Trade:
The US is targeting $50bn worth of Chinese products with tariffs, according to an April 3 statement by the Office of the US Trade Representative (USTR).
Robert Lighthizer, the trade representative, argued that China should have reacted to the US threat by changing its trade practices, rather than retaliating with equal measures. He claimed in a reportthat China is treating US businesses unfairly and is costing the US economy around $50bn per year.
“Unfortunately, China has chosen to respond thus far with threats to impose unjustified tariffs on billions of dollars in US exports, including our agricultural products,” he said. “Under these circumstances, the [US] president is right to ask for additional appropriate action to obtain the elimination of the unfair acts, policies, and practices identified in USTR’s report.”
China will impose 25% tariffs on 106 US products, ranging from soybeans to automobiles, Zhu Guangyao, deputy finance minister, told an April 4 press conference. The implementation date of the tariffs will depend on when the US begins imposing its tariffs on China, the Ministry of Finance said in a separate statementon April 4.
But the minister stressed that China will not leverage its holding of US debt to tip the balance in the trade war, echoing comments made by premier Li Keqiang on March 20.
“China is a responsible investor in the international capital markets,” he said.
However, a Ministry of Commerce spokesperson displayed a more hawkish stance in an April 6 statement, saying that China will not shy away from further trade conflict with the US.
“We have made our position very clear, we do not want to fight a trade war, but we are not afraid of one,” said the spokesperson. “If the US ignores the opposition of China and the international community, and persists in unilateralism and trade protectionism, China will retaliate to the end.”
China initiated a process to challenge the US tariffs at the World Trade Organization (WTO) on April 5, according to a complaint filed with the WTO.
Equities:
Charles Li, chief executive of Hong Kong Exchanges and Clearing, has shrugged off fears that the emergence of CDRs will deter tech companies from listing in the city. He told legislators on April 3 that these companies will seek exposure to international investors, through hubs such as Hong Kong, and will not solely focus on the mainland market.
“For major US-listed companies that will issue CDRs in the Mainland, Hong Kong can also play a role by providing certain pricing fungibility and interaction between onshore and offshore investors,” he said. “For foreign incorporated unicorns seeking a CDR listing, by definition, they will need to list their ordinary shares in an international market such as Hong Kong.”
The plans were welcomed by Shanghai Stock Exchange and Shenzhen Stock Exchange earlier this week.
“It represents a milestone systematic innovation of China's capital market in supporting key national strategies and keeping promoting the opening-up progress,” the Shanghai bourse said in a March 30 statement. The Shenzhen exchange published a similar statement was published on March 31.
Indices:
Bank of China’s cross-border RMB index stood at 257 points in the last quarter of 2017, up 28 points year-on-year, according to a March 28 statement by the bank.
The bank attributed the uptick to a stable RMB exchange rate, China’s growing FX reserves, and the further opening up of the country’s financial markets, citing a growth of 265% in settlement for cross-border RMB investment between the first and second half of 2017.
The ascending status of the currency also helped, said BOC. The Chinese bank noted that central banks from Belgium, Czech Republic, France and Germany have all indicated that they will allocate part of their reserves in RMB.
Derivatives:
The Singapore Exchange’s offshore renminbi (CNH) futures recorded a trading volume of 333,353 contracts in March, up 37% month-on-month and up 237% year-on-year, according to the bourse.
Meanwhile, the FTSE China A50 Index Futures continues to be the most actively traded contract on the exchange, recording a volume of 6 million contracts. The marked a growth of 5% year-on-year for the product, but it was down 16% month-on-month.
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