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IFF Newsletter Issue 51
TIME:2022-09-28
From the Editor
The People’s Bank of China said it would steadily and prudently push forward yuan internationalisation, the central bank said in a report on Friday.
The central bank said it would promote a healthy circulation of the yuan in and outside of the Chinese mainland.
The PBOC said it would improve the liquidity of financial assets denominated in yuan and further facilitate foreign investors’ access to Chinese markets and make it easier for foreign investors, central banks, in particular, to increase holdings of yuan-denominated assets.
Transactions denominated in yuan reached 36.6 trillion yuan in 2021, up by 29%, according to the report.
The value of financial assets owned in yuan grew by 20.5% to 10.8 trillion yuan by the end of 2021, the central bank said.
The International Monetary Fund brought yuan’s weight in the Special Drawing Rights (SDR) basket to 12.28 percent starting from August 2022.
Hong Kong scrapped on Monday mandatory hotel quarantine requirement for inbound travellers, its government announced on Friday.
Instead of quarantine, the special administrative region asks travellers to self-monitor for three days upon arrival.
Travellers will no longer need to show a negative Covid test before boarding the plane to Hong Kong.
China remains committed to opening-up and will continue deepening reforms, Premier Li Keqiang told Japanese business representatives in a virtual meeting on Thursday.
“Reform and opening up is a key measure to meet various challenges on our way forward,” said Premier Li, “it is also an important driving force to promote China’s development in the years to come.”
Li said by deepening reform, China will be a huge market for the world and a promising land for foreign investment.
Li called for stronger economic cooperation between Asia’s two biggest economic powerhouses.
China will increase the number of direct flights between China and Japan “on the premise of ensuring Covid-related safety”.
Li said that China is firmly committed to peaceful development and urged the two countries to enhance trust and maintain a peaceful and stable international environment.
China bond issuance reached 5.28 trillion yuan in August, according to data released by the People’s Bank of China on Friday.
Treasury bonds stood at 1.04 trillion yuan while local governments issued 391 billion yuan.
Cash bond trading in the interbank bond market grew 34.7% from the same period last year.
Foreign institutions held 2.5% of China’s total outstanding bonds by the end of August, according to the report.
Profits of the listed arms of China’s state-owned enterprises reached 1.17 trillion yuan in the first half of the year, Chinese media reported on Friday.
The total revenues of these companies stood at 13.55 trillion yuan for the first six months of the year.
By the end of June, 84 centrally-administered SOEs had 450 listed companies, according to a report by the China Association for Public Companies.
The Beijing Stock Exchange hosts 110 listed firms with a combined market value of 200 billion yuan as it celebrates its first anniversary in September.
The exchange was established on September 2 last year after China’s President Xi Jinping said the country would set up a stock exchange in Beijing as the primary platform for innovation-oriented small and medium enterprises.
SMEs account for 77 percent of the 110 listed companies, and private enterprises account for 90 percent, according to Xinhua.
The US Federal Reserve raised benchmark interest rates by 0.75 percentage points to bring down inflation.
The Fed raised the key interest rate to 3% to 3.25%, according to a statement from the Fed last Wednesday.
The central bank signaled more hikes to come to bring inflation to its target rate of 2%.
“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” said Jerome Powell, the Fed chair.
Britain’s central bank on Thursday increased key interest rates in a bid to rein in runaway inflation.
The Bank of England raised the benchmark interest rate by 0.5% to 2.25%, it said in a statement.
Britain’s inflation stood at 9.9% in August, way higher than the central bank’s target rate of 2%.
Oil prices dropped $2 a barrel on Monday, reaching a nine-month low, Reuters reported.
US West Texas Intermediate (WTI) crude for November delivery fell 2.3% to 76.71 a barrel, the lowest since Jan.6, according to Reuters.
A strong dollar is having an adverse effect on oil prices as oil is priced in the US currency.
Germany announced the nationalisation of its biggest gas importer Uniper in a bid to secure energy supplies, according to a statement from Uniper.
The German government will buy 98.5% of Uniper’s shares at a cost of 8 billion euros.
German state bank KfW will provide financing to Uniper, according to the statement.
Uniper’s CEO Klaus-Dieter Maubach said the deal “provides clarity on the ownership structure” and allowed the company to fulfill its role as a “system-critical energy supplier”.
Tensions between China and the US have fueled an exodus of academics of Chinese descent from US universities, the Wall Street Journal reported.
More than 1,400 US-trained Chinese scientists gave up their American academic or corporate positions for Chinese ones in 2021, up by 22% from the previous year, according to data gathered by researchers from Princeton University, Harvard University and the Massachusetts Institute of Technology.
The Biden administration is working with scholars of Chinese descent to address concerns, according to the Journal.