Communist Party’s…

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New Covid-19 variants prompt IMF to slash China, emerging Asia economic growth outlook

July 27, 2021

[unable to retrieve full-text content]The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for China this year because of the patchy recovery from new coronavirus variants, as Beijing focuses on reducing debt and public investment.The Washington-based organisation trimmed China’s gross domestic product (GDP) growth estimate to 8.1 per cent, down from April’s projection of 8.4 per cent. But the country’s growth forecast for next year edged up 0.1 percentage points from April to 5.7 per cent.The IMF also…

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China’s surging yuan allows Beijing greater financial flexibility, creating capital markets ‘too big to ignore’

July 26, 2021

[unable to retrieve full-text content]A trade weighted index looking at the value of China’s yuan climbed to a five-year high last week, and analysts expect the currency to remain at elevated levels in the foreseeable future as the government allows greater flexibility and tries to remove distortions in the economy.A simulated CFETS RMB basket index, which measures the yuan’s value against a number of foreign currencies, climbed to 98.70 on Friday, marking its highest level since March 2016, according to the China Foreign Exchange…

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China’s e-yuan like ‘a double-edged sword’, and mishandling it carries considerable financial risks

July 18, 2021

[unable to retrieve full-text content]To mitigate “financial risks”, China needs to weigh the pros and cons of loosening its strict capital controls using a central bank digital currency, according to the director of digital finance at China’s prestigious Peking University.The so-called e-yuan is mainly intended to be used in the domestic retail sector, but a big question that is often discussed is whether it could be useful in internationalising the yuan, in addition to helping with China’s market liberalisation efforts and…

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Could Hong Kong’s status as a business hub be threatened under global minimum tax reform?

July 14, 2021

[unable to retrieve full-text content]Hong Kong’s low tax rate has been a major incentive for American businessman Nicholas Appel to live and work in the city for the past 25 years.But along with challenges like the city’s high cost of living, the prospect of higher taxes under a minimum global corporate tax rate is one more reason to wonder whether it is worth staying.“We really love Hong Kong but it’s not a sustainable place to live in if you don’t have income to support it,” Appel said. “If the profitability of a business as a…

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China welcomes bigger role for yuan in de-dollarised Russian sovereign wealth fund

July 10, 2021

[unable to retrieve full-text content]China has welcomed Russia’s efforts to give the yuan a bigger role in its sovereign wealth fund, saying it reflected Russia’s confidence in China’s economic development and the prospects for cooperation between the two countries.Chinese foreign ministry spokesman Wang Wenbin said on Friday that China would continue to deepen mutually beneficial cooperation with Russia, firmly support each other in international and regional affairs, and safeguard the common interests of the two countries.The…

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China ‘needs Hong Kong’ in race for global financial leadership, former stock exchange chief says

July 8, 2021

[unable to retrieve full-text content]China is well on its way to becoming the world’s first digitalised and cashless economy, allowing it to dictate global financial rules while also enabling Hong Kong to shoulder an important responsibility alongside, according to the former head of the city’s stock exchange operator.For several decades, China has regarded Hong Kong as playing an important role as an extension of the Western world, which is the leader in traditional financial banking.But as China still does not have the ability…

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As China’s foreign currency deposits pass US$1 trillion, banks face unwanted headache, yuan pressure

July 5, 2021

[unable to retrieve full-text content]China’s post-coronavirus export boom has created massive headaches for its commercial banks over how to effectively recycle the huge influx of foreign currencies resulting from overseas sales, and in turn how to generate investment returns, analysts said.China is also seeing rising capital inflows from other channels, such as foreign direct investment into China’s growing economy, as well as portfolio investment into mainland stocks and bonds.This demand for Chinese assets, in turn, continues…

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China digital currency: could Beijing’s advanced e-yuan replace smaller Asian currencies?

June 25, 2021

[unable to retrieve full-text content]Central banks around the world are developing sovereign digital currencies to improve international payments, but one concern that has emerged is that a foreign digital currency could displace a domestic one, especially in smaller Asian nations with less effective financial systems, analysts said.There is potential for a major central bank digital currency (CBDC) to make inroads into daily transactions, causing harmful spillover effects in the domestic financial market and challenging monetary…

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China shipping: Yantian port delays already worse than those caused by Suez Canal debacle in March

June 18, 2021

[unable to retrieve full-text content]The Port of Yantian, which is at the epicentre of China’s latest coronavirus-containment efforts, is creating massive headaches across the maritime shipping world and further complicating the process of reopening the global economy.Disruptions to the supply chain for some companies are said to already be worse than those caused by the six-day blockage of the Suez Canal in March, which made global headlines and spawned countless memes on social media.From June 1-15, a total of 298 container…

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Hong Kong’s e-dollar study in spotlight as city’s US dollar peg remains strong

June 16, 2021

[unable to retrieve full-text content]As the Hong Kong dollar continues to remain strong, attention is turning towards the potential for a digital version to be launched in the city.In line with a strategic plan to promote Hong Kong’s fintech development, the city’s de facto central bank said last week that it had set up a working group to study the feasibility of an e-Hong Kong dollar.“The [Hong Kong Monetary Authority] will come to an initial view on the prospect for an e-Hong Kong dollar in the next 12 months,” Siddharth Tiwari,…

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China’s yuan could become world’s ‘currency of choice’ by 2050 under dual circulation plan

June 11, 2021

[unable to retrieve full-text content]Amid rising anti-globalisation sentiment and as Western countries intensify their efforts to contain China, the country is entering a period of economic development that will create new infrastructure to enable the global use of the yuan, according to a former deputy governor of its central bank.As China’s economy integrates with the rest of the world, market entities will use the yuan for cross-border purposes, although under the so-called dual circulation plan, yuan globalisation is…

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China-Australia relations: how an underperforming Australian dollar could entice new trade partners

June 9, 2021

[unable to retrieve full-text content]With relations between Beijing and Canberra showing little sign of improving, Australia’s dollar has been underperforming in recent weeks, and this could work in the country’s favour when it comes to finding alternative markets that would help reduce reliance on its largest trading partner in the long-term.After surging by 10 per cent last year as advanced economies recovered and commodity prices surged, the Australian dollar touched a three-year high of 0.7976 to the US dollar in February. But…

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China’s digital currency trials accelerate, but will users of Alipay, WeChat Pay switch to the new e-yuan?

June 5, 2021

[unable to retrieve full-text content]From kitchen utensils to fresh vegetables, Shanghai resident Sun Xuhong shops online because there is a much better selection of imported brands than those found in bricks-and-mortar retailers.The range of choices, coupled with seamless connection to mobile payment apps like WeChat Pay and Alipay, is why she has little interest in partaking in China’s sovereign digital currency trials, which have so far been confined to a limited number of retailers and select e-commerce sites.“I opened an e…

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Hong Kong manufacturers struggle with ‘blackouts’, rising producer prices in mainland China

June 3, 2021

[unable to retrieve full-text content]As China pushes to maintain its central position in the global supply chain, Hong Kong funded-firms are being hit by new challenges on the mainland, including power shortages and skyrocketing production costs, according to an industry group.China’s domestic demand and exports continue to recover from the coronavirus pandemic, with factory orders at about 70 to 80 per cent of pre-pandemic levels, Allen Shi Lop-tak, president of the Chinese Manufacturers’ Association of Hong Kong, said on…

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US-China economic talks put spotlight on yuan exchange rate as currency continues to surge

June 3, 2021

[unable to retrieve full-text content]The rapid appreciation of the yuan against the US dollar recently is likely to draw increased scrutiny from the Biden administration of China’s opaque exchange rate mechanism, as high-level trade talks resume between the world’s two biggest economies, analysts say.China’s top trade negotiator Liu He held a virtual meeting with US Treasury Secretary Janet Yellen on Wednesday morning, just days after he had a conversation with US Trade Representative Katherine Tai that represented the first…

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China moves to slow yuan’s rise as concerns rise over hot money flows, asset bubbles

May 31, 2021

[unable to retrieve full-text content]China’s central bank said on Monday that it would raise the amount of money that financial institutions must set aside as reserves for their foreign exchange deposits, in the latest move to curb the yuan’s recent rapid appreciation.The increase in the reserve requirement to 7 per cent from 5 per cent will take effect on June 15 and is aimed at strengthening foreign exchange liquidity management for financial institutions, according to a statement by the People’s Bank of China (PBOC).The move by…

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China calls for global action to stop big flows of pandemic-fuelled hot money

May 30, 2021

[unable to retrieve full-text content]Chinese financial watchdogs have called for tougher international oversight to stop big flows of hot money across borders in the aftermath of the coronavirus pandemic.Addressing the International Finance Forum in Beijing over the weekend, regulators also vowed to have zero tolerance for market manipulators.Liang Tao, vice-chairman of the China Banking and Insurance Regulatory Commission, said that with the recovery of developed economies, market volatility and vulnerabilities had increased as…

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China calls for global action to stop big flows of pandemic-fuelled hot money

May 30, 2021

[unable to retrieve full-text content]Chinese financial watchdogs have called for tougher international oversight to stop big flows of hot money across borders in the aftermath of the coronavirus pandemic.Addressing the International Finance Forum in Beijing over the weekend, regulators also vowed to have zero tolerance for market manipulators.Liang Tao, vice-chairman of the China Banking and Insurance Regulatory Commission, said that with the recovery of developed economies, market volatility and vulnerabilities had increased as…

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China’s yuan rally fuels central bank debate on using currency appreciation to fight commodity price surge

May 26, 2021

[unable to retrieve full-text content]The rally in China’s yuan in the past month has fuelled a public debate among central bank officials on whether China should tolerate greater appreciation of the yuan to help combat surging commodity prices and imported inflation.After slipping against the US dollar for the previous four months, the yuan began to rebound in April. On Wednesday, it was changing hands at around 6.40 per dollar after briefly surpassing that level on Tuesday for the first time since June 2018. A lower US dollar…

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China’s yuan rally fuels central bank debate on using currency appreciation to fight commodity price surge

May 26, 2021

[unable to retrieve full-text content]The rally in China’s yuan in the past month has fuelled a public debate among central bank officials on whether China should tolerate greater appreciation of the yuan to help combat surging commodity prices and imported inflation.After slipping against the US dollar for the previous four months, the yuan began to rebound in April. On Wednesday, it was changing hands at around 6.40 per dollar after briefly surpassing that level on Tuesday for the first time since June 2018. A lower US dollar…

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China population: Beijing faces ‘tricky’ reforms to unleash new drivers of growth as workforce ages

May 14, 2021

[unable to retrieve full-text content]This is the seventh in a series of stories about China’s once-in-a-decade census conducted in 2020. The world’s most populous nation released its national demographic data on Tuesday, and the figures will have far-reaching social policy and economic implications.Given new data showing China’s labour force continues to decline, Beijing is likely to reinforce the message that quality economic growth and improving people’s living standards is more important than the rate of economic expansion in…

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