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China policy round-up: Politburo sets tone for H2 policies, Hong Kong bars 12 LegCo candidates, MoF tells governments to speed up bond issuance

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By Addison Gong, Rebecca Feng
31 Jul 2020

In this round-up, China emphasises proactive fiscal policies and flexible monetary policies, Hong Kong disqualifies a dozen pro-democracy candidates from the upcoming legislative council election and the Ministry of Finance tells local governments to use up their special-purpose bond quotas by October.

China held a Politburo meeting on Thursday, chaired by president Xi Jinping, to set the policy stance for the second half of 2020.

The fiscal policies need to be more proactive with a focus on their effectiveness, while the monetary policies need to be more flexible and appropriate, as well as targeted, according to minutes of the meeting.

The wording indicates that the economic policy focus for the second half is on the “effective implementation of already-announced fiscal policies, and on targeted monetary policy support”, wrote economists at Standard Chartered in a Friday report.

China also wants to make sure there is appropriate growth in M2 monetary supply and total social financing to drive financing cost lower. New financing needs to be directed to the manufacturing industries as well as medium, small and micro-sized enterprises.

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The Hong Kong government barred 12 pro-democracy candidates from running in this year’s legislative council general election. Among the 12 are activist Joshua Wong and leader of the pro-democracy Civic Party, Alvin Yeung.

The government said in a Thursday statement that “upholding the basic law is a fundamental constitutional duty of every LegCo member” and behaviours including promoting Hong Kong independence could not “genuinely uphold” the law.

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The Ministry of Finance has told local governments to speed up the issuance of special purpose bonds and use up the new bond quota by the end of October.

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The US Senate’s judiciary committee approved an act that will allow American citizens to sue China in federal court for the damage done to their families and businesses by the Covid-19 pandemic.

The committee’s chairman Lindsey Graham said in a statement that “the Chinese Communist Party deceived the world and manipulated information about coronavirus” and was “negligent” in dealing with it. China will be hold accountable for its “outrageous [behaviour]”, he added.

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The China Banking and Insurance Regulatory Commission (CBIRC) released a three-year plan for the property insurance industry. It is targeting total revenues from insurance premium to reach Rmb1.7tr ($244bn) by 2022.

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China is willing to prioritise requests from the Philippines to access Covid-19 vaccines once they are developed, Wang at the foreign ministry said. Wang also said that China is willing to have “friendly bilateral negotiations” to maintain peace in the South China Sea.

Philippine president Rodrigo Duterte reportedly said at the State of the Nation address that he had asked China for help in getting access to a Chinese-developed vaccine.

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China will continue supporting the Asian Infrastructure Investment Bank (AIIB) alongside its other member countries, Chinese president Xi Jinping said at the virtual opening ceremony of the 2020 AIIB Annual Meeting this week.

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China has done “a lot of work” to implement the phase one trade deal with the US since it was signed, and as a result, there have been “positive developments” in expanding US imports, said Ning Jizhe, deputy head of the National Development and Reform Commission.

By Addison Gong, Rebecca Feng
31 Jul 2020