The renminbi recorded its best weekly performance against the dollar since 2005, thanks to the positive signals sent by trade talks last week.
The People’s Bank of China set the reference rate at 6.756 for the currency on Monday morning, the lowest since July 20 last year.
“Expectations on positive developments from the US-China trade talk may continue to support the RMB in the near term, with the USDCNY possibly testing 6.70 should more corporates join the trend to sell the dollar,” Tommy Xie, head of Greater China research at OCBC Bank, wrote in a January 14 note. “However, we think the current fundamentals do not support a sustainable rally for the RMB.”
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China’s foreign trade volume reached Rmb30.5tr ($4.5tr) in 2018, up 9.7% year on year (YoY), according to local media reports.
Exports jumped 7.1% last year to Rmb16.42tr and imports grew 12.9% to Rmb14.09tr. But on a monthly basis, both numbers were down. In December, exports and imports shrank 4.4% YoY and 7.6% YoY respectively. Trade was especially slow in coal, crude oil, and electronic and auto-related goods.
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China and Russia trade surpassed $100bn last year, reaching a record high, according to data from China’s Ministry of Commerce.
China is the biggest trading partner of Russia and Russia the tenth biggest trading partner of China. In the first 11 months of 2018, trade volumes in the mechanical and high tech manufacturing industries increased 15% and 29%, respectively. Trade volume in agricultural products jumped 31%.
Meanwhile, Russia’s central bank sold more than $100bn in US treasuries to buy euros and yuan for its reserves, according to a report from Bloomberg. Russia now owns ten times more RMB assets than any other central bank in the world with 25% of the world’s total RMB reserves, according to the article.
This year marks the 70th year of two countries’ diplomatic relationship.
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Total assets in the banking sector reached Rmb261.4tr at the end of 2018, according to data from China Banking and Insurance Regulatory Commission (CBIRC). That meant December numbers were up 6.4% YoY. That was down from the 6.6% growth announced in October, but up from November’s 6.3% growth figure.
Total volume of bad debt outstanding was Rmb2tr, which is around 1.89% of total assets.
Total loans outstanding and investments in bonds reached Rmb140.6tr and Rmb45.2tr, respectively, marking a 12.6% and 14.1% increase YoY.
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The Ministry of Commerce will continue with market reforms in 2019, a spokesperson said in an interview with local media outlets.
The spokesperson noted that 95% of the corporates surveyed by the US-China Business Council said they would increase or at least maintain their current level of investment into China. To encourage more foreign investors to invest in manufacturing, high tech industry and central and western China, the ministry will facilitate the process of revising its “Catalogue of Industries for Guiding Foreign Investment” and “Catalogue of Priority Industries for Foreign Investment in Central and Western China”.
The ministry said it will publish the foreign investment law as soon as possible.