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Monday July 2, 2018

At a Glance

Payment fi rmsTHE central bank said Friday payment fi rms will be required to deposit 100 percent of their total client funds with a central custodian by Jan. 14, 2019, marking the latest step to tighten supervision for third-party payment fi rms.

The People’s Bank of China said the measure was part of a broader effort to crack down on fi nancial risk. It has already raised the reserve funds ratio of third-party payment fi rms to 50 percent in April from 20 percent previously.SME services planCENTRAL bank Governor Yi Gang asked commercial banks to report their fi nancial services plan for smaller fi rms to the central bank and bank-ing sector regulator, starting in the third quarter, media reports said Friday.

The People’s Bank of China said earlier in the day it will expand coverage and increase credit supply for smaller fi rms.South Korea fi rmsPREMIER Li Keqiang said Friday he welcomes South Korean fi rms to expand investment in China for major projects, especially in the electronics sector, media reports said.

The reports said Li met with executives of South Korean fi rms including Samsung Electronics Co., Hyundai Motor Co. and SK Holdings Co. During the meeting, Li also called on South Korea to work with China in order to safeguard multilateralism and the free trade system.Monetary easingTHE government cannot rely on monetary policy easing to resolve its structural prob-lems, the central bank’s chief researcher said in an opinion column Friday.

Xu Zhong also said fi scal policy should play a bigger role in China’s deleveraging pro-cess, and the country should roll out a property tax to reduce local governments’ reliance on land sales for revenue.

THE government Saturday fur-ther relaxed restrictions imposed on foreign investment in its free trade zones, in the latest step to fulfi ll its promise to open up the economy.

Publishing a revised “negative list” for investment in the zones, the National Development and Reform Commission (NDRC), China’s top economic planner, said curbs in oil and gas explo-ration, nuclear fuel production and telecommunications would be eased.

Foreign investors will no longer have to conduct oil and

natural gas exploration and development through joint ventures, and a ban on foreign investment in production of nuclear fuel and radioactive minerals will be lifted, the NDRC said in a statement.

Foreign investment limits on breeding of new crop varieties and seed production for wheat and corn will be relaxed, and opening of value-added telecom-munications will be expanded from Shanghai’s free trade zone to other zones, it added.

On Thursday, China unveiled a long-anticipated easing of for-

eign investment curbs on sectors including banking, the automo-tive and heavy industries, and agriculture.

The number of items on the negative list was cut to 48 from 63 in the previous version pub-lished in June last year.

In addition to confi rming already announced pledges to remove ownership limits fully on industries such as insurance and autos within the next three to fi ve years, China will also ease or scrap ownership caps on busi-nesses including ship and aircraft manufacturing, and power grids.

China has repeatedly said it will continue market reforms at its own pace, stressing it will make and implement decisions on opening up markets based on its own needs and not due to external pressure.

China fl agged in April that it would implement a number of the measures by the end of this year.

The changes include a previ-ously announced decision to allow 51-percent foreign own-ership of brokerages and life insurers, and to remove that cap entirely by 2021. Current rules

limiting a single foreign fi nancial institution’s stake in a Chinese commercial bank to 20 percent will also be abolished July 28.

The rule that investment by multiple overseas fi nancial insti-tutions in Chinese commercial banks must not exceed 25 percent will also be lifted.

Foreign ownership limits for passenger car manufacturing will be removed by 2022, as already announced. Restric-tions on power grids, passenger railway transport and shipping companies will also be lifted.

(SD-Agencies)

Nation further eases foreign investment curbs

THE government could impose “special emissions restrictions” on industrial fi rms in as many as 80 cities, extending the program from the current 28, an Environ-ment Ministry spokesman said Friday.

China said in January that it would force industrial fi rms in 28 northern Chinese cities to meet tough new emissions curbs in a bid to cut smog in the Beijing-Tianjin-Hebei region.

Enterprises in the thermal power, steel, petrochemical, chemical, nonferrous metals and cement sectors will be forced to comply with as many as 25 new emissions standards by Octo-ber, with coking coal producers given another year to make the required adjustments.

But some have expressed con-cern that the tougher emissions restrictions would undermine efforts to create a level playing fi eld, raising production costs and making it harder to compete with rivals in other regions.

“As China increases curbs on emissions, I believe the mea-sures will be expanded to more regions,” said Tian Weiyong, head of environmental inspec-tions at the Ministry of Ecology and Environment.

“But we might start with tighter emission standards in the 80 cities,” he told reporters during a briefi ng in Beijing.

China’s new three-year smog action plan will cover the major coal-producing regions of Shanxi and Shaanxi as well as the major manufacturing regions of Beijing-Tianjin-Hebei and the Yangtze River Delta.

Inspectors will target small-scale, “scattered” coal users in Shanxi and Shaanxi, two major coal-producing regions, Tian said.

China has promised to end a “one size fi ts all” approach to curbing smog, and will impose production curbs only on fi rms that fail to meet emission stan-dards.

Tian said China would also begin a round of inspections to ensure natural gas supplies are suffi cient in northern China this winter. (SD-Agencies)

Firms expect ‘special’ emissions limits

CHINA on Friday posted a fi nal current account defi cit of US$34.1 billion for the fi rst quarter of 2018, the fi rst defi cit since early 2010.

The fi nal fi gure compared with a preliminary defi cit of US$28.2 billion, the foreign exchange regulator said in a statement.

The quarter’s current account defi cit was equivalent to 1.1 per-cent of gross domestic product and is still within a reasonable range, the State Administration of Foreign Exchange said.

Analysts attributed the fi rst quarter’s rare current account defi cit to China’s narrowing trade surplus and a widening services trade defi cit.

“The volatile goods surplus and widening service trade defi cit show that China’s current account balance could be more volatile in future,” said Tommy Xie, China economist at OCBC Bank in Singapore. “Fundamen-tally, it will provide less support for the yuan,” he said.

The 2017 current account sur-

plus was equivalent of 1.3 per-cent of China’s gross domestic product, down from 1.8 percent in 2016, according to offi cial data released earlier.

The ratio has been falling steadily from as high as 10 per-cent in 2007.

For the January-March period, China recorded a US$72.5 billion surplus in its capital and fi nancial account, compared with a preliminary surplus of US$28.2 billion, the regulator said. (SD-Agencies)

Nation reports a rare current account defi cit

Workers make stuffed toys for export inside a factory in Linyi, Shandong Province, in this fi le photo. Growth in China’s manufactur-ing sector slowed in June after better-than-expected performance in May, offi cial data showed. SD-Agencies

GROWTH in China’s manufac-turing sector slowed in June after better-than-expected per-formance in May, offi cial data showed.

The offi cial Purchasing Man-agers’ Index (PMI) released Saturday fell to 51.5 in June, below analysts’ forecast of 51.6 and down from 51.9 in May, but it remained well above the 50-point mark that separates growth from contraction for a 23rd straight month.

The fi ndings are in line with recent data including credit growth, investment and retail sales pointing to slowing growth in China’s economy, as policymakers navigate debt risks

and a trade row with the United States.

Signifi cantly, the June new export orders index contracted for the fi rst time since Febru-ary, dropping to 49.8 from 51.2 in May.

A production sub-index fell to 53.6 in June from 54.1 in May, while a new orders sub-index declined to 53.2 from 53.8.

The PMI for large-sized fi rms fell to 52.9 in June from 53.1 in May, the index for medium-sized fi rms dipped to 49.9 from 51 while that for small fi rms rose to 49.8 from 49.6.

“Domestic demand is weaken-ing and external demand faces pressure from escalating trade

frictions between China and the United States,” said Wen Bin, senior economist at China Min-sheng Bank Corp. in Beijing.

Wen said he expected the central bank to continue to lower banks’ reserve require-ment ratios (RRR) in the coming months.

A sister survey showed growth in China’s service sector picked up slightly in June, with the offi cial non-manufacturing PMI rising to 55 from 54.9 the previous month.

On July 16, the govern-ment is due to release data on second-quarter growth in gross domestic product and other key indicators. (SD-Agencies)

Factory growth slows amid trade tensions