Posts tagged ‘Renminbi’

20/10/2015

Survey Shows China Passes U.S. in Stuff Built – China Real Time Report – WSJ

China is the world’s No. 2 economy by most measures, but by one it has surpassed the U.S. China has overtaken the U.S. as the world’s wealthiest nation in terms of built assets in 2014, and is likely to double that of the U.S. by 2025, according to the Arcadis Global Built Asset Wealth Index.

The study compares 32 countries in terms of their buildings and infrastructure – homes, schools, roads, airports, power plants, malls, rail tracks  and other structures. In fact, China’s stock of built assets will exceed the next four economies combined in the next 10 years, according to the index.

The firm calculates the data at purchasing-power-parity rates, which adjusts the figures to account for differing costs in each country. That measure tends to boost the size of figures from developing countries. China has the largest stock of built assets at $47.6 trillion in 2014 and the U.S. came in second at $36.8 trillion, according to the study released Monday. In the last report, the U.S. was ahead at $39.7 trillion in 2012 compared to China’s $35.4 trillion. China’s rapid asset building came alongside soft investment in the U.S. to replace old machinery, equipment and buildings, the report said.

The index is billed as an alternative economic indicator to measure a country’s performance. the index quantifies the value of a country’s infrastructure as well as its public and private property.

Policymakers have been trying to direct the Chinese economy to rely more on consumer spending rather than investment. Still,  the pace of economic rebalancing has been slow, leading to softer growth despite some positive signs in China’s consumer sector.

The transition “is encountering difficulties, as the government has repeatedly used fiscal stimulus to try to meet its growth targets,” said the report. “The proportion of the economy accounted for by investment is falling only very slowly.  This keeps China’s built asset stock growing rapidly.”

China’s economy grew at 6.9% in the third quarter this year, falling below 7% for the first time since 2009. In the past two years, Beijing has been struggling to turn to more sustainable drivers of growth amid mounting concerns about manufacturing overcapacity and an oversupplied property market.

“There is also likely to be significant underutilization of assets in China given growth is so rapid and much asset creation is pre-emptive, also known as ‘build it and they will come,’” said the biennial report. Since 2000, China has invested $33 trillion in built assets, with its investment in infrastructure at 9% of GDP, dwarfing the U.S.’s current 2%said the report. In per capita terms, however, populous China appears far from being overbuilt.

China’s built asset wealth per person stood at $34,100, which ranks it No. 24 worldwide, unchanged from its previous ranking in 2012, according to the index. The latest figure is slightly less than a third of the U.S. per capita figure of $114,100. The countries at the top of this ranking are disproportionately made up of smaller nations by population or area, hence the density of built asset stock is much greater per resident, the report said.

Source: Survey Shows China Passes U.S. in Stuff Built – China Real Time Report – WSJ

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11/08/2015

China Shakes Markets with Yuan Move – China Real Time Report – WSJ

China devalued the yuan by nearly 2% on Tuesday in a surprise move that shook markets around the world and appeared to be a response to sharply weaker exports and plummeting factory prices in a softening economy. The central bank described its action as a new way of setting the daily parity or reference rate – a rate it sets for the currency against the dollar –  to better reflect market rates.  (The markets get a chance to trade the currency around that rate, but not by much. The yuan can go up or down only 2% from that crucial central rate.)

So far this year, the parity rate has hardly budged against the dollar even though the latter has been rising steadily against other currencies. That has made China’s exports more expensive in many markets just as the world’s second largest economy is slowing.  The People’s Bank of China says it will now pay more attention to the market levels when it sets its parity rate. It also called the move a “one-time fix.”

Economists are hotly debating the significance of the move, in part because it seems to be speaking to many different audiences. It will help the struggling export sector, which has stalled amid weak global demand. Exports in July, for example, sank more than 8% and they were down nearly 1% for the first seven months of the year.

At the same time, it was essential for the People’s Bank of China not to alarm domestic and foreign investors to avoid triggering a wave of capital outflows. Investors tend to dump a weakening currency and move their assets into other currencies. Thus, the PBOC said the move was a one-time reform effort to bring the yuan more in line with the markets.

Finally, the central bank may also have had the International Monetary Fund in its sights. The yuan is up for possible inclusion in international agency’s Special Drawing Rights, a basket of currencies that serves as a global reserve. Too big a move might have damaged Beijing’s case that the yuan is a suitable candidate for addition to that basket of currencies, analysts said.

via Economists React: China Shakes Markets with Yuan Move – China Real Time Report – WSJ.

11/03/2015

Nuclear Power Gains Traction in China – China Real Time Report – WSJ

China’s government is breathing life into its nuclear sector with the approval of the country’s first new reactors in more than two years. As the WSJ’s Brian Spegele reports:

The National Development and Reform Commission, China’s top economic-planning agency, approved construction of two reactors in the country’s northeastern Liaoning province by state-owned China General Nuclear Power Corp., according to a statement to the Hong Kong Stock Exchange by the company’s listed unit, CGN Power Co.

China is the world’s biggest nuclear growth market. The country operates 24 reactors currently. A further 25 are under construction, out of 68 globally, according to the IAEA. China doesn’t disclose total spending, but based on the cost of reactors, its buildout represents tens of billions of dollars in potential new business for Chinese and foreign companies over the coming decade.

via Nuclear Power Gains Traction in China – China Real Time Report – WSJ.

16/02/2015

Li gives residents keys to ‘new life’|Politics|chinadaily.com.cn

The set of keys that Xiao Wenmei received from Premier Li Keqiang opens up not only her new apartment but her future.

Li gives residents keys to 'new life'

Li visited the newly finished Yu’an community in Guiyang, Guizhou province, and helped distribute keys to the new apartments on Saturday.

“Have you seen your new apartment?” Li asked as he handed keys to Xiao. “It is not only the key to your home but also to your new life.”

He then posted a fu character, a traditional Chinese paper cutting for Spring Festival, at the community’s main office.

“A new community is not only about building new houses but also about people’s new lives, so they can live in a comfortable and safe environment,” he said.

Xiao, 32, was still excited as she recalled the moment she received the keys from the premier. She said her family is busy preparing to move into the new apartment before Chinese New Year’s Eve “as a good start of the year”.

She has lived with her husband and kids in a nearby village, where houses leaked and roads became muddy during rainstorms. The local government invested 3 billion yuan ($481 million) in 2009 to build 8,500 apartments for 5,000 households in Xiao’s community.

Xiao’s family was allotted two apartments, about 300 square meters, as were some other families.

“We’ll move into one apartment and rent the other out,” she said. “A new house is like a big dream for my family.”

The Chinese government has counted heavily on the rebuilding of urban shantytowns to drive domestic demand and improve people’s living conditions.

via Li gives residents keys to ‘new life’|Politics|chinadaily.com.cn.

30/03/2014

Germany, China say renminbi hub in Frankfurt will boost trade | Reuters

A decision by Germany and China to make Frankfurt a European hub for financial transactions in the Chinese currency will give new momentum to trade between the two economic powers, Chinese President Xi Jinping and a German minister said on Saturday.

China's President Xi Jinping waves to media following a joint news conference with German Chancellor Angela Merkel after an agreement signing, at the Chancellery in Berlin March 28, 2014. REUTERS/Fabrizio Bensch

In a speech to politicians and business leaders in the city of Duesseldorf, Xi said setting up the hub for the renminbi in Germany “represents an important step on the road of the internationalisation of our currency,” according to a translation.

The Bundesbank and the People’s Bank of China signed an agreement on Friday to facilitate transactions in the Chinese currency in Frankfurt and to cooperate more closely in clearing and settlement arrangements of renminbi payments.

Up to now, transactions in China’s currency, the renminbi or yuan, have been impractical for all but very large European companies that are able to involve China’s central bank in a deal, because the renminbi is not freely convertible.

via Germany, China say renminbi hub in Frankfurt will boost trade | Reuters.

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20/02/2014

China, UK discuss setting up yuan clearing bank in London – Osborne | Reuters

The British and Chinese governments are in active discussions about setting up a clearing bank in London for China’s currency, a milestone that will put the city in a leading position to offer yuan trade business in Europe.

British Chancellor of the Exchequer George Osborne listens to a question after his speech during a breakfast meeting held by the British Chamber of Commerce in Hong Kong February 20, 2014. REUTERS/Bobby Yip

Taking a leaf out of Hong Kong’s blueprint in being the leading offshore yuan hub after the establishment of Bank of China (Hong Kong) as a clearing bank, the authorities are pressing ahead with having one for the city of London.

The move will help expand the Chinese currency‘s footprint beyond Hong Kong, where more than 80 percent of yuan trade settlement transactions are handled and foster greater confidence among European companies to adopt the yuan, also known as the renminbi, as a currency for trade.

“The UK and Chinese governments are in active discussions now about the appointment of a RMB clearing bank in London, recognising London’s role as the Western centre of offshore RMB

via China, UK discuss setting up yuan clearing bank in London – Osborne | Reuters.

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13/12/2013

Could a Shanghai Exodus Be in the Air? – China Real Time Report – WSJ

China’s effort to turn Shanghai into a global financial center came under a cloud this month—or, rather, under a choking blanket of smog that has affluent residents talking about bolting.

English: Shanghai Smog

English: Shanghai Smog (Photo credit: Wikipedia)

As Wei Gu writes in this week’s The People’s Money column:

China’s pollution problem is spreading and growing worse, a fact on stark display last week in Shanghai, the country’s financial center. A stretch of filthy-air days in that coastal city so thoroughly shocked residents—who had largely escaped the smog that has long plagued the likes of Beijing and Harbin—that it inspired fresh talk about getting away from China.

Over the past century, migration has almost always been driven by a desire to get ahead. But today more affluent Chinese are talking about accepting a climb-down on the career ladder and a less-exciting lifestyle in exchange for cleaner air, safer food and a different education system.

via Could a Shanghai Exodus Be in the Air? – China Real Time Report – WSJ.

03/12/2013

China’s yuan surpasses euro as 2nd most-used currency in trade finance: SWIFT | Reuters

China\’s yuan currency overtook the euro in October, becoming the second-most used currency in trade finance, global transaction services organization SWIFT said on Tuesday.

100 Yuan notes are seen in this illustration picture in Beijing November 5, 2013. REUTERS/Jason Lee

The market share of yuan usage in trade finance, or Letters of Credit and Collection, grew to 8.66 percent in October 2013. That improved from 1.89 percent in January 2012.

The yuan, also known as the renminbi, now ranks behind the U.S. dollar, which remains the leading currency with a share of 81.08 percent.

The top five countries using the yuan for trade finance in October were China, Hong Kong, Singapore, Germany and Australia, SWIFT said in a statement.

\”The RMB is clearly a top currency for trade finance globally and even more so in Asia,\” Franck de Praetere, SWIFT\’s Asia Pacific head of payments and trade markets said.

The RMB remained the 12th payments currency of the world, with a slightly decreased share of 0.84 percent compared with 0.86 percent in September.

RMB payments increased in value by 1.5 percent in October, while growth for all payments currencies was at 4.6 percent.

The world\’s second-largest economy is accelerating the pace of financial reform to promote its currency to international players beyond Hong Kong. China aims to lift the yuan\’s global clout and reduce its reliance on the U.S. dollar.

via China’s yuan surpasses euro as 2nd most-used currency in trade finance: SWIFT | Reuters.

01/06/2013

Yuan may continue to appreciate

China Daily: “The yuan may be trading at below 6.1 against the US dollar as the Chinese currency continues to rise in the next few months, said a currency analyst at DBS Bank.

Yuan may continue to appreciate

A trader with an Asian bank in Shanghai said that the yuan’s valuation has peaked for a few days, while sales of dollars are easing.

An employee from the Industrial and Commercial Bank of China is counting the renminbi and Japanese yen in Huaibei, Anhui province, on May 17. The yuan has gained some 20 percent against the yen since the beginning of the year. Woo He / For China Daily

“Most of my peers working in Shanghai share the opinion that in the short term the renminbi may further appreciate against the US dollar,” the trader said.

China’s central bank, the People’s Bank of China, set the yuan’s midpoint at a record-high level of 6.1796 against the US dollar, while the spot yuan closed at 6.1345 per dollar on Friday.

It has been 12 months since Japan’s yen and China’s yuan became directly convertible, and the yuan has gained some 20 percent against the yen since the beginning of the year.

The appreciation of the yuan and the depreciation of the yen may cast risks to China’s currency as it’s the only currency which lacks the elasticity of East Asian economies, wrote Liu Yuhui, a financial researcher at the Chinese Academy of Social Sciences in an article published on Tuesday.

“It has been very difficult for us to guarantee orders from Japan these days because our price advantage disappeared,” said Yuan Hongtao, owner of a Hangzhou-based plastic production company, which exports some 40 percent of its products to Japan.

Analysts said that policymakers now have to figure out ways to help companies grow, as the renminbi is increasingly going global.

“While the benefits of direct convertibility between the renminbi and other currencies are obvious, including cutting the costs of exchange and reducing the risks brought by the fluctuation of the US dollar, it can also bring some risks to companies and regions in China whose growth is driven by foreign trade,” said Liu Yang, a foreign exchange analyst with Shanghai Gaofu Consultancy.

Currently, the yuan is directly convertible to the yen and the Australian dollar. New Zealand and China are in an early stage of negotiations for direct convertibility of each other’s currencies, according to a Reuters report on May 26.

“One important step to make the renmibi more internationalized is to use more yuan in direct investment overseas”, said Nathan Chow, vice-president and economist of group research with DBS Bank (Hong Kong) Ltd.

Chow said that only about 6 percent of China’s outbound direct investment uses renminbi, while 36 percent of foreign direct investment in China uses renminbi.

If regulations on ODI using renminbi are eased, a large amount of yuan will be released to overseas markets and help divert risks of the fluctuation of the US dollar, which is being used for foreign exchange reserves, said Chow.

He added that more big corporations may want to issue dim sum bonds — yuan-denominated bonds issued in Hong Kong — as the renminbi bond market grew significantly this year, driven by lower funding costs, improved macroeconomic conditions and the heightened expectations for yuan appreciation.

“Despite all these factors, market facilities for renminbi bonds still have a lot of catching up to do. Decision makers and financial institutions need to work closer with corporations, while continuing to improve the fundraising infrastructure in offshore renminbi centers such as Hong Kong and Singapore,” he said.

The yuan had appreciated 1.72 percent against the dollar since the beginning of the year, following a moderate gain of 1.03 percent throughout 2012.”

via Yuan may continue to appreciate |Economy |chinadaily.com.cn.

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13/04/2013

* France plans currency swap line with China: paper

Reuters: “China to make Paris a major offshore yuan trading hub in Europe, competing against London, the China Daily on Saturday cited Bank of France Governor Christian Noyer as saying.

A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei, Anhui province, June 8, 2012. REUTERS/Stringer

Yuan deposits in Paris amount to 10 billion yuan ($1.6 billion), making it the second largest pool for the Chinese currency in Europe after London. Almost 10 percent of Sino-French trade is settled in yuan, also called the renminbi or RMB, according to French data cited by the official newspaper.

“The Bank of France has been working on ways to develop a RMB liquidity safety net in the euro area with due consideration of a supporting currency swap agreement with the People’s Bank of China,” Noyer told the English-language newspaper.

The yuan’s internationalization and bilateral financial cooperation could be among the main topics during French President Francois Hollande’s visit to China in late April, the paper said.”

via France plans currency swap line with China: paper | Reuters.

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