China Economy Forum

[TaiShang]

China's August exports up 5.9 pct, imports up 10.8 pct
Xinhua, September 8, 2016

China's exports in yuan-denominated terms rose 5.9 percent year on year in August, while imports increased 10.8 percent, customs data showed on Thursday.

That led to a monthly trade surplus of 346 billion yuan (51.9 billion U.S. dollars), down 5.1 percent from one year earlier, according to figures from the General Administration of Customs.

 

[ahojunk]

World Bank issues SDR bonds in China
2016-09-01 08:52 | Xinhua | Editor: Mo Hong'e


The World Bank on Wednesday issued landmark bonds denominated in special drawing rights (SDR) in China's interbank market.

The three-year bonds worth 500 million SDR (nearly 700 million U.S. dollars) were billed as "Mulan bonds." The Chinese currency the yuan, or renminbi, will be used as the settlement currency.

It is the first issuance of SDR bonds since 1981.

A much bigger wave of such bonds could be expected as the World Bank plans to sell as much as 2 billion SDR of such bonds in China.

The SDR is the reserve currency administered by the International Monetary Fund, the price of which is determined by a basket of currencies including the U.S. dollar, euro and Japanese Yen.

The yuan is scheduled to be included in the basket in October, which will be a milestone in the internationalization of the currency.

The People's Bank of China (PBOC), the central bank, said the bonds were heavily oversubscribed, with about 50 domestic and overseas financial institutions.

Interbank debts denominated in SDR will enrich China's bond market and help promote the global use of the currency, the PBOC said, adding that it will continue to improve SDR bond trading and propel the opening up of China's market.

 

[TaiShang]

Economic Watch: Inflation, producer price trends add to evidence of steadying Chinese economy

September 09, 2016, Xinhua

People buy vegetable at a market in Zhengzhou, capital of central China's Henan Province, Sept. 6, 2016. China's consumer price index (CPI), a main gauge of inflation, grew 1.3 percent year on year in August, down from July's 1.8 percent, the National Bureau of Statistics (NBS) announced Friday. (Xinhua/Li Bo)


China's rising month-on-month inflation and narrower decline in producer prices in August have provided fresh evidence of a steadying economy, experts said.

China's consumer price index (CPI), a main gauge of inflation, rose 0.1 percent in August on a month-on-month basis, the National Bureau of Statistics (NBS) announced Friday.

It grew 1.3 percent year on year in August, down from July's 1.8 percent, largely due to eased food prices, according to NBS statistician Yu Qiumei.

The price of pork rose 6.4 percent year on year in August, slowing from a 16.1-percent rise in July.

The pace of August inflation was the slowest since October 2015 and marked a fourth consecutive monthly drop from 2.3 percent in April, when the CPI reached its highest level since July 2014.

"However, the decline should not arouse particular concerns among economists as it was mostly caused by subdued food price inflation," said Zhang Shuyu, a finance researcher with the University of International Business and Economics.

Since January 2016, CPI has been calculated using a new comparison base and includes more products and services, while slightly reducing the weighting of food, which accounts for about one-third of the China CPI.

China's producer price index (PPI), which measures costs for goods at the factory gate, dropped 0.8 percent year on year in August, easing from a 1.7-percent decline registered in July, NBS data also showed. Yu attributed the milder decline to a low base in the same period last year.

"There is no immediate interest rate rise pressure as inflation remained benign," said Zhang.

As China's economic slowdown and industrial overcapacity weighed on prices, the PPI has been negative for more than four years, but the pace of the decline is lessening, a positive sign for economic stabilization, according to Zhang.

In the first eight months of the year, the PPI dropped 3.2 percent year on year, but on a month-on-month basis, August's PPI edged up 0.2 percent.

Producer prices for ferrous metal smelting and rolling increased markedly faster in August to 6.5 percent year on year, while prices for nonferrous metal smelting and rolling returned to growth of 0.8 percent.

"Rising prices for both ferrous and nonferrous metal smelting and rolling may indicate that China's drive to cut excess industrial capacity is starting to have some positive effects," Zhang said.

Zhang said he believes broader CPI and PPI trends confirm recent signs of a more sure-footed recovery.

China's exports in yuan-denominated terms rose 5.9 percent year on year in August, accelerating from 2.9 percent in July. Imports increased 10.8 percent, compared with a decline of 5.7 percent, official data showed Thursday.

The import growth was a big surprise, said HSBC economist Julia Wang, noting that the domestic demand rebound was likely a result of infrastructure investment growth over the past few months.

Exports turned out better than expected in August as overseas demand stabilized to some extent, investment bank China International Capital Corp. (CICC) said in a research note, citing rebounding manufacturing activity in the United Kingdom and improved job data in the United States.

In addition, depreciation of the yuan also helped lift exports, said Li Jian, a researcher with the Chinese Academy of International Trade and Economic Cooperation.

But looking ahead, the exchange rate of the renminbi (RMB) will remain largely stable in the second half of 2016 and China is unlikely to seek competitive advantages via yuan devaluations, according to the CICC.

"The RMB's inclusion in the IMF's Special Drawing Rights (SDR) currency basket will come into effect in October. China is unlikely to allow drastic changes in its exchange rate to facilitate the transition, not to mention the G20's commitment to avoiding competitive devaluations," according to the CICC.

CICC researchers believe the expectation that China may devalue the RMB after SDR inclusion is a misperception, given the country needs to establish its credibility in consistent and transparent policymaking as a new SDR currency issuer and the IMF's third-largest shareholder.

Exchange rate instability would also discourage investment and consumption for China, it said.

 

[TaiShang]

Industrial output expands 6.3% in Aug.
Xinhua, September 13, 2016

China's value-added industrial output, an important economic indicator, expanded 6.3 percent year on year in August, official data showed Tuesday.

The increase was faster than the 6 percent increase for July and the 6.1 percent in the same period of last year, according to data from the National Bureau of Statistics.

Industrial output measures the output of Chinese companies with annual main business revenue of more than 20 million yuan (US$3 million).

**

Fixed-asset investment grows 8.2% in Aug.
Xinhua, September 13, 2016

China's fixed-asset investment grew 8.2 percent year on year in August, up by 4.3 percentage points from the last month, official data showed on Tuesday.

Fixed-asset investment includes capital spent on infrastructure, property, machinery and other physical assets.

**

China retail sales up 10.6% in Aug.
Xinhua, September 13, 2016

China's retail sales of consumer goods grew 10.6 percent year on year in August, accelerating from the 10.2-percent growth in July, official data showed on Tuesday.


**

Property investment slightly picks up
Xinhua, September 13, 2016

Investment in China's property sector rose 5.4 percent year on year in the first eight months of 2016, slightly higher than 5.3 percent registered during the Jan.-July period, official data showed Tuesday.

@Economic superpower , @Shotgunner51

 

[ahojunk]

IIRC, The RMB will become the newest member of the IMF's SDR starting from October 1, 2016.

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Broader use of SDR can play role in reforming global system
By Wang Yanfei (chinadaily.com.cn)
Updated: 2016-09-13 16:04

While taking presidency of the G20 Summit this year, China has been actively promoting the broader use of the SDR (Special Drawing Right), which is part of efforts to promote global economic financial governance under G20 framework.

In an exclusive interview, Fielding Chen, Bloomberg Intelligence Economist, shared her insights with China Daily of how SDR-dominated bonds issuance in domestic market would be a strong force to explore the broader use of SDR and facilitate the reform of global financial system to a more balanced one in the long-run, despite some key challenges needed to be addressed.

The World Bank issuance of its first tranche of SDR-denominated bonds in China in August is what she called a landmark move in future expansionary use of SDR.

The first batch, valued at 2 billion SDR, bonds will be settled in yuan and will be sold in the interbank market.

"SDR-dominated bond can reduce currency risks for both investors and bond issuers," she said.

She said that for domestic investors, it provides a good channel to investment bonds denominated in currencies other than yuan, and for foreign issuers, the depth of China's bond market and the interest of domestic investors are attractive - they can issue bonds with lower interest.

However, a couple of challenges, mainly risk management and pricing scheme, would make it hard to become a very popular debt program while at its beginning stage, she said.

A bank staff woman deals with Chinese 100-yuan banknotes in Beijing, Dec 1, 2015. [Photo/IC]​

Despite that the SDR bonds issued by the World Bank will be settled in the yuan, it is not known whether the World Bank will receive SDRs from the People's Bank of China, or it will receive cashes with a similar composition to SDR.

She added that if it is the former, SDR bond issuance will mean a loss of SDR units of the PBOC, and the total amount of SDR bonds may be limited by China's total SDR balance in its foreign reserves.

"That means private sectors may not want to issue SDR bonds because it's hard to use in the market," she said.

If it is the latter, it will mean the central bank needs to exchange the yuan to other four currencies and give the money to the World Bank after bond issuance, and the World Bank will need to pay back cashes in five currencies when SDR bond matured - there is currency transaction cost.

In the meantime, since SDR bonds are equivalent to a weighted average of five bonds each denominated by one SDR currency, this would increase cost of risk management and pricing, she said.

While at the beginning stage, she added that for investors it may be difficult to hedge against risks, because it hard to develop yield curves or SDR bonds' credit default swaps when there are not many SDR bonds in the market.

She said that as more international institutions are expected to follow after the first issuance, the shortages may be resolved with efforts being made by both regulators and issuers.

 

[ahojunk]

China's industrial output growth accelerates in August
Source: Xinhua 2016-09-13 11:38:56

BEIJING, Sept. 13 (Xinhua) -- China's value-added industrial output, an important economic indicator, increased mildly in August -- an encouraging sign for a slowing economy.

Industrial output expanded 6.3 percent year on year last month, faster than the 6-percent increase for July and the 6.1 percent posted for the same period of last year, according to data from the National Bureau of Statistics (NBS) on Tuesday.

Industrial output measures the output of Chinese companies with annual main business revenue of more than 20 million yuan (3 million U.S. dollars).

According to the breakdown, the industrial output in less-developed western regions rose 7.9 percent, followed by 7.8 percent for central regions and 7.2 percent in the east.

However, northeastern areas plagued by serious overcapacity did not fare so well, with a 2-percent output drop.

By sectors, automobile manufacturing jumped 21.4 percent in August, followed by 11.5 percent in the pharmaceutical sector and 10.6 percent in electronics manufacturing, NBS said.

In the first eight months, industrial output increased 6 percent from a year ago.

Editor: Xiang Bo

 

[ahojunk]

London to actively promote RMB internalization: mayor of City of London
(Xinhua) | Updated: 2016-09-10 10:13


HONG KONG - As the western offshore renminbi hub, London will continue play its leading role to help promote the internalization of the Chinese currency, Jeffrey Mountevans, mayor of the City of London said here on Friday.

London welcomed the "truly significant" development of the internalization of renminbi, Mountevans told a press conference, adding the city took great pride, together with Hong Kong, to play their roles in the process.

"I think a great deal has been achieved in a very short time," he said.

London will continue help promote renminbi products, Mountevans said. "We are committed to developing an industry that supports the currency's growth as China's markets open up."

Over the past few years, financial market collaboration has been a priority for both governments in China and Britain.

There will be many high-value opportunities for the two countries to collaborate in the financial and innovative industries in the future, such as green finance and FinTech, he said.

Moreover, as a maritime Lord Mayor with 44 years in shipbroking, Mountevans said China and Britain have a "very strong" relationship in maritime sections.

"There's a great deal of respect in London for strengthening the capability of Hong Kong market as the ship owning and operating business moves increasingly eastwards," he said.

Mountevans also expected the two countries to build up more mutual interests in maritime finance and maritime arbitration.

Lord Mountevans is leading a business delegation to Hong Kong, Beijing, Shanghai and Tianjin on Sept 7-14, in a move to strengthen the commercial ties between Britain and China.

During his three-day visit to Hong Kong, Mountevans has met Financial Secretary of the Hong Kong Special Administrative Region government John Tsang and representatives from the Hong Kong Monetary Authority, the Hong Kong Exchanges and Clearing Ltd and Hong Kong Shipowners Association.

 

[ahojunk]

US challenges China at WTO over gov't support for grains
Xinhua, September 14, 2016

The Obama administration has challenged China at the World Trade Organization (WTO) over "excessive government support" for domestic grain production, U.S. Trade Representative (USTR) Michael Froman announced Tuesday.

The USTR's office claimed that China's "market price support" for rice, wheat, and corn in 2015 was estimated to be nearly US$100 billion above the limits that China committed to when it joined the WTO in 2001.

That pushed up Chinese grain prices "above market levels" and created "artificial government incentives" for Chinese farmers to increase production, and thus affected the ability of U.S. farmers to compete around the world, the USTR's office alleged in a statement.

China's Ministry of Commerce expressed regret at the U.S. challenge, saying it would adopt measures in accordance with WTO dispute settlement protocols and safeguard China's interests.

The Chinese side will stick to providing government support for the agricultural sector in line with WTO rules and enhancing the agricultural trading system, China's Ministry of Commerce said in a statement.

The trade enforcement case, the 14th that the Obama administration has launched against China at the WTO, comes at a time of increasing anti-trade rhetoric in the current U.S. presidential campaigns.

The Obama administration wants to demonstrate a tough stance on enforcing trade agreements in an attempt to draw support from lawmakers to ratify the Trans-Pacific Partnership (TPP) trade agreement later this year.

"It's not enough to enforce the existing rules," U.S. President Barack Obama said Tuesday in a statement. "It's all the more important that we finalize TPP soon."

But U.S. House Speaker Paul Ryan said last week that the TPP agreement does not have enough votes to pass Congress this year, noting the Obama administration has to fix the agreement to get Congressional approval.

Both Republican presidential nominee Donald Trump and his Democratic rival Hillary Clinton have come out against the 12-nation trade deal, which makes it more difficult for the TPP to get through Congress.

Experts said U.S. and Chinese policymakers should focus on the big picture of bilateral relations and seek opportunities to deepen economic and trade cooperation in the Asia-Pacific region.

China and the United States could consider a large multilateral trade agreement that covers both the TPP and the Regional Comprehensive Economic Partnership (RCEP), another major free trade agreement in Asia, Wang Huiyao, president of Center for China and Globalization, a leading Chinese social think tank, said last week at an event about China-U.S. trade relations.

That will benefit all the economies in the Asia-Pacific region, he said.

Long Yongtu, China's former chief negotiator for WTO entry, said at the same event that China's accession to the WTO has brought significant benefits to the United States, particularly its agricultural sector.

China has become the largest export market of American agricultural goods, helping create at least 160,000 jobs in the United States, he said. He encouraged the world's two largest economies to continue expanding cooperation in trade and investment.

China has gone from a 2-billion-dollar-a-year market for U.S. agricultural products to a 20-billion-dollar-plus market, according to U.S. Secretary of Agriculture Tom Vilsack.

 

[ahojunk]

Tariff cut on IT products to push China's industrial innovation
(Xinhua)Updated: 2016-09-18 11:27

BEIJING - China's decision to cut tariffs on a wide range of technology products would help push the country's industrial innovation, analysts pointed out.

Starting Thursday, China, the world's largest IT products exporter, would cut import duties on 201 IT products covered by the Information Technology Agreement (ITA), a global technology trade pact under the World Trade Organization (WTO), according to the Ministry of Finance.

The products include integrated circuits, touch screens, semiconductors and medical devices. The government also promised to reduce tariffs to zero on these products within seven years.

Over 50 countries, including China, reached an agreement last year at a WTO meeting in Nairobi, Kenya, to begin implementing their tariff commitments to the ITA by July 1, 2016, while the timetable is subject to the completion of each country's domestic procedural requirements.

China's legislature passed a bill earlier this month to ratify an amendment to the ITA.

"The ratification and implementation of the amendment will be in the interests of China's drive to build an open economic system and to accelerate the development of domestic IT industry amid international competition and cooperation," said the National People's Congress Foreign Affairs Committee in a review report to the lawmakers.

The move meant that China would play a bigger role in participating in global resources relocation and move upper in the global industrial value chain thanks to lower import costs, according to Bai Ming, a researcher with the think tank of the Ministry of Commerce.

Global trade of the 201 IT products is valued at $1.3 trillion, about ten percent of total world trade. China's foreign trade volume of the goods is about a quarter of the amount, according to Lou Jiwei, head of the Customs Tariff Commission of the State Council.

Based on 2014 figures, eliminating these duties will cost China 15 billion yuan (about $2.24 billion) and 52 billion yuan in annual actual and potential tariff revenue losses respectively, Lou said.

The adjustment of tariffs would be conducted in a gradual manner, which would not impact China's IT industry much despite expected larger imports of less expensive IT products, said Liu Yingkui, a researcher with the China Council for the Promotion of International Trade.

Chinese IT enterprises should harness free global trade and enhance their R&D capabilities to seek wider global reach with investment, Liu added.

The Chinese government decided to raise the ratio of R&D investment on GDP from 2.1 percent in 2015 to 2.5 percent by 2020, with major breakthroughs in fundamental research and strategic technologies.

 

[cirr]

China, Mongolia, Russia to build economic corridor

Xinhua, September 17, 2016

China, Mongolia and Russia will cooperate in seven areas to build a trilateral economic corridor, according to guidelines released this week.

The three neighbors will improve transport facilities by expanding land, air and sea connections, said the guidelines issued by the National Development and Reform Commission.

They plan to renovate ports of entry and overhaul customs procedures for easier clearance.

The three countries vowed closer cooperation in energy and mineral resources, high tech, manufacturing, agriculture and forestry.

They agreed to expand trade at border regions and widen services trade, and eyed more cooperation in education, science and technology, culture, tourism, medical care and intellectual property.

In addition, they promised to strengthen cooperation in environmental protection and push partnerships of local governments and border regions.

The guidelines were signed in June in Tashkent, Uzbekistan, following a meeting of Chinese, Mongolian and Russian leaders.

 

[ahojunk]

This is good news. US Treasury securities are junk. They are the largest debtor nation.

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China continues to unload US debt ‘for yuan’s SDR entry’
(Global Times) 10:53, September 19, 2016

China continued to cut its holdings in US Treasury securities in July, which experts mainly attributed to preparations for the yuan's inclusion in the International Monetary Fund's (IMF) Special Drawing Rights (SDR), effective October 1.

China currently held about $1.22 trillion worth of US Treasury securities as of the end of July, its lowest level since January 2013, down $22 billion from the previous month, according to the US Treasury Department's monthly Treasury International Capital (TIC) report issued on Friday.

While it was the second consecutive month when China's holdings of US Treasury securities declined, the nation remained the biggest overseas holder of US debt in the month.

The TIC report also showed that overall foreign holdings of US Treasury securities fell to $6.25 trillion, down from $6.28 trillion in June. In the same month, Japan, the second-largest US creditor, increased its holdings to $1.15 trillion, while the UK, the eighth-largest foreign holder, slashed its holdings by $22.8 billion. Other major countries that cut their holdings of US debt include Saudi Arabia, Russia, Canada, Singapore, Germany and Norway.

Tu Yonghong, director of the International Monetary Institute at Renmin University of China, said given the yuan's official inclusion in the SDR in October, the country may have made certain adjustments to its foreign exchange reserves, a major factor behind the July reduction in Chinese holdings of US Treasury securities.

"After the yuan's official inclusion, some central banks may increase their yuan portfolio to diversify their foreign exchange reserves, thus pointing to the increased supply of US dollars for China. In this sense, it is necessary for the country to make some preparations, or advanced structural adjustments to its foreign exchange reserves," Tu told the Global Times on Sunday.

Various financial institutions have given their estimates on the size of global reserves that will switch to Chinese assets after the yuan becomes a reserve currency.

Morgan Stanley previously expected global inflows of up to $2 trillion over 10 years, with most coming from central banks, while Bank of America Merrill Lynch estimated yuan demand to be worth $35 billion, according to a CNBC report in November 2015.

Need to unload

China Merchants Bank analyst Liu Dongliang said this may be because China has used its foreign reserves to support the yuan.

"Considering the currency's official inclusion in the SDR, the move will also serve to stabilize the yuan and help the currency smoothly endure the transition period," Liu told the Global Times.

Another reason is because China's central bank is stepping up efforts to strike a balance in the country's foreign exchange reserves, as an increasing number of Chinese enterprises are going global and investing abroad, Liu noted.

Industrial Bank chief economist Lu Zhengwei said since market expectations for a September increase in the US Federal Reserve's benchmark interest rates is quite low, the dollar is likely to face more pressure, thus justifying the central bank's decision to unload US debt.

"Quite a number of factors could explain the result … and there is no need to over-interpret the implications of a monthly change," Tu said.

She also pointed out that China's foreign exchange reserves, which have dropped from a peak of nearly $4 trillion in 2014, remain the world's largest.

"More than a quarter of China's cross-border trade is settled using the renminbi, and after the yuan is officially included in the SDR, more countries and regions will accept the yuan as the settlement currency in trade with China," Tu explained. "Thus, we need to gradually lower the huge amount of foreign reserves."

 

[ohmrlobalobayeh]

This is good news. US Treasury securities are junk. They are the largest debtor nation.

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China continues to unload US debt ‘for yuan’s SDR entry’
(Global Times) 10:53, September 19, 2016

China continued to cut its holdings in US Treasury securities in July, which experts mainly attributed to preparations for the yuan's inclusion in the International Monetary Fund's (IMF) Special Drawing Rights (SDR), effective October 1.

China currently held about $1.22 trillion worth of US Treasury securities as of the end of July, its lowest level since January 2013, down $22 billion from the previous month, according to the US Treasury Department's monthly Treasury International Capital (TIC) report issued on Friday.

While it was the second consecutive month when China's holdings of US Treasury securities declined, the nation remained the biggest overseas holder of US debt in the month.

The TIC report also showed that overall foreign holdings of US Treasury securities fell to $6.25 trillion, down from $6.28 trillion in June. In the same month, Japan, the second-largest US creditor, increased its holdings to $1.15 trillion, while the UK, the eighth-largest foreign holder, slashed its holdings by $22.8 billion. Other major countries that cut their holdings of US debt include Saudi Arabia, Russia, Canada, Singapore, Germany and Norway.

Tu Yonghong, director of the International Monetary Institute at Renmin University of China, said given the yuan's official inclusion in the SDR in October, the country may have made certain adjustments to its foreign exchange reserves, a major factor behind the July reduction in Chinese holdings of US Treasury securities.

"After the yuan's official inclusion, some central banks may increase their yuan portfolio to diversify their foreign exchange reserves, thus pointing to the increased supply of US dollars for China. In this sense, it is necessary for the country to make some preparations, or advanced structural adjustments to its foreign exchange reserves," Tu told the Global Times on Sunday.

Various financial institutions have given their estimates on the size of global reserves that will switch to Chinese assets after the yuan becomes a reserve currency.

Morgan Stanley previously expected global inflows of up to $2 trillion over 10 years, with most coming from central banks, while Bank of America Merrill Lynch estimated yuan demand to be worth $35 billion, according to a CNBC report in November 2015.

Need to unload

China Merchants Bank analyst Liu Dongliang said this may be because China has used its foreign reserves to support the yuan.

"Considering the currency's official inclusion in the SDR, the move will also serve to stabilize the yuan and help the currency smoothly endure the transition period," Liu told the Global Times.

Another reason is because China's central bank is stepping up efforts to strike a balance in the country's foreign exchange reserves, as an increasing number of Chinese enterprises are going global and investing abroad, Liu noted.

Industrial Bank chief economist Lu Zhengwei said since market expectations for a September increase in the US Federal Reserve's benchmark interest rates is quite low, the dollar is likely to face more pressure, thus justifying the central bank's decision to unload US debt.

"Quite a number of factors could explain the result … and there is no need to over-interpret the implications of a monthly change," Tu said.

She also pointed out that China's foreign exchange reserves, which have dropped from a peak of nearly $4 trillion in 2014, remain the world's largest.

"More than a quarter of China's cross-border trade is settled using the renminbi, and after the yuan is officially included in the SDR, more countries and regions will accept the yuan as the settlement currency in trade with China," Tu explained. "Thus, we need to gradually lower the huge amount of foreign reserves."

I know for sure this is a phenomenon becoming the norm because it's cheaper for me to buy my stuff from taobao and other stuff in yuan(from SG dollar) instead of using the US dollar as the medium of exchange.

 

[ahojunk]

The internationalization of RMB is gathering momentum.

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First RMB clearing bank established in the U.S.
(Xinhua) 18:15, September 21, 2016

The People's Bank of China (PBOC), the central bank, announced on Wednesday it has authorized Bank of China's (BOC's) New York branch to provide Renminbi (RMB) clearing services in the United States.

It is the first time for China to set up an RMB clearing bank in the United States.

The decision was made according to a PBOC memorandum of cooperation signed with the U.S. Federal Reserve Board, according to a statement posted on the PBOC official website.

As the world's largest economy, the United States is a key destination for the RMB in its internationalization process.

Senior Chinese and U.S. officials endorsed a framework for facilitating RMB trading and clearing in the U.S. for the first time during the eighth China-U.S. Strategic and Economic Dialogue concluded in June in Beijing.

The BOC New York branch is the largest China-funded finance institution in the United States.

China has vigorously promoted global use of the RMB as the world's largest trading nation looks to lower transaction costs in international trade, which is primarily settled in U.S. dollars.

The IMF has decided to add the RMB to its Special Drawing Rights (SDR) currency basket, making it one of the five reserve currencies fully endorsed by the 188-member organization.

The PBOC's latest report showed that by the end of 2015, the RMB had become the third most-used currency in cross-border trade and financing. It was in fifth place among all currencies for use in international payments and foreign exchange trading.

 

[ahojunk]

Merger plan for China's two major steelmakers unveiled
2016-09-21 08:42 | Xinhua Editor: Mo Hong'e


China's major steel company Baosteel has unveiled a plan to acquire Wuhan Iron and Steel and thereby will become the world's second largest steelmaker, after ArcelorMittal.

According to announcements posted on the Shanghai Stock Exchange website on Tuesday evening, state-owned Baosteel will issue A-shares to all transferring shareholders of Wuhan Iron and Steel to absorb the latter,also a large state-owned steel enterprise based in Hubei Province.

The restructuring plan still needs approval from the shareholders of both listed firms.

Last year, Wuhan Iron and Steel reported a loss of 7.5 billion yuan (1.1 billion U.S. dollars). Baosteel's profits shrank by more than 80 percent to its lowest level in 18 years.

The crude steel output of Baosteel and Wuhan Iron and Steel was 34.9 million tonnes and 25.8 million tonnes respectively last year. After the merger, the output of Baosteel will exceed that of HeSteel Group based in Hebei Province, to rank first in China.

Shares of the two firms have been suspended from trading since late June due to the planned restructuring.

China plans to cut steel production capacity by 100 million tonnes to 150 million tonnes by 2020, according to a government plan unveiled in February.

Chen Derong, president of Baosteel, said the merger will coordinate various aspects of the business, such as logistics and R&D.

Both companies produce and sell auto sheets. Now, long-distance transportation can be avoided and costs cut, he said.

Baosteel already planned to cut 9.2 million tonnes of capacity by 2018.Together, the production of both companies can be cut further, he said.

The market share of certain core products, such as high-end auto sheets, will be greatly expanded in China after the restructuring, according to a research report by Everbright Securities. Meanwhile, the profitability of these products will be improved and the company's pricing ability for upstream iron ore strengthened, it added.

Wang Bei, researcher with mysteel.com, said the restructuring will contribute to the balance between supply and demand through production adjustment and squeeze out ineffective or poor supply.

After the merger, the new entity will account for 7.6 percent of the country's crude steel output. Industry experts expect more acquisitions among steel producers.

 

[ahojunk]

IMF: RMB's inclusion in SDR basket marks important milestone for global monetary system
(Xinhua) 15:07, September 22, 2016


WASHINGTON, Sept. 21 (Xinhua) -- The inclusion of the Chinese currency, Renminbi, in the Special Drawing Right (SDR) basket by the International Monetary Fund (IMF) is an important milestone for the international monetary system, said a senior IMF official on Wednesday.

The preparations for the inclusion work continue on track, said Siddharth Tiwari, director of the strategy, policy and review department of the IMF, at a press conference on the preparations of the new SDR basket.

Last year, the IMF decided to include the RMB in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, the Japanese yen and the pound sterling, effective Oct. 1, 2016.

"Inclusion of the Chinese Renminbi in the SDR basket is an important milestone in the process of China's global financial integration. It recognizes and reinforces China's continuing reform efforts," said Tiwari.

The inclusion of RMB in the SDR basket will make the SDR basket more representative, and help foster a more robust international monetary and financial system, which in turn will support growth and stability of global economy, he said.

The inclusion also comes with responsibilities for China. According to the official, China has promised that it will continue to improve its transparency of foreign exchange reserve portfolio and banking industry data.