Credit and liquidity conditions should remain robust in 2013, but the rising popularity of alternative sources of financing poses increasing risks
It seems clear that China’s overall growth rate picked up somewhat in March compared to the Jan-Feb period (CC Apr 5, Macro View). The question is whether Jan-Feb will come to mark the GDP growth low-point for the year. Our view is that it may, but this is not assured.
Proposals to create a Brics-wide development bank has aroused a great deal of debate among Chinese commentators
Premier Wen Jiabao said last week that China was considering “involving itself more deeply” in resolving the eurozone crisis through channels like the European Financial Stability Facility (ESFS) and the European Stability Mechanism (ESM), a $650bn permanent bailout fund that replaces the ESFS in July. But how willing is Beijing to pledge its money in this way and how confident is it that the EU can really put its house in order (thereby safeguarding Beijing’s investments)?
Commentators discuss the US's recent debt conundrum and the ramifications for China.
The S&P downgrade rocks the steady "trade-for-credit" symbiosis that has formed the basis of the US-China commercial relationship.
We consider the central bank's move to raise the required reserve ratio by 50 basis points to a record 21% for major banks effective May 18th primarily as a tool to sterilise inflows of foreign exchange, not as evidence of an increasingly hawkish attitude to liquidity management. The move, which is expected to freeze around Rmb 370bn from the market, has been coupled by issuance of longer-term central bank bills, as well as a small net withdrawal through open market operations.
Renminbi settlement in cross-border trade and investment is set to be expanded as part of China's next "Five-Year Plan".
Beijing has shown in the first two months of this year that it is serious in its endeavour to control inflation, property prices and bank lending.
The United States Federal Reserve's announcement this month that it would pump $900bn (Rmb 5,977bn, £562.9bn, €661.8bn) into the economy by purchasing long-term Treasury bonds over the next year elicited vigorous criticism within China.
Renminbi Compass, a new research service launched by the FT, aims to act as a navigational guide through the expanding universe of renminbi asset classes. With the Chinese currency gaining ever-wider acceptance around the world and Beijing taking steps to open its capital account, we are broadening our research coverage to include not only equity funds but also all other important renminbi asset classes, such as chengtou bonds, dim sum bonds, real estate, trust products, underground banking, art, antiques and several others.