The week in review: China tackles financial fraud, CSRC said to grant securities licences to commercial banks, May industrial profit growth turns positive
In this round-up, China proposes harsher punishments for financial crimes under the criminal law, the securities regulator is reportedly mulling over giving securities licences to commercial lenders, and monthly industrial profits grow for the first time this year.
China plans to hand out securities licences to commercial banks, onshore media Caixin reported over the weekend, citing anonymous regulatory sources. The regulator currently forbids domestic banks from offering securities services onshore. While there were talks in 2015 to open up the market, the rules hadn’t been relaxed.
The China Securities Regulatory Commission (CSRC) is likely to give the licence to at least two major commercial banks “to pilot the policy”, said Caixin. They can begin investment banking businesses instead of offering the full range of securities services, it added.
The CSRC acknowledged the report in a Sunday evening statement, but said it had no further information to provide.
It added that different approaches are under discussion to help develop high-quality investment banks, and the new policy — whatever it may be — “will not have a big impact on the current industry landscape”.
China is proposing to amend the criminal law again, following the last round of changes in 2018.
One of the many proposed amendments is on financial crime, according to minutes of the meeting published by state media Xinhua.
These include increasing the cost of companies faking information in prospectuses for stocks or bonds issuance as well as improper disclosure of information. Lawmakers are also seeking to clearly define the criminal liability of controlling shareholders or persons who control the issuers.
The standing committee of the National People’s Congress (NPC) held a group discussion on Sunday regarding the draft of the national security law for the Hong Kong Special Administrative Region, Xinhua reported. The draft was going through the second reading at the meeting.
The meeting will be wrapped up on Tuesday and the national security law is expected to be passed by then, according to Hong Kong local media.
Chinese premier Li Keqiang chaired a State Council meeting on Sunday, discussing measures to keep foreign trade and investment stable as the Covid-19 pandemic continues to spread globally.
Li urged financial institutions to support liquidity of companies in the trade industry. He also called for the better implementation of export tax rebates.
Between January and May, export tax rebates received by Chinese companies reached Rmb632.4bn ($89.4bn), according to data released by the State Taxation Administration on Sunday.
China’s industrial profits (IP) grew 6% year-on-year to Rmb582.3bn in May, reversing the decline of 4.3% in April, according to data from the National Bureau of Statistics (NBS) on Sunday. This is the first time China’s monthly IP growth returned to positive territory since the beginning of 2020.
That said, accumulative IP for the first five months of the year still experienced a 19.3% decrease year-on-year.
The change was mainly due to lower cost and improved profitability in the petrochemical processing, electricity, chemical engineering and iron and steel industries, Zhu Hong, senior statistician at the NBS, said in a separate statement.
The monetary policy committee of the People’s Bank of China (PBoC) held a regular meeting last Wednesday, according to a statement released by the central bank on Sunday.
The committee concluded that the influence of Covid-19 on China’s economy remains controllable and the country’s economic growth is still resilient.
The PBoC will work to strengthen macroeconomic policies, stabilise employment, improve the transmission mechanisms of monetary and fiscal policies and deepen interest rate reform, said the statement.
The PBoC injected Rmb100bn into the banking system through seven-day reverse repurchase agreements on Sunday. The interest rate was set at 2.2%, the same level as previous seven-day repo operations. The central bank did not conduct any repo operation on Monday.
Luckin Coffee has decided to withdraw its request for a Nasdaq hearing to appeal the bourse’s decision to delist the company’s shares, it said in a filing on Friday US time. Its stock will be suspended from the market open on Monday.
The Nasdaq has issued two delisting notices to Luckin since its admission to fabricating sales. The first notice was on May 15. A hearing was scheduled on June 25, but a second notice was given on June 17 after the coffee company failed to file its 2019 annual report.
China National Pharmaceutical Group Co, one of China’s largest pharmaceutical manufacturers, said in a Sunday announcement that it has now set up a production plant in Beijing that can produce 120m Covid-19 vaccine doses annually, the largest such plant in the world.The company also said that two vaccine candidates — developed in two of its affiliated research institutes in Beijing and Wuhan — have successfully generated high levels of Covid-19 antibodies in phase one and phase two clinical trials. They are now entering phase three trials.