Policy:
The People’s Bank of China has named the start of phase two of the China cross-border interbank payment system (CIPS), the appointment of JP Morgan as the second RMB clearing bank in the US, and the launch of RMB oil futures in Shanghai as key milestones in the internationalisation project in its latest monetary policy report.
It further noted that 652 foreign institutions have been approved to enter the interbank bond market as of the end of February, and that these investors are holding Rmb4.47tr ($705.7bn) of assets in onshore stocks, bonds, loan and deposits, up 39.6% year-on-year. The PBoC also added that regulators have registered and approved applications for Rmb624bn of Panda bond issuance quotas as of the end of March.
The central bank said it will continue to improve the policy framework and infrastructures for cross-border RMB business, and adhere to the principles of serving the real economy and making trade and investment easier in the process.
Equities:
The listing of Foxconn’s onshore subsidiary in the A-share market is drawing closer, according to a May 11 post on Weibo by the China Securities Regulatory Commission (CSRC).
The regulator said the company and the lead underwriters will confirm the issuance date with the Shanghai Stock Exchange and publish the prospectus, but it did not reveal the timeline or the size of the IPO. The announcement came after the Foxconn got an initial approval from the securities watchdog on March 8. The company submitted its application in early February.
Banks:
Assets of foreign banks in Shanghai stood at Rmb1.5tr at the end of March, up 14.4% year-on-year, according to a May 9 state media report, quoting data provided by the local banking regulator. Foreign banks’ assets accounted for 10.4% of total assets in the city’s banking sector, which was Rmb14.8tr by the end of the first quarter, up 3.8% year-on-year.
Total assets of Chinese banks stood at Rmb256tr as of the end of March, up 7.4% year-on-year, according to a May 11 statement by the China Banking and Insurance Regulatory Commission. Chinese banks have outstanding debt of Rmb236tr, up 7.1% year-on-year, said the CBIRC.
Trade:
US president Donald Trump has softened his stance towards the Chinese technology company, ZTE, which was the target of sanctions imposed by the US Department of Commerce on April 16. In a May 13 tweet, Trump said he was working with Chinese president Xi Jinping to resolve the tensions over the company, noting that too many jobs would be lost in China as a result of the conflict.
Meanwhile, Liu He, vice premier and top advisor to Xi, is said to be delaying his trip to the US because of diverging opinions among US negotiators, such as Steven Mnuchin, treasury secretary, and Robert Lighthizer, the US trade representative, a May 11 media report has claimed. The report came after Sarah Sanders, press secretary at the White House, told a May 7 press briefing that Liu He will travel to the US to continue the negotiations this week.
Payments:
CIPS has added 23 financial institutions as its participants, effective as of last Friday, CIPS said in a May 11 announcement. The list includes five offshore indirect participants — Bank of Communications (Hong Kong), the Kyoto Chuo Shinkin Bank, the Macau branch of Bank of China, the Michinoko Bank and the Zurich branch of Industrial and Commercial Bank of China.