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The week in renminbi: CBRC reinforces deleveraging effort, more scrutiny for outbound investment, China pushes maritime sector for BRI

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By Noah Sin
29 Jan 2018

China’s banking regulator prioritises deleveraging of financial institutions and individuals, the Chinese government tightens grip on overseas investment with new guidelines, and regulators encourage financing for the maritime industry in an effort to promote the Belt and Road Initiative.

Regulators:

  • Controlling corporate and household leverage is a top priority for the China Banking Regulatory Commission (CBRC) this year, the banking regulator said in a January 26 announcement.
    “The CBRC will lower the level of corporate leverage, promote adjustment, merger and restructuring of enterprises, and tightly control the financing of enterprises with heavy debt,” said the statement. “We will also accelerate the disposal of non-performing loans.”
    The CBRC will also seek to control the leverage levels of households. It will stop the illegal use of personal borrowing to fund activities in the housing and stock markets, and closely monitor and control financing in the real estate sector.
    “The key is to control household leverage which is growing too fast,” said the statement.

Trade:

  • China has published a new set of guidelines tomore closely scrutinise outbound investment, a spokesperson at the Ministry of Commerce (MofCom) said on January 25.
    Whereas companies were previously only required to file with regulators before their investments were made, the guidelines will require companies do so throughout the course of their investments abroad, said the spokesperson.
    The government will also encourage companies to invest in particular sectors – or discourage them from certain industries – using a negative list, the spokesperson added.
    “This see-through model of management will help us grasp the real direction of outbound investment,” said the spokesperson. “It will also help government departments to provide protection for enterprises involved in outbound investment.”
    The guidelines were jointly published by MofCom, CBRC, China Insurance Regulatory Commission (CIRC), China Securities Regulatory Commission (CSRC), the People’s Bank of China, the State Administration of Foreign Exchange and the State-owned Assets Supervision and Administration Commission of the State Council.

Belt and Road:

  • The PBoC has jointly published a set of guidelines with seven other regulators and government ministries to push for more financing activities in the country’s maritime industry – in an effort to promote the Belt and Road Initiative.
    The central bank encouraged enterprises in the maritime industry to raise funds by listing in the stock market, and by issuing corporate and green bonds. Companies with stable cash flows should also explore issuing asset-backed securities, said the PBoC.
    The guidelines were jointly published on January 25 by the CBRC, CIRC, CSRC, Ministry of Finance, Ministry of Industry and Information Technology, National Development and Reform Commission, the PBoC and the State Oceanic Administration.

FX:

  • China’s Foreign Exchange Trade System (CFETS) is planning to launch a new trading platform on February 5, according to a January 25 announcement by CFETS.
    The new model will continue to support FX spot, forward and swap transactions. It will provide new cross currency swaps options on six currency pairs – AUDCNY, EURUSD, GBPUSD, USDHKD, USDJPY and USDAUD – for market participants, the trading platform said.

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By Noah Sin
29 Jan 2018