The week in renminbi: tariffs delayed as trade deal nears, Shanghai tech board rules unveiled, Congress meeting kicks off on Tuesday

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The week in renminbi: tariffs delayed as trade deal nears, Shanghai tech board rules unveiled, Congress meeting kicks off on Tuesday

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In this round-up, the US trade representative’s office announced the delay of a China tariff increase, the Shanghai Stock Exchange released detailed rules for its tech board and China’s annual planning session gets set to address issues including economic growth targets and foreign market access

The office of the US trade representative has indicated the delay of tariff increase that was scheduled to hit Chinese goods on Friday, the original deadline for trade talks. It will publish a formal notice on Tuesday. China’s Ministry of Finance issued a statement on Saturday saying that it welcomed the decision.

The move fueled rising hope about an end to the trade war. Bloomberg and the Wall Street Journal reported over the weekend that a deal is close in sight and will be signed at a meeting between Chinese president Xi Jinping and US president Trump in March. But although that is good news for Chinese and US corporations, some analysts warned investors that it may already be reflected in current asset prices.

“Investors need to gauge how much of the positive trade news has been priced in and whether markets can rally further if a trade deal is signed,” Timothy Moe, co-head of Asian economics, strategy and commodity research at Goldman Sachs, wrote in a Friday note. “While disentangling trade from other drivers of this rally is difficult, we adopt a composite approach to evaluate the market upside if a trade deal is reached. The bottom line is that regional valuations look fair relative to the macro backdrop.”

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China Securities Regulatory Commission and the Shanghai Stock Exchange unveiled detailed rules for the science and technology innovation board on Friday late evening,

The new rules shortened the lock-up period after an IPO from three years to one year, clarified the extent of financial disclosures for all companies and laid down specific guidelines for red chip companies, which are Chinese companies incorporated in Hong Kong. The CSRC said it would respond to applications from IPO candidates within five working days after receiving documents.

The rules took effect on Friday.

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The National People’s Congress will begin meeting on Tuesday, kicking off the most important gathering in China’s political calendar. Premier Li Keqiang will deliver the annual government work report, which will include targets for GDP growth and the fiscal deficit.

The meeting is one part of Liang Hui, which translates as the Two Sessions. It will run alongside a meeting of the Chinese People’s Political Consultative Conference, an advisory body, which started on Sunday.

Any new economic policy announcements at the Two Sessions are likely to focus on supporting growth, HSBC economists Ma Xiaoping and Julia Wang said in a Friday note. They said they expected China to grow its fiscal deficit to around 3%, allowing a cut in value-added tax.

The government will propose a plan to Congress this week to reduce taxes, including indirect taxes such as social security fees. It has an annual target of cutting more than Rmb1.3tr, according to a Monday announcement.

Apart from tax cuts, the new Foreign Investment Law, which was finalised in early February, is also set to be submitted to top legislature on March 8 and be voted into effect on March 15, local media reported.

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Chinese smartphone maker Huawei published a whole-page advertisement in The Wall Street Journal on Friday. The advert was aimed at US journalists and headlined: “Don’t believe everything you hear. Come and see us.” The company also sent an emailed invitation a select group of US journalists to visit its office and campuses in China.

Catherine Chen, board director at Huawei, said she hoped the US government and the general public would come to understand Huawei better. 

On the same day, Canada said that it would start extradition proceedings for Huawei’s CFO Meng Wanzhou, who is wanted by US officials. Lu Kang, a spokesperson of China’s foreign ministry, condemned the move.

“The US and Canada are abusing their bilateral extradition treatment and randomly adopting forceful measures to a Chinese citizen,” he said. “This is a serious violation of a Chinese citizen’s legal rights.”

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China’s Supreme People’s Court has issued a five-year plan to encourage courts nationwide to make better use of technology, such as big data and artificial intelligence, to speed up judicial process, according to a statement on February 27.

The 65-item guideline ordered courts to explore ways to deliver legal documents online and make more use of mobile phones.

“These moves aim to offer more convenience for litigants,” said Hu Shihao, director of the top court's Judicial Reform Office. “I believe better use of technologies and the internet will help judges handle the rapid growth of cases more effectively.”

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