Copying and distributing are prohibited without permission of the publisher.

Watermark

The week in review: China’s GDP grows 2.3% in 2020, regulator expands market bans on securities-related violations, Ant works on business overhaul timetable

Economic recovery_adobe_575px_18Jan21
By Addison Gong
18 Jan 2021

In this round-up, China’s coronavirus-hit economy grows 2.3% year-on-year in 2020, the securities regulator plans to introduce more bans on those who break rules in the onshore capital markets, and the vice central bank governor says Ant Group will give a timetable for the shakeup of its businesses.


China’s GDP exceeded Rmb100tr in 2020 to reach Rmb101.6tr ($15.7tr), the National Bureau of Statistics (NBS) said on Monday morning.

The country’s full year economic growth came at 2.3%, the slowest since the 1970s. The fourth quarter 2020 GDP increased 6.5% compared to a year ago.

*

For the first time in eight years, growth in real estate loans in China is slower than loans from other sectors, said the head of financial markets department at the People’s Bank of China (PBoC) at a State Council briefing last Friday. He added that the central bank will ensure the “continuity, consistency and stability” of its financial policy for the real estate sector, increase support for the rental market, and promote the stable and healthy development of the Chinese property market. 

*

The weighted average interest rate of corporate loans was 4.61% at the end of December, the lowest on record and 0.61 percentage points below what was seen a year ago, said the head of the central bank’s monetary policy department at the same State Council briefing.

*

The China Banking and Insurance Regulatory Commission (CBIRC) and the PBoC last Friday published a notice banning Chinese commercial banks from offering online deposit products, including time deposit products, through third-party internet platforms. The move is to prevent financial risks given such business models allow local lenders to operate outside of the region they are based in, and bring challenges to the liquidity management of banks, the regulators said.

Banks are also required by the new notice to adhere strictly to existing laws and regulations, strengthen their risk management, and protect consumers’ interests when developing internet-related businesses.

*

The China Securities Regulatory Commission (CSRC) has proposed changes to rules related to securities market bans. Under current regulations, people that have engaged in financial fraud, insider trading and market manipulation can be banned from doing business in the securities market, such as becoming senior management at securities firms and listed companies.

The revised rules expand the bans to cover securities services business, and all securities issuers instead of listed companies. Those who have committed trading-related violations can be banned from directly and indirectly trading listed securities for a maximum of five years. Serious information disclosure-related violations can result in a life-long ban from the market.

*

The National Development and Reform Commission (NDRC) said it will establish a “project library” for public infrastructure real estate investment trusts (Reits). It is asking the local NDRCs to include qualified projects in the library to “lay the foundation” for the steady development of the infrastructure Reits pilot programme in China. Local NDRCs have been told to submit the first batch of selected projects before March 5.

*

Creditor committees at heavily indebted corporations can be set up by a minimum of three financial institutions that are debtors or bond trustees, according to a new joint rule by the CBIRC, CSRC, NDRC and the PBoC.

*

The CSRC plans to revise the trading rules of convertible bonds, its spokesperson Gao Li said in a Friday press conference.

*

Ant Group has set up a working group at the instruction of Chinese financial regulators, vice central bank governor Chen Yulu said. The company is working on a timetable to overhaul its business, while maintaining normal operations and ensuring the quality of services to the public, he added.

*

The National Association of Financial Market Institutional Investors (Nafmii) has revised the self-regulating guide for market-makers in the interbank bond market and updated its evaluating system of the market-makers. It has added stricter requirements on internal control and more detailed description on prohibited behaviour. It will publish a quarterly evaluation of the market-makers. The moves are expected help increase liquidity in the interbank market, Nafmii said.

*

In outgoing US president Donald Trump’s possible last action against Huawei Technologies, the White House is revoking some licenses for Huawei suppliers, including Intel, to sell to the Chinese telecommunications company, Reuters reported, citing people familiar with the matter. Dozens of other applications to supply Huawei are likely to be rejected, the wire added.

*

The Hong Kong-listed shares of Xiaomi Corp lost nearly 11% of its value on Friday after it was put on a US blacklist of firms with alleged ties to the Chinese military. In a stock exchange filing, Xiaomi said it “provides products and services for civilian and commercial use” and is “not owned, controlled or affiliated with the Chinese military”. It is studying the potential impact of the US’s move, and plans to “take appropriate course of actions” to protect its interest and that of its shareholders, the company added.


By Addison Gong
18 Jan 2021