The week in renminbi: Credit growth beats expectations, CDRs get tax break, PBOC promises prudence

In this round up, Chinese credit growth beat expectations in March, a deputy governor at the People’s Bank of China promised prudent monetary policy and the finance ministry announced a tax exemption for China Depositary Receipts (CDRs).

  • By Addison Gong
  • 15 Apr 2019
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China's credit growth in March exceeded expectations. Broad money supply, known as M2, increased by 8.6% year-on-year, according to data released by the People’s Bank of China. 

Net new renminbi-denominated lending from Chinese banks increased by Rmb1.69tr in March, beating economists’ estimates of Rmb1.25tr rise according to Chinese media. Outstanding renminbi loans stood at Rmb142.11tr ($21.2tr), up 13.7% from a year ago.

Total social financing, which includes shadow lending, grew at a faster pace of 10.7% year-on-year, compared to the 10.1% observed in February.

Together with the rebound of inflation, the stronger than expected credit expansion has reinforced market concerns that China may stop easing monetary policy, said OCBC Bank’s head of Greater China research Tommy Xie.

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During the 39th meeting of the International Monetary and Financial Committee (IMFC), Chen Yulu, deputy governor of the People's Bank of China, said the country will continue to implement a prudent monetary policy and a proactive fiscal policy in 2019. China previously announced around Rmb2tr of tax cuts, including a three percentage point reduction in value-added tax.

Chen said China was still committed to opening up its financial sector. Chinese and foreign-funded financial institutions will be “treated equally in a way that is more transparent and consistent with best international practices to strengthen the vitality and resilience of the financial sector”, he said.

He criticised trade and investment protectionism, predicting a negative impact on the countries concerned as well as on global growth.

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The Ministry of Finance has given China’s depositary receipt market a helping hand, announcing that investors will not have to pay income tax on any profits they make from trading the CDRs of technology companies.

The finance ministry has given a three-year personal income tax exemption for any CDR profits made by individual investors, it said on Friday in a joint announcement with the State Taxation Administration and China Securities Regulatory Commission. The announcement refers explicitly to CDRs of ‘innovative enterprises’.

The move was one of a number of tax breaks announced in the CDR market, which regulators hope will encourage China’s technology companies to list at home rather than turning offshore. Alibaba and JD.com, both listed offshore, are among the companies that mooted a CDR listing last year, but so far there has not been a single deal.    

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The International Monetary Fund is projecting 5.4% growth in Asia in both 2019 and 2020, while revising up its 2019 China growth projection to 6.3% from 6.2% in October mainly due to “the tariff truce” with United States. 

Despite weaker than expected global growth, most Asian economies are resilient, the IMF said on Friday US time during a press briefing from its Asia and Pacific department.

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China’s foreign minister Wang Yi and his Japanese counterpart Taro Kono had a high-level economic dialogue in Beijing on Sunday. Before the talks, they vowed to have a constructive discussion that would ensure cooperation between the world’s second and third largest economies.

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MSCI said on Saturday morning that the transition of MSCI All China Indexes to the MSCI China All Shares Indexes will happen on November 26, instead of the previously planned June 1. The US-based equity index compiler pointed to market feedback for the decision, according to Chinese media.

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The PBOC has made Deutsche Bank the first bank to be able to offer cross-border renminbi spot and FX derivatives through any of the bank’s branches across the world. It will use its Hong Kong branch as the centralised hub, according to a Monday press release. Deutsche will be able to offer its global clients access to the onshore renminbi rate, in addition to CNH rates, for renminbi FX conversion. This means those clients do not have to set up an offshore RMB account.


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Foreign insurers including AIA, Generali, Manulife and Prudential are planning to enter China’s private pension sector. They are all in discussions with local regulators about accessing the market, according to Reuters.

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The Monetary Authority of Macau is looking into the feasibility of establishing a securities market in Macau that will be denominated and settled in renminbi, according to Securities Times, a Chinese newspaper.

  • By Addison Gong
  • 15 Apr 2019

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 19.93
2 Industrial and Commercial Bank of China (ICBC) 13.40
3 China Merchants Securities Co 12.94
4 Agricultural Bank of China (ABC) 7.84
5 China Securities 6.54

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 07-Aug-19 Daimler Germany 5,000
2 31-Jul-19 Cassa Depositi e Prestiti SpA Italy 1,000
3 24-Jul-19 Semiconductor Manufacturing International Corp (SMIC) China 2,000
4 10-Jul-19 BMW Finance N.V. Germany 3,500
5 20-Jun-19 Maybank Malaysia 2,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 32.50
2 Credit Agricole 6.34
2 HSBC 6.34
4 Bank of China (Hong Kong) (BOCHK) 6.22
4 Bank of Communications Hong Kong Branch (BOCOM HK) 6.22

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 16-Jul-19 CIFI Holdings China 1,600
2 22-May-19 Agricultural Development Bank of China (ADBC) China 3,000
3 16-Apr-19 ICBC Singapore Branch China 1,000
4 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
5 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500