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The week in review: PBoC publishes digital renminbi white paper, seven regulators visit Didi for cybersecurity review, Beijing extends Tomorrow group units takeover timeline

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By Addison Gong
19 Jul 2021

In this round-up, the Chinese central bank releases the first white paper for its digital currency, regulators led by the Cyberspace Administration of China conduct an on-site inspection at Didi Chuxing Technology, and the takeover period of nine financial firms linked to beleaguered conglomerate Tomorrow Holding has been extended.

Chinese holding in US Treasury bonds fell to $1.078tr in May, from $1.096tr the previous month, data from the US Department of the Treasury showed. Japan, the largest holder of US Treasuries, also reduced its investment in May to $1.266tr from $1.277tr in April. 

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The People’s Bank of China (PBoC) has published a white paper for the digital renminbi (e-CNY). The digital currency will be issued by the central bank with equal value to the renminbi, the PBoC said, adding that e-CNY will co-exist with the renminbi, as well as traditional electronic payment tools.

At a Friday press briefing, vice central bank governor Fan Yifei said there is no official timetable for the launch of e-CNY. The PBoC is working on rules for the management of e-CNY and plans to strengthen the protection of personal data, he added.

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Seven Chinese regulators, including the Cyberspace Administration of China, have launched an on-site cybersecurity review of Didi Chuxing Technology, according to an announcement. Didi’s New York-listed shares closed down 3.16% last Friday.

The others involved are the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, the Ministry of Transport, the State Taxation Administration and the State Administration for Market Regulation.

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The China Banking and Insurance Regulatory Commission (CBIRC) and the China Securities Regulatory Commission (CSRC) decided to extend the one-year takeover period of nine financial institutions with ties to Tomorrow Holding, an embattled Chinese conglomerate, by another year until July 16, 2022. The move is to “resolve the financial risks as soon as possible” and “effectively maintain financial stability”, said a CBIRC announcement.

Four insurers, two trust companies, two securities firms and a futures company are affected. They are Huaxia Life Insurance, Tianan Life Insurance Co, Tianan Property Insurance, Yian P&C Insurance Co, New China Trust Co, New Times Trust Co, New Times Securities, Guosheng Securities and Guosheng Futures.

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China Minsheng Banking Corp, Shanghai Pudong Development Bank and Bank of Communications have been fined by the CBIRC after an inspection regarding shadow banking and cross-financial businesses. The trio was penalised Rmb114.5m ($17.7m), Rmb69.2m and Rmb41m, respectively.

Among other things, the lenders were accused of allegedly failing to properly isolate risks between their wealth management and proprietary businesses and for allegedly illegally providing financing to local governments and the real estate market.

Separately, the Export-Import Bank of China was fined nearly Rmb73.5m for alleged violations related to risk management and internal control.

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The debt-to-asset ratio at central-government owned enterprises dropped by one percentage point year-on-year to 64.9% by the end of June, according to the State Council’s State-owned Assets Supervision and Administration Commission (Sasac).

The amount of corporate debt raised by central SOEs’ through bond issuance and the use of bond proceeds will be closely monitored, a Sasac spokesperson said last Friday.

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China’s new national carbon market ended its inaugural trading day at Rmb51.23 per ton on Friday after opening at Rmb48. It saw total trading value of Rmb210m, according to the Shanghai Environment Energy Exchange.

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The Ministry of Commerce and the Ministry of Ecology and Environment jointly published guidelines last Friday encouraging overseas investment from Chinese companies in clean energy sectors such as solar, wind, nuclear energy, and bioenergy.

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Some 96 foreign investment projects were signed at the Qingdao Multinationals Summit at the end of last week. The investment, totalling $11.85bn, will mainly go towards areas such as high-end equipment manufacturing, new generation information technology, high-end chemical engineering, new energy and new materials, and medical and healthcare.

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The CBIRC has launched a system to evaluate financial institutions’ performance in consumer rights protection. Banks and insurance companies are required to strengthen consumer rights protection related to the internet platforms they work with.

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The CSRC will review China Telecom’s A-share IPO application at a meeting on Thursday, the securities regulator said.

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The CSRC Shanghai bureau said it has randomly selected seven Shanghai-listed companies and two bond issuers for an onsite inspection this year.  
By Addison Gong
19 Jul 2021