Chinese president Xi Jinping met with a US trade delegation in Beijing on Friday. However, no deal was reached at the end of the week-long negotiation.
“The two sides reached a consensus in principle,” according to a statement issued on Friday by the Chinese Ministry of Commerce.
The White House also issued a statement on Friday.
“These detailed and intensive discussions led to progress between the two parties,” it read. “Much work remains, however. Both sides will continue working on all outstanding issues in advance of the March 1 2019 deadline for an increase in the 10% tariff on certain imported Chinese goods.”
The two countries will meet in Washington DC this week to continue trade talks at the ministerial and vice-ministerial levels.
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Total credit growth in January accelerated for the first time in the past 18 months, according to data released by the People’s Bank of China (PBoC) on Friday afternoon.
Aggregate credit increased by 10.4% YoY in January, a 0.6 percentage point rise from December YoY growth. Renminbi loans reached Rmb3.23tr, a 13.4% increase YoY, up from the 13.2% growth in December.
Corporate bond issuance totalled Rmb499bn in January, Rmb376.8bn higher than the total amount of new issuance last January. That represented a 308.3% YoY growth and a 32.7% growth from December.
The data was above market expectations.
“We think stronger than expected total social financing (TSF) growth overall was mainly because of the administrative pressures the government put on financial institutions,” Yu Song, China economist at Goldman Sachs, wrote in a Friday note.
In a press conference held by the PBoC on Friday, Ruan Jianhong, director of statistics and analysis at the central bank, told reporters that new loans issued to small-and-medium enterprise (SMEs) in January totalled Rmb210.9bn, 2.6 times more than January 2018. That brought the total outstanding loans to SMEs in the month to Rmb9.7tr, a 17.6% growth YoY.
Lastly, the total issuance of credit bonds in January reached Rmb950bn, a 17.7% increase from December and a 165% increase YoY. Those issuers with ratings below AA sold a total of Rmb102.8bn of bonds, a 28.1% increase from December, counting for 10.84% of total corporate credit bond issuance.
“We expect broad credit growth to decelerate again in February, and only start to fundamentally accelerate in Q2,” Trivium, a consulting firm, wrote in a Friday note. “That means we shouldn’t see an improvement in economic growth until late Q3, at the earliest.”
Goldman Sach’s Song has a different view.
“We expect February TSF to remain strong,” he wrote. “The rebound of TSF and better-than-expected export data should lower the risk of such a downside scenario significantly.”
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Industrial and Commercial Bank of China has received permission from the China Banking and Insurance Regulatory Commission (CBIRC) on Sunday to set up a wealth management subsidiary.
That means the five biggest commercial banks in China — Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of Communications — have all now received permission.
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Pakistan has invited bids from banks to act as financial advisers and lead managers of the sovereign’s upcoming Panda bond, according to a finance ministry announcement on Friday.
Applications are due on March 20.
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China’s current account posted a surplus of $49.1bn. Trade in goods recorded a surplus of $395.2bn while trade in services saw a deficit of $292.2bn, according to a report released by the State Administration of Foreign Exchange (SAFE) on Friday.
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On Thursday, the State Council released new guidelines designed to make it easier for private companies to finance.
Regulators promised to speed up the approvals of private firms’ IPO applications and other refinancing activities and encourage them to issue convertible bonds.
The regulators will also adjust the macro-prudential evaluation system to incentivise commercial banks to lend to SMEs and agriculture firms. For example, the amount of lending to SMEs and private companies will be an important evaluation criterion for small and medium sized banks to issue stocks.
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On the same day, the State Council released another document to provide guidance for government-managed financing guarantee institutions, hoping to encourage them to guarantee loans for SMEs, rural households and agricultural operators.
According to the document, government-managed guarantee and re-guarantee institutions should aim to have 80% of their business in providing guarantees for SMEs, although the State Council gave no specific deadline for this goal. Those SMEs seeking guarantees worth Rmb5m or less should receive priority.
From 2018 to 2020, the central government will set aside Rmb3bn each year to expand the guarantee industry for SMEs.