China policy round-up: Trade war truce brews more uncertainties, China upgrades cooperation in Latam, CFFEX plans to lift bans on stock-index futures trading

In this round-up, Trump was confident China would deliver on promises from G20 dinner, China signed several cooperation agreements in Panama and Argentina, China Financial Futures Exchange (CFFEX) planned to lift bans on trading stock-index futures to boost market activity.

  • By Rebecca Feng
  • 07 Dec 2018
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President Trump tweeted on December 5 that he saw “very strong signals being sent by China” on finding an agreement to end the conflict over its trade and investment practices. Trump was convinced Chinese president Xi Jinping would follow through on the agreements reached.

“Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting,” Trump tweeted. “ALL subjects discussed!”

Ministry of Commerce (MoC) published a short statement on the same day, mentioning the 90 days’ time limit for the first time and promising to “start implementing the terms agreed upon as soon as possible.”

Hours later, Bloomberg reported that officials have begun preparing to restart imports of U.S. soybeans and liquefied natural gas.

On December 4, 38 party and government agencies signed an agreement to develop more effective measures to punish violations of intellectual property rights, according to a statement from the National Development and Reform Commission (NDRC),

The agencies promised to punish organisations and individuals that repeatedly infringe on patents, fail to comply with the government’s administrative IPR rulings, or falsify documents during patent applications. IP protection has been high on the list of areas the Trump administration is urging China to improve upon.


Panama tightened relationship with China, following Xi’s state visit to the Latin American country on December 3. The two countries signed a score of infrastructure, tourism and development cooperation agreements. Panama also became the first Latin American country to sign up for the Belt and Road project.

Panama central bank also signed a memorandum of understanding (MoU) with the Bank of China (BoC) on December 3 to tighten collaboration on the trading of renminbi-denominated products, insurance products, and time deposit investments.  Local media reported that Panama has also agreed to issue a $500m Panda bond before the end of the year.

China also signed an MoU with Argentina on service trade cooperation on December 6, according to a statement from MoC. The collaboration will be focused on information technology, financial science, agricultural technology, entertainment services, construction, service outsourcing, and traditional medicine.

On another leg of his international tour, China’s Xi signed an agreement in Lisbon with Portugal’s prime minister António Costa on December 5 to tighten economic collaboration between the two countries.

Portugal’s Caixa Geral de Depósitos, a state-owned banking corporation, also signed an MoU with BoC on December 5. The two parties will focus on working together to facilitate renminbi internationalisation and develop third-party markets. Local media Xinhua reported that the parties also discussed CGD’s potential issuance of a Panda bond.


NDRC gave local governments a three-month deadline to compile a list of “zombie companies”, according to a statement dated November 23 but published on December 4.

The regulators divided zombie companies into three categories, those that still have operational value, those without operational value and state-owned zombie enterprises.

Companies in the first category should formulate a restructuring plan within six months. Those in the second category are to prepare bankruptcy plan in six to nine months. Companies in the third category will need to formulate and complete debt disposal plans “within set time limits.”


CFFEX said on Tuesday it plans to lift current bans on trading domestic stock-index futures starting from December 2. Stock index futures trading was first launched in 2010 to allow investors to hedge risks in the market. It was largely suspended in the wake of the summer 2015 market crash. Restrictions were starting to slowly ease in 2017 when the markets stabilised.


China’s Banking and Insurance Regulatory Committee (CBIRC) released new regulations permitting commercial banks to set up wealth management subsidiaries. The new rules went into effect on December 2.

Subsidiaries can now issue wealth management products that directly invest in the stocks of listed companies, with a 15% investing ceiling for a single company’s total shares.

Further, wealth management subsidiaries can issue products that invest in non-standardised debt assets (debt assets that are not traded in the interbank market or the stock exchange market such as credit asset and trust loans). Investment in these non-standardised debt assets cannot exceed 35% of the subsidiary’s net assets.

The minimum registered capital of wealth management subsidiaries is Rmb1bn.


China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission of Hong Kong (SFC) signed a MoU on December 3 to enhance supervisory cooperation and exchange of information of cross-border regulated entities, according to the official statement.


Credit rating agency Fitch has affirmed China's long-term foreign-currency issuer default rating at A+ with a stable outlook, according to a press release on Wednesday.

Fitch also outlined factors that could challenge that rating in the future. First, Fitch forecasts GDP growth to decelerate to 6.1% in 2019 and 2020, down by 0.5% from 2018. Second, the sluggish export performance due to the trade war may lead to a more challenging macro environment over the next two years. On the positive side, weakening shadow-banking activity over 2018 was seen as a sign that while monetary policy had turned accommodative, the deleveraging efforts had not been entirely abandoned.

Finally, China’s current account surplus has narrowed rapidly and the rating agency saw more capital outflows. Over the medium term, the decreasing current account balance will increase the economy's reliance on foreign capital inflows, Fitch said.


Oil futures dominated in RMB were first launched by the Shanghai International Energy Exchange in late March 2018. In a sign of early success, trading volumes for the contract overtook those of the dollar-denominated oil futures traded in Singapore and Dubai. The Shanghai contract still lags behind the popular Brent oil futures traded in London and the WTI oil futures traded in the US, according to local media reports.


PBoC, CSRC and NDRC jointly issued a statement to improve the supervision of the bond market on December 3. The new statement proposed stricter rules regarding information disclosure, illegal market making, and insider trading.

As of the end of October, the size of the domestic bond market was Rmb83.8tn, the third biggest in the world and the second in Asia.


Chinese regulators have started to enter a more intense period of clearing up restrictive regulations on foreign investment that go beyond the official negative list, state media reported.

A spokesperson for the MoC promised to finish revising old investment restriction regulations by the end of 2019, the report added, referring to a press conference held by MoC on November 29.

  • By Rebecca Feng
  • 07 Dec 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 22.38
2 China Merchants Securities Co 18.86
3 Industrial and Commercial Bank of China (ICBC) 15.71
4 Agricultural Bank of China (ABC) 11.43
5 China Securities 9.52

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 15-May-19 Republic of the Philippines Philippines 2,500
2 29-Apr-19 Semiconductor Manufacturing International Corp (SMIC) China 1,000
3 29-Apr-19 Semiconductor Manufacturing International Corp (SMIC) China 500
4 18-Apr-19 Mengniu Dairy China 1,000
5 13-Mar-19 GLP Hong Kong 3,300

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 22.89
2 Credit Agricole 8.87
2 HSBC 8.87
4 DBS 6.72
5 China CITIC Bank Corp 5.85

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 16-Apr-19 ICBC Singapore Branch China 1,000
2 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
3 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500
4 13-Mar-19 Daimler International Finance Germany 1,000
5 05-Mar-19 Fantasia Holdings Group Co China 1,000