China’s July trade data was encouraging.
In dollar terms, exports growth rebounded to 3.3% year-on-year in July from a 1.3% contraction in June, while imports contracted for the third consecutive month to 5.6% year-on-year after a 7.3% contraction in June, according to data published by the Chinese General Administration of Customs on Thursday.
In renminbi terms, exports jumped to its highest year-on-year growth in four months to 10.3% from June’s 6.1% growth. Imports growth rebounded to 0.4% year-on-year from a 0.4% contraction in June.
However, in dollar terms, exports to the US contracted by 6.5% year-on-year in July. Imports to the US fell by 19% year-on-year. Exports to the European Union and countries in the ASEAN region increased by 6.5% and 15.6% year-on-year, respectively.
“[…] with the fading of the short-term boost from the frontloading, the proposed new tariff could add downward pressure on Chinese growth, dragging GDP by at least around 0.2pp,” Li Zhennan, a China economist at Goldman Sachs, wrote in a Thursday note.
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On Monday, when the renminbi weakened beyond seven against the dollar, the trading volume of USD/CNH futures on the Singapore Exchange exceeded $10bn for the first time in history, according to a note from the exchange. When the market closed, the trading volume of the currency pair reached $10.37bn, a 38% jump from the previous Friday.
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China’s foreign currency reserves fell to $3.1tr in July, down $15.5bn from the previous month. The drop put an end to the two months of consecutive growth, according to data released by the National Bureau of Statistics on Wednesday.
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China’s Consumer Price Index (CPI) inflation went up to 2.8% year-on-year in July from 2.7% in June, the National Bureau of Statistics saidon Friday. The country’s Producer Price Index (PPI) experienced deflation of 0.3% year-on-year, compared with 0% in June, the first time the reading turned negative since August 2016.
Food inflation accelerated further to 9.1% in July from 8.3% in June. Inflation in pork went up to 27% year-on-year in July from 21.1% in June.
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The five largest Chinese state-owned banks accumulated Rmb105tr ($14.9tr) in assets by last year. That is equal to 37% of the total assets in the country’s banking industry, according to a Monday statement by the China Banking and Insurance Regulatory Commission.
Total deposits in the biggest five banks — Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank and Industrial and Commercial Bank of China — reached Rmb76tr, taking up 44% of the overall deposits in the banking industry. The big five extended Rmb58tr of loans and provided jobs to 1.65m people, which is 40% of the total workforce in the banking industry.
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The average daily trading volume of Chinese bonds on Tradeweb’s platform reached $1bn in July, a 27% increase year-on-year. Tradeweb is an electronic trading platform.
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The MSCI announced on Wednesday that it will raise the inclusion factor of all large-cap China A-shares in the MSCI indices from the current 10% to 15%, effective after market close on August 27.
The inclusion will bring the weighting of China A-shares in the MSCI China index and MSCI emerging market index to 7.79% and 2.46%, respectively.