The Consumer Price Index (CPI) in China rose 0.8% year-on-year in August, slower than the 1% annual increase in July. The Producer Price Index (PPI) recorded a faster growth of 9.5% year-on-year compared to the previous month’s 9%.
“We think the weakness in services inflation mainly reflects softer demand amid Delta outbreak,” economists at Barclays wrote in a Thursday report, putting its CPI inflation forecast at 1.2% for 2021. “The upside surprise in August PPI inflation reflects supply restrictions and recovering construction.”
*
In dollar terms, China’s exports grew 25.6% year-on-year in August to $294.32bn, beating consensus forecast of a 17.3% increase, Tuesday data from the General Administration of Customs showed. Imports rose 33.1% from a year ago to $235.98bn. Trade surplus stood at $58.33bn for the month. Both figures also exceeded expectations.
“China’s August international trade posted a strong upside surprise,” said a note from Commonwealth Bank of Australia. “The strong trade surplus will partly offset weak domestic consumption and support Chinese growth in August.”
*
China’s foreign exchange reserves dropped $3.77bn month-on-month to $3.232tr in August, according to the State Administration of Foreign Exchange (Safe).
*
The size of the Qianhai economic zone in Shenzhen will be expanded seven-fold to 121 square kilometres, the State Council said on Monday. This is part of China’s efforts to deepen the opening up reform in the so-called “co-operation zone” between Shenzhen and the Hong Kong Special Administrative Region (SAR).
Policy makers put emphasis of the zone’s development on industries including modern services and technology, and vowed to promote free trade with Hong Kong and Macau SARs. They also want to further open up the local financial industry, and support the increase in connectivity with Hong Kong’s financial market, the cross-border use of renminbi, and cross-border securities investments.
The announcement followed a recent plan to develop the Zhuhai city’s Hengqin district adjacent to Macau. Shenzhen, Zhuhai, Hong Kong and Macau are all part of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).
Separately, at a State Council meeting chaired by premier Li Keqiang this week, Beijing said it will simplify onshore business registration procedures for investors from Hong Kong and Macau.
*
China will launch the cross-border Wealth Management Connect scheme in the GBA, as well as the southbound trading of the existing Bond Connect programme, soon, said deputy governor of the People's Bank of China Pan Gongsheng. He was speaking at a Thursday press conference — the transcript of which was published by the State Council Information Office — on Beijing’s plan on developing the Hengqin and Qianhai districts.
In addition, Pan said Chinese local governments will be encouraged to sell green bonds in Hong Kong and Macau. Pan is also the administrator of Safe.
*
The central bank said on Thursday that it will boost its re-lending quota by Rmb300bn ($46.5bn) to support small and medium-sized businesses in China. The quota will be allocated within this year to local banks, which must ensure that their SME loans have an average interest of around 5.5%.
*
The China Banking and Insurance Regulatory Commission (CBIRC) has approved the establishment of a state pension company, according to the Insurance Association of China.
The company will be based in Beijing with a registered capital of Rmb11.15bn. Seventeen state-owned entities poured money into the new entity, including the wealth management subsidiaries of 10 banks.
Beijing Infrastructure Investment Co, China Reform Holdings Corp and the wealth management arms of the big five state-owned banks are the largest shareholders. They each have an 8.97% stake.
*
By the end of July, the growth of outstanding real estate loans in China hit an eight-year low of 8.7% year-on-year, the CBIRC said in an update on Tuesday. It reiterated Beijing’s stance of “houses are for living in, not speculation”. It plans to continue working on improving the regulatory mechanism on real estate-related financings.
*
A total of 179 Chinese insurance companies reported an average comprehensive solvency adequacy ratio of 243.7% by the end of the second quarter, according to the CBIRC. Their core solvency adequacy ratio stood at 231%.
Ninety five insurers received an A rating from the regulator in its latest quarterly risk assessment of the firms. Five insurers are rated C and two have been assigned the lowest D rating, the CBIRC said in an announcement, without identifying the companies.
*
The China Securities Regulatory Commission (CSRC) has launched an investigation into Haitong Securities for alleged violations when providing financial advisory services to Southwest Pharmaceutical Co, according to a Wednesday filing.
The Shanghai-listed company is facing a potential delisting. Haitong said in the filing that it will co-operate with the regulator, and that its operations remain normal.
*
Foreign holding of bonds in China’s interbank market rose to Rmb3.78tr at the end of August, making up 3.4% of the market, according to PBoC data. The amount held by foreign accounts was Rmb3.77tr the previous month.
*
Shandong province plans to issue Rmb10bn of local government special purpose bonds on September 13 to support 12 local banks in five cities, said a Monday filing.
*
China Development Bank’s vice president, He Xingxiang, is being investigated by the Central Commission for Discipline Inspection (CCDI) for alleged “severe violations of discipline and law”, according to a Thursday announcement. The CCDI is the Communist Party’s top anti-corruption body.
He is also a member of CDB’s Communist Party committee, and has worked at another policy lender, Agricultural Development Bank of China, as well as Bank of China. His investigation follows a life sentence for former CDB chairman Hu Huaibang in January for allegedly taking Rmb85.52bn in bribes.
*
Chinese regulators held a meeting on Wednesday with online gaming giants such as Tencent Holdings and NetEase, and platforms providing services including online game streaming, according to state media Xinhua News Agency.
The companies have been told to strictly implement measures such as limiting minors’ online game play time and preventing the rent of online gaming accounts to minors. The meeting was led by the publicity department of the Central Committee of the Communist Party and the National Press and Publication Administration. Others like the Cyberspace Administration of China and the Ministry of Culture and Tourism also joined.
*
Private education companies offering tutoring on core school curriculums must not charge their students or admit new ones, before they complete the registration to become non-profit organisations, the Ministry of Education said at the end of last week.