China's foreign trade up 11.1 pct in first 11 months

Date Dec 10 2018 15:39:57 Source:Xinhua

BEIJING, Dec. 8 (Xinhua) -- China's goods trade rose 11.1 percent year on year to 27.88 trillion yuan (about 4 trillion U.S. dollars) in the first 11 months this year, customs data showed Saturday.

The value has already exceeded the total foreign trade registered last year, said the General Administration of Customs (GAC) in an online statement.

Exports rose 8.2 percent year on year to 14.92 trillion yuan in the January-November period while imports grew 14.6 percent to 12.96 trillion yuan, resulting in a trade surplus of 1.96 trillion yuan, which narrowed by 21.1 percent, the GAC said. 

Merrill Lynch forecasts slowing global growth in 2019

Date Dec 07 2018 09:41:00 Source:Xinhua

NEW YORK, Dec. 6 (Xinhua) -- Global growth is expected to dip from 3.8 percent in 2018 to 3.6 percent in the year ahead amid potential risks, according to a report issued on Thursday by BofA Merrill Lynch Global Research.

"We're expecting slightly weaker global growth. Both developed and emerging markets with most of the major economies are seeing weaker rather than stronger growth in 2019," said its research team.

The developed markets are expected to see a growth of 2 percent in 2019 as compared with a 2.2 percent gain in 2018; the growth prospect for the emerging markets is 4.6 percent in the year ahead, down from a 4.8-percent rise this year, according to the report themed Global Economics 2019 Year Ahead Outlook.

As for the major economies, the researchers expect the U.S. economy grow by 2.7 percent in 2019 and 1.9 percent in 2020, down from an estimated 2.9-percent growth in 2018, as fiscal stimulus may fade in the second half of 2019, revealing an economy growing near potential.

Meanwhile, the euro area is expected to see a 1.4 percent growth next year after a 1.9 percent advance this year.

A less friendly policy environment suggests a significant slowing in growth globally and risks including uncertainties caused by lingering global trade tensions and Brexit are skewed to the downside, according to analysts.

Meanwhile, structural issues in euro area, rising U.S. budget deficits, worries about consumption tax hike in Japan are potential longer-term risks for global economy.

However, the researchers noted that the slowing growth is likely a benign slowdown, instead of a "recession."

"Global fiscal policy has shifted from stimulative to neutral, but monetary policy is still supportive of growth. We expect a relatively benign outcome for most of the risks currently undercutting market sentiment," said the research team.

China's central bank injects funds into market via MLF

Date Dec 06 2018 17:25:44 Source:China Daily

China's central bank on Thursday injected 187.5 billion yuan ($27.33 billion) into the market via the medium-term lending facility (MLF) to maintain liquidity.

The funds will mature in one year with an interest rate of 3.3 percent, unchanged from previous operations, the People's Bank of China (PBOC) said on its website.

The operation effectively rolled over an equal amount of such loans, which matured Thursday.

The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.

The PBOC suspended reverse repo operations on Thursday.

In Thursday's interbank market, the overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which banks lend to one another, increased 15.1 basis points to 2.418 percent. The Shibor rate for one-month loans also increased to 2.81 percent.

The country vowed to maintain control over the floodgates of monetary supply and keep liquidity at a reasonable and ample level, according to a statement issued after a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee in July.

Deleveraging conducive to China's economy in long term

Date Dec 06 2018 13:27:19 Source:Xinhua

Although China's deleveraging push may slow growth in the short term, it will be conducive to the country's economy in the long haul, China Daily reported Thursday, citing Bridgewater Associates founder Ray Dalio.

China's goals to maintain growth and cut leverage levels may not necessarily lead to economic difficulties, Dalio was quoted as saying.

"Naturally, slowing or stopping bad lending slows economic growth over the short term and helps it over the long term," Dalio said.

As long as China continues making rapid reforms and broadening the expansion to less-developed parts of the economy while maintaining stability, the long-term prospects are very bright because that rapid productivity growth will continue, he said.

China's central government has been keeping up efforts to curb excess lending to state-owned enterprises, especially those in heavy industry suffering from overcapacity, while striving to maintain credit supply to more productive borrowers.

Deleveraging is one of the important tasks in China's supply-side structural reform.

China's economy expanded 6.7 percent in the first three quarters of the year, above the government's annual growth target of around 6.5 percent set for 2018.

China steadily pushes forex reforms, expands opening-up

Date Dec 05 2018 13:41:07 Source:Xinhua

China has maintained a steady pace in pushing foreign exchange (forex) reforms, enabling global investors wider access into one of the world's largest capital markets.

The latest data showed that some 286 overseas institutions had received quotas amounting to 100.56 billion U.S. dollars by the end of November under China's Qualified Foreign Institutional Investors (QFII) program, a scheme that allows for more convenient capital inflows.

The number edged up by 300 million dollars from the end of October, data from the State Administration of Foreign Exchange (SAFE) showed.

Since the launch of the program in 2003, the quotas have been increasing gradually, as the country's financial authorities managed to maintain a delicate balance between liberalizing the capital account and maintaining forex market stability.

China's currency, the yuan, is convertible for trade purposes under the current account, while the capital account, which covers portfolio investment and borrowing, is largely run by the state in an effort to manage capital flows in and out of the country.

Sun Guofeng, head of the monetary policy department of the People's Bank of China (PBOC), the central bank, said China has learned to master the art of balancing reforms and risk control.

China has kept forex market reform "gradual and controlled," which enabled the implementation of the country's various financial reforms while at the same time keeping external risks at bay, according to Sun.

In addition to schemes such as QFII that broadened the access for capital inflows, China has also rolled out pilot programs to encourage domestic investors to access foreign assets, such as the Qualified Domestic Institutional Investor (QDII) program, a scheme for outbound investment.

The central bank has been taking an orderly approach in making the capital account convertible, giving priority to capital inflows over outflows, long-term investment over short-term, direct investment over indirect, and institutions over individuals, said PBOC governor Yi Gang.

Among the 40 capital account transactions that the International Monetary Fund tracks, the Chinese yuan is now either fully or partially convertible on 37 items, accounting for 92.5 percent of the total, according to Yi.

"The country's foreign exchange authority has successfully mastered the timing and pace to roll out reform policies, which helped maintain market stability despite a complex situation since mid-2015," said Zhang Yifan with Guotai Junan Securities.

With wider access, foreign investors showed their enthusiasm in the Chinese market. In the first three quarters, net purchase of Chinese bonds and stocks by overseas institutions surged by 133 percent and 78 percent year on year, respectively, SAFE data showed.

By the end of September, the market value of the bonds and stocks owned by overseas investors accounted for 2.2 percent and 2.8 percent of the total, both up 0.6 percentage points compared with the end of 2017.

"The share is still relatively low compared with other countries. There is a lot of room for growth," said Wang Chunying, spokesperson for SAFE.

Yi said China would continue to push capital account convertibility in an orderly manner.

"We will develop the financial market, push reforms, and expand opening-up on the premise of financial system stability, uninterrupted financial services and forestalling systemic financial risks," Yi said.