- the People’s Bank of China has injected hundreds of billions of yuan into the financial system after some smaller lenders failed to make debt payments in the interbank market
- Tuesday’s injections followed missed interbank payments on Monday
- The institutions that missed payments included rural commercial banks
President Donald Trump declared China the “grand champions” of currency manipulation on Thursday, just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing’s foreign exchange practices.
In an exclusive interview with Reuters, Trump said he has not “held back” in his assessment that China manipulates its yuan currency, despite not acting on a campaign promise to declare it a currency manipulator on his first day in office.
During his presidential campaign Trump frequently accused China of keeping its currency artificially low against the dollar to make Chinese exports cheaper, “stealing” American manufacturing jobs.
But Treasury Secretary Stephen Mnuchin told CNBC on Thursday he was not ready to pass judgment on China’s currency practices.
In China’s latest test of the US response to its escalating claims of islands in the South China Sea, Reuters reports that Beijing has “nearly finished building almost two dozen structures on artificial islands in the South China Sea that appear designed to house long-range surface-to-air missiles.” Predictably, such a development will likely raise questions about whether and how the United States will respond, given its vows to take a tough line on China in the South China Sea. The structures appear to be 20 meters (66 feet) long and 10 meters (33 feet) high.
Official cited by Reuters said the new structures were likely to house surface-to-air missiles that would expand China’s air defense umbrella over the islands. They did not give a time line on when they believed China would deploy missiles on the islands. “It certainly raises the tension,” Poling said. “The Chinese have gotten good at these steady increases in their capabilities.”
China’s Mischief Reef in the disputed Spratly Islands in the South China Sea
Warning India against playing the ‘Taiwan card’, an op-ed article in Global Times said that New Delhi will suffer losses by challenging “one China” policy.
The editorial titled ‘New Delhi will suffer losses if it plays Taiwan card’ reminded India that even the new US President Donald Trump has made a U-turn on challenging the ”one China” policy.
“By challenging China over the Taiwan question, India is playing with fire. At a time when new US President Donald Trump has put the brakes on challenging China over the Taiwan question, agreeing to change course and respecting the “one China” policy, India stands out as a provocateur,” the article said .
“High-level visits between India and Taiwan are not very frequent, so why did India invite the Taiwan delegation to visit at this time?” the article asked referring to Taiwanese MPs delegation.
It is the first such visit since the Taiwanese President Tsai Ing-wen administration took office, it said.
Tsai, who won on elections last year is a strong supporter of Taiwan’s independence from China.
Sellers of assets in Europe and the US are becoming increasingly wary of large deals with Chinese buyers, according to people involved with several cross-border transactions involving China.
China notched up a record capital exodus last year, driven by expectations that the renminbi would continue to weaken against the dollar, and as slowing domestic growth diverted investment elsewhere.
On Friday, the US Commerce Department announced its plans to raise import tariffs for the Chinese stainless steel products from 63 percent to 190 percent citing a probe that found they were selling on US market at dumping-level price.
“China is disappointed that the United States continued to launch high taxes on Chinese steel export products and calls into question the unfair way the US conducted its investigation,” Wang said, as quoted by the South China Morning Post newspaper.
The United States did not take into the account the evidence previously submitted by the Chinese steel manufacturers and avoided cooperation with the Chinese government, violating the rules of the World Trade Organisation (WTO), the Chinese official underlined.
This is a second blow for the Chinese steel importers in the recent months. The European Commission imposed in January anti-dumping duties on Chinese stainless steel tubes and pipe butt-welding fittings to protect its industry from steel overcapacity.
According the European Commission, Chinese imports will be taxed with duties ranging from 30.7 to 64.9 as its investigation commission confirmed that Chinese stainless steel products had been sold in Europe at dumping prices.
The latest diplomatic spat between the US and China erupted overnight, when China said on Tuesday it had “irrefutable” sovereignty over disputed islands in the South China Sea after White House spokesman Sean Spicer vowed to defend “international territories” in the strategic waterway. Spicer’s first official comments on Monday signaled a sharp departure from years of cautious U.S. handling of China’s assertive pursuit of territorial claims in Asia.
“The U.S. is going to make sure that we protect our interests there,” Spicer said when asked if Trump agreed with comments by his secretary of state nominee, Rex Tillerson. Two weeks ago, Tillerson said China should not be allowed access to islands it has built in the contested South China Sea.
“It’s a question of if those islands are in fact in international waters and not part of China proper, then yeah, we’re going to make sure that we defend international territories from being taken over by one country,” Spicer said.
While it will hardly come as a surprise to China watchers who have for years mocked China’s cooked “data”, overnight the state-run People’s Daily reported that the severely impacted by the commodity crunch of the past 2 years rust-belt province of Liaoning fabricated fiscal numbers from 2011 to 2014, citing local officials have said, raising fresh doubts about the accuracy of China’s economic data just two days ahead of the release of China’s GDP report.
Why paint a rosier picture? The same reason as alwasy: Chen said the data were made up “because officials wanted to advance their careers.” The fraud misled the central government’s judgment of Liaoning’s economic status, he said, citing a report from the National Audit Office in 2016.
The admission of fraud comes now because with growth now moderating, officials have “sought to improve the credibility of economic data” as diffusing financial risks becomes a key policy consideration, along with keeping growth ticking along at a rapid clip.
And while the outgoing Obama administration is cracking down on “fake news”, Ning Jizhe, head of the National Bureau of Statistics, has said China is focusing on preventing “fake economic data” as well as increasing the quality of its statistics. Naturally, incidents such as this one will make China watchers that much more skeptical.
Fake economic data may be the least of Liaoning’s worries which in recent years has seen an unprecedented purge of more than 500 deputies from its legislature Bloomberg reports. The deputies were implicated in vote buying and bribery in the first provincial-level case of its kind in the Communist Party’s almost seven-decade rule, according to the official Xinhua News Agency. Former provincial party chief Wang Min, who led Liaoning from 2009 until 2015, was earlier expelled following corruption allegations by China’s top anti-graft watchdog.
As China’s debt-fueled economic impulse continues, if only for a few more months, we wxpect more such instances of fake data to swim to the surface.
Chinese President Xi Jinping delivered a keynote speech on Tuesday at the opening plenary of the 2017 annual meeting of the World Economic Forum in the Swiss town of Davos.
Here are 10 quick takeaways from the 50-minute address, which touched upon globalization, protectionism, world economy and China’s development among other subjects.
1. Many of the problems troubling the world are not caused by economic globalization. Just blaming economic globalization for the world’s problems is inconsistent with reality, and it will not help solve the problems.
2. Whether you like it or not, the global economy is the big ocean that you cannot escape from. Any attempt to cut off the flow of capital, technologies, products, industries and people between economies, and channel the waters in the ocean back into isolated lakes and creeks is simply not possible. Indeed, it runs counter to the historical trend.
3. At present, the most pressing task before us is to steer the global economy out of difficulty.
4. Lack of robust driving forces for global growth makes it difficult to sustain the steady growth of the global economy; inadequate global economic governance makes it difficult to adapt to new developments in the global economy; uneven global development makes it difficult to meet people’s expectations for better lives.
5. The world should develop a dynamic, innovation-driven growth model; pursue a well-coordinated and inter-connected approach to develop a model of open and win-win cooperation; develop a model of fair and equitable governance in keeping with the trend of the times; and develop a balanced, equitable and inclusive development model.
6. Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war.
7. The Paris Agreement is a hard-won achievement which is in keeping with the underlying trend of global development. All signatories should stick to it instead of walking away from it as this is a responsibility we must assume for future generations.
A commentary piece in Xinhua that outloines current challenges facing the Chinese economy:
- Such as a weak global recovery, rising trade protectionism, domestic debt overhang & excess capacity
- China’s contribution to world growth in 2016 is again poised to top that of all other countries, exceeding the figure for all developed economies combined
- The IMF has projected China’s growth to be 6.6 percent with global growth at 3.1 percent in 2016
- However, China’s growth last year appears set to hit 6.7 percent