Policy:
US president Donald Trump moved from trade war rhetoric to real policy action this week. The Office of the United States Trade Representative (USTR) issued a statement on June 18 noting that tariffs were being introduced on $50bn worth of Chinese imports, in an effort to persuade China to change existing trade and industrial policies, including Xi Jinping’s landmark “Made in China 2025” initiative.
“We must take strong defensive actions to protect America’s leadership in technology and innovation against the unprecedented threat posed by China’s theft of our intellectual property, the forced transfer of American technology, and its cyber attacks on our computer networks,” said US trade representative Robert Lighthizer. “China’s government is aggressively working to undermine America’s high-tech industries and our economic leadership through unfair trade practices and industrial policies like ‘Made in China 2025’.”
This kicked off a series of tit-for-tat statements between the two countries. China reacted predictably to the US announcement, stating it would introduce tariffs on a similar amount of US imports. On Monday, Trump responded to China's response, promising he was willing to go further should China not change its approach.
“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States,” Trump said in a statement on June 18. “Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent ." China stuck to its tune, with the Ministry of Commerce stating on Tuesday that it would fight back on any tariffs the Trump administration may impose on Chinese goods.
*
Two updated negative lists for foreign investment into China will be released by July 1, according to state media. The first list will clarify sectors where foreign investment is restricted on a nationwide level, while the second one will refer specifically to China's pilot free trade zones.
The updated lists are expected to be shorter than the existing ones, Wang Shouwen, vice minister of commerce, told state media.
Foreign direct investment into China for the first five months of 2018 was up 3.6% on last year to $52.66bn.
*
China's securities regulator has launched a proposal to create a Belt and Road Initiative federation of exchanges, with Shanghai at its heart, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, told a recent forum in the city.
"We will follow the trend of economic globalization and actively promote the 'going global' of exchanges, and securities and futures trading organizations, so as to provide enterprises with more convenient investment and financing and risk management services,” Fang told state media.
Markets:
Saxo Bank has launched a Stock Connect trading service for its clients, the bank announced on June 19. The service is offered on a global basis with the exception of Japan and UK, both of which will see the service rolled out at a later date, the bank said.
A-shares were added this month to the MSCI emerging markets index.
"China is the greatest growth story of our century and the appetite among investors to access this growth through capital markets is significant," Kim Fournais, CEO and founder of Saxo Bank, said in a statement. "Investors have been somewhat underweight in their exposure to Chinese stocks and coupled with the recent addition of Chinese A-shares to the MSCI emerging market index, interest in these shares is increasing.”
*
US-based ETF issuer and index provider Reality Shares launched the first China blockchain exchange traded fund on June 20. The ETF tracks the Reality Shares Nasdaq Blockchain China Index, which contains 31 companies with resources invested in developing blockchain technology.
The fund, which trades on Nasdaq, had total net assets of $.23m as of June 21.
*
HKEX saw a record high one-day trading volume for the USDCNH options contract on June 19. Some 743 contracts with a notional of $74m. The previous record was 516 contracts on in September 2017.