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JUMORE Reviews: China’s yuan funds for foreign exchange ends 22-month decline

The central bank’s yuan outstanding for foreign exchange rose in September, snapping a 22-month decline, data from China’s central bank showed last Thursday. The funds increased by 850 million yuan ($128.6 million) from August to 21.51 trillion yuan, according to the People’s Bank of China. Meanwhile, Chinese banks saw a net foreign exchange purchase of $300 million in September, the first settlement surplus in the past 27 months as cross-border capital flows stabilized, official data showed.

JUMORE Reviews:

The rise of the funds and the net foreign exchange purchase could basically be attributed to the country’s stable and sound economic growth since the beginning of this year which leads to the yuan’s steady appreciation. Given China’s sound economic fundamentals, wider openness and more stable market expectations, cross-border capital flows will continue to be balanced and stable without sharp fluctuations.

JUMORE Reviews: Coal mining to meet more stringent requirements for work safety

China plans to work out improved and systematic standards for the safe production in the industries of coal mining, non-coal mining, hazardous chemicals, etc during the 13th Five-Year Plan period, said the State Administration of Work Safety in a circular issued recently. According to the circular, 362 items of production safety standards, of which 231 are mandatory and 131 are recommended, will be formulated to promote the construction of China’s work safety system. Meanwhile, scientific and technological innovation will be strengthened and a strong base for scientific research and talent cultivation will be established to promote the healthy development of those high-risk industries.

JUMORE Reviews:

The formulation of those production safety standards will facilitate the standardized production of the coal mining, non-coal mining, hazardous chemicals and other high-risk industries, promoting their healthy and orderly development. In addition, through combining the industry standards and patent development, new growth momentum will be created to strengthen the international competitiveness of these industries.

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QFIIs favor consumer electronics

As major traders in the A-share market, foreign capital, represented by Qualified Foreign Institutional Investors (QFIIs), has attracted more and more attention on the market. Data from surveys can first show these QFIIs’ latest ideas on stock section. Since the beginning of this year, QFIIs have participated a total of 888 surveys on 220 listed companies. QFIIs conducted remarkably more surveys on listed companies since September. Among the 888 surveys conducted by QFIIs this year, 145 were conducted in September. The number of companies surveyed was 63, much higher than the monthly average level. By sectors, most surveys in this month concentrated on consumption upgrading stocks. The attention to consumer electronics has risen rapidly. Li Lieng, chief strategy analyst of Sinolink Securities, released a report the other day, analyzing QFIIs’ investment behavior. The report analyzed data on QFIIs’ holdings since 2010 and pointed out that QFIIs’ positions mainly concentrate on consumption sector, particularly industry leaders. Excluding stocks held by QFIIs as initial shareholders, the market value of consumption stocks held by QFIIs accounts for over 60 percent of their total holdings. JUMORE Reviews The consumer electronics industry has undergone a rapid growth in recent years and there has been an increasingly large demand for consumer electronics products. As one of largest consumer and producer of consumer electronics in the world, China has obvious advantages in this industry. Further, sub-sector, like liquor, is also scarce in the world. Thus, to allocate funds for consumption sector is in line with QFIIs’ global asset allocation strategy.

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China to ease foreign investment restriction in FTZs

China’s third batch of free trade zones (FTZs) in Henan, Liaoning, Zhejiang, Hubei, Sichuan, Shaanxi and Chongqing have achieved a lot of positive results since they were all officially launched on April 1 this year. For example, the pilot FTZ in Henan has attracted 9,736 enterprises, with a total registered capital of 137.6 billion yuan. In Liaoning FTZ, the number of newly registered enterprises has exceeded 10,000 and that in Sichuan FTZ has also exceeded 8,000. Replication and innovation are now the key words for the third batch of FTZs. The government will make explorations in foreign investment access in the FTZs for the next step. JUMORE Reviews The third batch of FTZs are mainly from the central and western regions of China, and will play a demonstrative role in promoting the development of the central and western regions. The achievements that have been reached in these FTZs indicate that system innovation in the FTZs can be replicable and promoted. Thus, China may probably try to free foreign investment restriction on more fields including new-energy cars in the FTZs.

China, Russia agree to expand energy cooperation

Chinese Vice-Premier Zhang Gaoli and Deputy Prime Minister of Russia Arkady Dvorkovich agreed to expand energy cooperation between the two nations. Zhang and Dvorkovich made the remarks when co-chairing the 14th annual meeting of the China-Russia Energy Cooperation Committee. During the meeting, both sides exchanged views on pushing cooperation in natural gas, oil, electric power, coal and new energy. China and Russia agreed to promote major strategic cooperation programs in the energy sector, accelerate energy equipment cooperation and enhance standard docking in energy cooperation. JUMORE Reviews China and Russia are both large consumers of bulk commodities such as energy resources and thus have great potential for energy cooperation. Russia used to take oil and gas resources as an important bargaining chip for its politics and diplomacy, but the market condition has changed a lot, turning Russia's attitude towards China in the fields of oil and gas exploration and production. China and Russia who have a lot of common interests will work with each other in energy and other areas in a closer and diverse manner. Although the energy cooperation of the two sides is mainly led by the governments at present, it is foreseeable that, with the deepening of the cooperation, private capital is expected to be introduced in the future to speed up those cooperation.

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US to wind down quantitative easing

The US Federal Reserve finally decided to take a new step in the 10th year after the subprime crisis. The Fed announced on September 21 morning Beijing time that it will start reducing its 4.5 trillion US dollars balance sheet from October. This marks an end of quantitative easing (QE) as a result of the crisis and a beginning of quantitative tightening (QT). According to the Fed’s report, it is likely to raise interest rate again this year, and lift interest rates three times next year. JUMORE Reviews The decision of trimming balance sheet did not cause remarkable fluctuations in the financial market, but the long-term impact of QT has caught much attention. The market’s expectations for an interest rates hike in December rose to a higher level. The Fed’s plan is good news for the US dollar, but is not necessarily bad news for the renminbi. In fact, how greatly it will impact the RMB exchange rate still depends on the fundamentals of China's economy.

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RMB central parity down 111 bps against US dollar

The central parity rate of RMB weakened 111 bps to 6.5530 against the US dollar on September 19, representing a new low in over two weeks and ending the two days of strengthening, according to the China Foreign Exchange Trade System. The onshore RMB (CNY) closed at 6.5859 against the US dollar on September 19, a new low in more than two weeks, representing a decrease of 241 bps from the previous trading day. RMB has weakened by over 1,200 bps or about 1.92 percent against the US dollar amid fluctuation since September 11. Previously, RMB has been strengthening by over 2,000 bps against the US dollar for 11 straight days. It has weakened by over 500 bps against the US dollar in recent two trading days. JUMORE Reviews In view of sound economic fundamentals and more stabilized market expectation, China’s cross-border capital flows will continue to keep balanced and stable, leading to a generally steady progress of appreciation for the yuan. However, it is not possible to see unilateral rise of RMB exchange rate, but stronger two-way fluctuation instead, in the context of divergent expectations and increasingly frequent capital flows.

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Export growth slows down but stands well

China's foreign trade totaled 17.83 trillion yuan in the first eight months this year, up 17 percent year-on-year, customs data showed. In division, exports increased 13 percent year-on-year while imports rose 22.5 percent, resulting in a 15-percent decline in trade surplus. Notably, China's export growth eased for the second consecutive month in August to 6.9 percent, down from 11.3 percent in July, according to data released by the General Administration of Customs. Imports showed stronger growth than exports, at a rate of 14.4 percent in August, down slightly from 14.7 percent a month earlier. That led to a monthly trade surplus of 286.5 billion yuan (about $44 billion), down 14 percent year-on-year. Total foreign trade reached 2.41 trillion yuan last month, up 10 percent from a year earlier.

JUMORE Reviews

The slower trade growth in August was a result of a stronger yuan in recent weeks and a higher base in the second half of last year. Despite of the slowed growth rate, China has seen overall stable growth in foreign trade so far this year and given China’s economic fundamentals at present, the export data is expected to continue to look healthy in the coming months. In fact, the optimization of foreign trade structure and the transformation of growth momentum, rather than the figure of growth, is more noteworthy.

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China to accelerate debt-to-equity swaps in steel sector

According to report from the ‘2017 China Steel Technological Economy Top Forum’ on September 16th, China's ten major steel enterprises have signed debt-to-equity swaps agreements that are worth about 150 billion yuan since the beginning of the new round of debt-to-equity swap. An official of the Ministry of Industry and Information Technology said at the forum that China will speed up deleveraging in the steel industry to solve practical problems for the next step. The government will pay more attention to the implementation of those agreements and give strong support to the relevant enterprises by providing more available financing channels. JUMORE Reviews Although ten steel enterprises signed debt-to-equity swaps agreements, only two of them have been put into practice. Since most of the debts still are‘real debts’ after the swaps, which in fact can not allow enterprises to shake off heavy financial burden and attract funds from financial institutions, the difficulty of actually implementing the debt-to-equity swaps still exists. In order to give full play to the debt-to-equity swaps, the steel industry itself should deepen the supply-side reform through a series of effective measures to achieve structural optimization and upgrading of the entire industry chain.

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China to focus on improving product, service quality

The State Council, China's Cabinet, recently issued a guideline on quality improvement. Aimed at improving the quality of Chinese products and services, as well as making the supply system more efficient, the guideline says China can gain the great power of quality by 2020 by remarkably enhancing the overall quality of its products and services. The document requires remarkable improvement in the quality of industrial development, including enterprises' quality management, upgrading of the value chain of traditional competitive industries, and advancing the service industry. JUMORE Reviews The guideline is the first of its kind on quality in China, and it's of milestone significance to the upgrading of the country's manufacturing, which demonstrates the central government's determination to improve product quality. It is also strategically important for promoting China's industrial transformation and meeting consumers' demands for mid- and high-end goods and services.

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Deal inked for PPP rail project

The investment agreement for the Hangzhou-Shaoxing-Taizhou railway public-private partnership project was signed in Hangzhou of Zhejiang province on Monday, marking China's first high-speed train line with private investors taking the controlling stake. A consortium of eight privately owned enterprises led by Shanghai-based investment conglomerate Fosun International will take a controlling 51 percent stake in the 12.36 billion yuan ($1.9 billion) registered capital of the railway project. The investment agreement, which was signed on Monday, was worth over 40 billion yuan.

JUMORE Reviews

The Hangzhou-Shaoxing-Taizhou railway project will set a positive demonstration for more private investors to take part in PPP projects, especially involving municipal engineering and transportation. With the experience from the project, the privately owned enterprises will be able to play more and better roles in developing infrastructure and public services projects.

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Export growth eases again in August

China's export growth eased for the second consecutive month in August to 6.9 percent in yuan-denominated terms - down from 11.2 percent in July - as global demand softened, according to data released by the General Administration of Customs recently. The August's export growth recorded the second lowest level in this year, only higher than in February when the Chinese Spring Festival occurred. JUMORE Reviews： The unexpected slowdown in China's export growth in August was largely caused by a strong yuan and a slower global trade recovery. However, the yuan's appreciation will have limited influence on the future of China's exports since this time a stronger yuan is mainly due to depreciation of the dollar. Therefore, a stable export potential will remain for China. In addition, although economic fundamentals indicate improving external demand, but uncertainties in global trade still exist.

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China’s retail banking on the way to thrive

China’s retail banking market is on path to become the world’s second largest by 2020, with the industry’s aggregate income growing 10 per cent to 3.2 trillion yuan (US$471 billion) according to a forecast by McKinsey & Co. Retail banking contributed to 27 per cent of the country’s total banking income last year, up from 22 percent five years earlier, but still a long way from the international norm of between 40 and 50 per cent. It was reported by the 21st Century Business Herald that China Merchants Bank has retail banking accounting for 49.8 percent of its total banking income, the largest proportion among the leading Chinese banks, which is followed by Ping An Bank with a proportion of 40 percent and others all below. Further, retail banking of China Merchants Bank made up over 50 percent of its pre-tax profit.

JUMORE Reviews

With the steady and improved growth of China's economy, as well as the continuous increase of the people’s incomes, most of the consumers have been considering how to manage their money matters. In this context, China’s retail banking sector has experienced constant fast growth as compared to pinched corporate banking in recent years and it will usher in a golden era of development with its potential being fully tapped.

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BRICS Plus to play big role in global growth

Chinese President Xi Jinping said Tuesday that "BRICS Plus" leaders have agreed on deepening South-South cooperation, fostering the "BRICS Plus" approach, and building extensive partnerships. Xi made the remarks when meeting the press at the end of the Ninth BRICS Summit in the eastern city of Xiamen. He said the Dialogue of Emerging Market and Developing Countries has sent "a strong message" for closer South-South cooperation and global development cooperation. The dialogue was attended by leaders from BRICS - Brazil, Russia, India, China and South Africa - and five other developing countries, which are Egypt, Guinea, Mexico, Tajikistan and Thailand.

JUMORE Reviews

The continuously progressing cooperation among BRICS countries sets an innovative example for promoting a new-type globalization, as well as reshaping a fair and rational cooperation mechanism. Moreover, the China-proposed “BRICS Plus”model for building up a broader partnership with emerging market and developing countries could be of great significance to South-South cooperation and global development, enabling more countries and peoples to share in the benefits of globalization.

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E-commerce sets to thrive in BRICS countries

E-commerce is set to prosper among the BRICS countries and become a major fabric connecting their nationals, according to the latest report by Alibaba Group Holding Ltd. By 2022, gross merchandise volume generated via online shopping portals will skyrocket 340 percent from last year to reach $3 trillion in Brazil, Russia, India, China and South Africa,the report said. That figure would represent 59 percent of global e-commerce transaction value in five years, up from 41.8 percent a year ago. Meanwhile, the number of online shoppers is projected to nearly double from 720 million last year to 1.35 billion in 2022. That means an expanded share of total online shoppers from 47.2 percent to 61 percent.

JUMORE Reviews

The BRICS countries, as emerging economies, have seen an unprecedented prosperity through tapping up their own development potential, and achieved abundant fruit in the areas of economic growth, trade exchange, and business investment, etc. This would necessarily lead to a huge demand for e-commerce such as online shopping of the people in those countries. In fact, the rapid development of e-commerce in BRICS countries will also significantly enhance the inter-connectivity and deepen the cooperation among them.

#China #Jumore #E-commerce #E-business #E4B

China’s economy hits two-year high

After two years of uncertainty and volatility, China’s economy is for now in a sweet spot. Its foreign exchange reserves have been expanding in the past six months, hitting a whopping $3.6 trillion. The economy grew by 6.9 per cent in the first half of this year and the yuan has been rising steadily against the US dollar. Financial outflows have slowed. A combination of improved trade and economic performance, and measures to control capital outflows have meant money and investment are moving back into China. It is said by some critics that the country’s economic policymakers have won a battle.

JUMORE Reviews

In recent two years, China has taken a series of steps to strengthen the real economy and accelerate the transition from traditional growth momentum to new one for maintaining a stable and healthy economic development. This kind of economic growth driven by endogenous factors has caused a well control of capital outflows and attracted steady inflow of foreign capital, imparting the Chinese economy with an steady stream of power for its sustainable growth.

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