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Zhou Xin

Articles by Zhou Xin

China signals real financial opening up, but will it follow through?

3 days ago

[unable to retrieve full-text content]A Chinese foreign exchange official said on Friday that Beijing will “study” a plan to allow all mainland residents to invest in offshore securities and insurance policies up to an annual limit of US$50,000.It is hard to overestimate the plan’s significance over the long run, if it goes ahead.For decades, China has barred its people from freely investing in offshore financial assets. Every Chinese citizen is given a nominal annual quota of US$50,000 to change yuan into foreign currencies for…

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Hong Kong tech stock boom may be prelude for China outbound investment wave

10 days ago

[unable to retrieve full-text content]It’s time for mainland China money to make a bigger splash in the world, starting with Hong Kong, after restraints put on Chinese foreign investment in the last half-decade.China’s situation in 2021 is similar to what it was a decade earlier in many ways. As in the aftermath of the global financial crisis of 2008, the Federal Reserve is flooding the economy and markets with liquidity. China has again become a hot destination for funds seeking higher returns thanks to its early recovery from an…

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US-China relations: threat of financial war fading as investors eye returns from likes of Kuaishou, Agora

17 days ago

[unable to retrieve full-text content]The threat of a financial war between the United States and China is fading.A series of events in the past few days showed have shown that financial decoupling between the world’s two largest economies is unlikely to happen.In addition, the fact that China-based companies last year raised the largest amount of capital in the US market since 2014, combined with the Biden administration’s decision to postpone a ban by former president Donald Trump on Americans investing in companies with…

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China’s quick execution of former top banker shows Beijing is dead serious about quelling corruption

23 days ago

[unable to retrieve full-text content]Last week’s execution of a former top banker at one of China’s largest state-controlled asset management firms set a record – never before had a senior Chinese financial official been put to death in such a swift manner.Lai Xiaomin, former chairman of China Huarong Asset Management, was sentenced to death on January 5 by the Tianjin No 2 Intermediate People’s Court, convicted of accepting US$277 million worth of bribes. The Tianjin High Court rejected his appeal on January 21. And on Friday,…

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China’s state-led growth model to intensify in 2021 as ambitious provinces lay out growth targets

January 25, 2021

[unable to retrieve full-text content]A review of China’s provincial people’s congresses over the last couple of days has been like watching a competition of spending ambitions.Each sees the respective governors outline their economic and social development plans for the year ahead to be endorsed by the local parliamentary session.Guangdong is the most conservative among a dozen or so provinces and municipalities that have published their goals. The province, with an economic size on par with Canada, is aiming for only “a minimum…

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China’s economic boom is a great story, but for many it still reads like Les Misérables

January 18, 2021

[unable to retrieve full-text content]For those following China’s economic and social developments, a common impression is that there are always two seemingly conflicting stories unfolding in the world’s second-largest economy.The first story is about a booming China. The country has never been so prosperous and powerful, and it is only a matter of time before China replaces the United States as the world’s top economy. In the latest set of macroeconomic data for 2020, the figures make China the envy of other major economies – a 2…

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China’s food security is again on Beijing’s agenda, with the nation’s bitter history of hunger and famine in mind

January 11, 2021

[unable to retrieve full-text content]It was in 1995 that Beijing first tasked every provincial governor with the difficult job of ensuring sufficient grain plantations and output in their provinces – an accountability system known as “provincial governors looking after the rice bag”.The Chinese government, under then-premier Li Peng, imposed the task upon provincial governors because Beijing saw great dangers posed by a grain-supply shortage amid runaway food-price inflation. China’s official consumer price index shot up 21.7 per…

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Revitalising China’s rural regions is Xi Jinping’s next priority

January 4, 2021

[unable to retrieve full-text content]China’s Central Rural Work Conference, an annual gathering for the nation’s leaders to discuss agriculture and areas where many of the country’s poorest residents live, has sent a consistent message over the last quarter century: Beijing values the importance of its vast countryside and the more than half a billion people who live there.It is more than just paying lip service. In a span of about a generation, China has improved infrastructure – from roads to electricity – in the countryside;…

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China’s coronavirus success boosts confidence that its system is the best answer to the country’s challenges

December 28, 2020

[unable to retrieve full-text content]The year 2020 started off with huge challenges for China, but it is ending as a year of victory for Beijing and the ruling Communist Party.It is a remarkable turnaround for the Chinese leadership from the night of Dr Li Wenliang’s death in early February – the moment when the legitimacy of the party and its way of governing was in doubt – to the day in December when the Politburo proudly their “extremely extraordinary” success in handling the coronavirus outbreak domestically.It offered Beijing…

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Punishing Australia through trade also comes at a price for China

December 21, 2020

[unable to retrieve full-text content]China’s decision to punish Australia through trade is the result of both feelings and calculations. Beijing is angry at Canberra and is implementing a plan to inflict pain – making a case to the world that those who dare to offend China will pay the price.But Beijing’s approach of selectively picking battles is costly for China, as well.China has cited anti-dumping probes and strict quarantines as legitimate reasons to restrict Australian imports, but few people are blind to the bigger picture…

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What is behind China’s clamp down on Big Tech, and how far will it go?

December 20, 2020

[unable to retrieve full-text content]Beijing’s determination to tame China’s big tech firms is set to have a profound impact on the country’s economic trajectory in coming years.Questions remain about how far the government will go to clip the wings of the internet giants. But to get close to an answer, it’s worth investigating the reasons behind Beijing’s fresh scrutiny.Only a few years ago, Beijing was touting its “four new inventions” – high-speed rail, cashless payment, online shopping and shared bikes – as modern-day…

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Xi Jinping’s new economic focus on China’s demand reform borrows ideas from Marx more than Keynes

December 14, 2020

[unable to retrieve full-text content]The Politburo of China’s Communist Party coined a new term, “demand-side reform”, at its latest meeting, intending to complement Beijing’s ongoing “supply-side reform” to better balance the national economy, as the official line goes.It is clear that Beijing is not totally happy with the demand side. But the primary concern about demand revolves more around its structure than its size. If Beijing was worried about insufficient demand, it could just take a page from the Keynesian playbook by …

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China targets monopolies in warning to keep big capital in check in 2021

December 11, 2020

[unable to retrieve full-text content]In a veiled jab at China’s sprawling big capital firms, China’s Politburo said on Friday that the country should do more to tackle monopolies and prevent “disordered expansion of capital”, according to a report by state news agency Xinhua.Along with efforts to improve oversight and regulation, the country will implement a broad strategy of keeping economic growth “within a reasonable range” for 2021 – the year the ruling Communist Party celebrates its centenary – while expanding domestic demand…

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China’s handling of Australia row highlights what may be an increasingly hard line in diplomatic affairs

December 7, 2020

[unable to retrieve full-text content]A speech by vice-minister of foreign affairs Le Yucheng at a Beijing forum over the weekend looks to be one of the most important references in gauging the guiding principle of future Chinese diplomacy.Le addressed a key talking point regarding China’s international relations – its “wolf warrior” style of diplomacy. To many analysts and experts, including scholars within China, Beijing’s diplomatic apparatus is sometimes too confrontational to be constructive – there must be more sophisticated…

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China reveals new generation of top-level government appointees, including an ex-copy machine salesman and fighter jet designer

December 6, 2020

[unable to retrieve full-text content]A new generation of Chinese cadres in their late 50s have assumed ministerial and provincial positions, including top roles at the commerce and agriculture ministries, as Beijing reshuffles government rankings after finalising its 2035 development vision.The latest round of changes, including replacing officials who have reached the mandatory retirement age of 65, comes as US President-elect Joe Biden forms his own administration – offering fresh faces, and potentially a fresh start, in both…

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China’s grass-roots party members must fall in line to maintain economic stability, President Xi’s top aide says

December 4, 2020

[unable to retrieve full-text content]A top aide to President Xi Jinping says the Chinese Communist Party’s centralised command of the nation’s economic and social development must be improved in an era of turbulence and uncertainty.Ding Xuexiang, director of the General Office of the Central Committee, wrote in an article published in People’s Daily last week that China is in need of a strong leadership core to deal with an increasingly unstable world.“The more severe and complex the situation is, the more conflicts, risks and…

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China’s bond defaults may lead to poor places becoming poorer and rich places richer

November 30, 2020

[unable to retrieve full-text content]One consequence from recent defaults in China’s bond market is that there is likely to be an acceleration of money flowing from the country’s poor provinces into a handful of already affluent areas such as the Pearl River Delta and the Yangtze River Delta.If the monetary displacement is large enough, it could result in regional polarisation in the world’s second-biggest economy, with the rich areas becoming richer and the poor places poorer – a situation that would have far-reaching…

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China’s former central bank chief urges revamp of modern central banking

November 27, 2020

[unable to retrieve full-text content]A former long-standing governor of China’s central bank has backed reforms to the way inflation is defined and measured to reflect new social and economic realities, a proposal that may lead to a wholesale retooling of modern central banking that has been serving the global growth since the early 1990s.Zhou Xiaochuan, who was the head of People’s Bank of China (PBOC) for over 15 years until 2018, believes the popular practice of targeting inflation, which has been adopted by the United States,…

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China’s Liu He vows Beijing will not give up economic opening with ‘dual circulation’ strategy

November 25, 2020

[unable to retrieve full-text content]Vice-Premier Liu He, the top economic adviser to President Xi Jinping, has reiterated that China’s new focus on its domestic market and technological independence does not mean it is cutting links with the rest of the world.Beijing’s “dual circulation” strategy, which will concentrate on domestic demand for future growth and work to promote indigenous technology innovation, has fanned speculation China is trying to reduce its interaction with the outside world. Chinese leaders, including Xi,…

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China looks to deepen regional integration via CPTPP as US rivalry grows

November 23, 2020

[unable to retrieve full-text content]China is trying to turn a strategic threat into an asset in its rivalry with the United States by publicly stating it wants to join the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP).President Xi Jinping told Asia-Pacific leaders last week that China was “actively considering” joining the trade pact. It showed Beijing has made up its mind that obtaining membership to the CPTPP – which replaced the Trans-Pacific Partnership (TPP) after the US pulled out – or even…

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RCEP offers China a fresh start to counter US influence in Asia-Pacific

November 16, 2020

[unable to retrieve full-text content]The signing of the Regional Comprehensive Economic Partnership (RCEP), a trade pact which excludes the United States, is a new beginning for China to enhance its economic sphere of influence in the Asia-Pacific.While its immediate impact might be small, the fact that China, Japan, South Korea, the Asean bloc nations, Australia and New Zealand have signed the deal is a win for Beijing amid a push from the US for decoupling.The deal also shows trade and investment flows between China and the…

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China finally waves goodbye to family planning as country gets old, but is the damage already done?

November 9, 2020

[unable to retrieve full-text content]The era of family planning through birth restrictions is ending in China. This was made clear by the fact that the four character Chinese phrase, Jihua Shengyu, was not included in the latest 20,000 character national plan released by the ruling Communist Party.I was born in 1979 and so was part of China’s first “only child” generation as Beijing rolled out its one-child policy across the country.Jihua Shengyu meant that many of my classmates from primary school to university had older sisters…

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Beyond propaganda: China’s 2035 vision assumes that it will overtake US as the world’s No 1 economy

November 2, 2020

[unable to retrieve full-text content]Beijing’s 2035 vision for “basic socialist modernisation” includes few specific targets and did not specifically mention the United States. But the message is clear between the lines that China will stay on its growth trajectory to replace the US as the world’s top economy in the next 15 years.China’s total economic size and per capita income “will climb to a new big level” by 2035, with significant improvements in its economic, technological and comprehensive power, according to the communique…

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An emboldened Beijing emerging from the coronavirus could be good news for investors

October 26, 2020

[unable to retrieve full-text content]The triumphalism is clear among China’s leadership as the Central Committee of the ruling Communist Party gathers for a four-day conference in Beijing this week.That is understandable, given what has happened in 2020. Early in the year, it seemed the “national fate” of China was on the decline. The coronavirus outbreak in January and February brought the country’s economic apparatus to a halt, and China’s central role in the global value chain was seemingly at stake.Many Chinese people were…

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China’s Mr Renminbi says Beijing must dismantle capital controls to create a more globally accessible yuan

October 22, 2020

[unable to retrieve full-text content]China’s former central bank governor says it is time for Beijing to relax capital account controls to facilitate international use of yuan – a suggestion that comes as Chinese officials have been more vocal in criticising the global dominance of the US dollar.Zhou Xiaochuan, who served as governor of the People’s Bank of China from 2002-2018, said at a financial forum in Beijing on Wednesday that China cannot have it both ways by maintaining rigid capital account controls while promoting use of…

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China’s rapid GDP growth shows why coronavirus controls must trump reopening economy

October 19, 2020

[unable to retrieve full-text content]China’s economic growth acceleration in the third quarter confirmed a strong recovery in the world’s second-biggest economy when many other countries are still struggling to balance growth and coronavirus control.The 4.9 per cent gross domestic product growth rate is expected to feed a narrative that China’s way of handling the coronavirus has been effective, and that the country’s governance system is better suited to cope with crises such as Covid-19, especially compared with the United…

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China reports surge in long-term investment inflows despite talk of decoupling from US

October 16, 2020

[unable to retrieve full-text content]Foreign direct investment (FDI) inflows into China surged in September by nearly a quarter compared to a year ago, underlining the confidence international investors have in the world’s second biggest economy long-term prospects, despite threats of decoupling from the United States.FDI inflows into China rose 23.7 per cent to US$14.25 billion last month, according to data released by the Ministry of Commerce on Friday. The growth marked an acceleration from August when China’s FDI recorded year…

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China speeds up draft law against food waste as nation strives to feed 1.4 billion people

October 16, 2020

[unable to retrieve full-text content]China’s legislature is speeding up its drafting of a national law to discourage food waste, following President Xi Jinping’s order to clamp down on the problem and ensure stable food supply.The Legislative Affairs Commission of the National People’s Congress is pressing ahead with the law, a first for China, and held a symposium with local lawmakers and legal experts this week to talk preliminary clauses, according to the Hebei provincial legislature.Hebei is the first Chinese province to…

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China’s Xi Jinping praises Shenzhen as economic model for country at ‘historic crossroad’

October 14, 2020

[unable to retrieve full-text content]President Xi Jinping is pinning his hopes on Shenzhen to set an example for the rest of China by renewing Deng Xiaoping’s success of experimenting with the city and applying it elsewhere, which helped turn the country from an economic backwater to the world’s second largest economy.In an hour-long speech on Wednesday, China’s most powerful leader in decades said the country was facing new challenges and called on the city to make “greater contributions” to national prosperity – noting it had …

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China’s yuan rally has just started, and it is thanks to the US Federal Reserve

October 12, 2020

[unable to retrieve full-text content]The yuan’s appreciation against the US dollar in recent days could be a prelude to a long rally for the Chinese currency as it is increasingly being seen as a stable source of value amid unconventional monetary policies by major central banks pushing the global financial system into uncharted territories.The near zero and sub-zero bond yields offered by governments from rich countries are upending conventional theories of value, forcing investors to scramble to defend the value of their…

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