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Coming up on today’s program.
PBOC's governor pledged to accommodate monetary policy to support economic recovery;
China changes Covid-19 quarantine rules in first step towards easing border controls.
Here’s what you need to know about China in the past 24 hours
The People’s Bank of China (PBOC) pledged to maintain a supportive monetary policy to aid the economy’s recovery from Covid outbreaks and other stresses.
"This year, we face some downward pressures of growth due to Covid-19 and external shocks, and the monetary policy will continue to be accommodative to support economic recovery in an aggregate sense," PBOC’s governor Yi Gang said in an interview on Monday.
The central bank’s “high priorities” are to maintain stable prices and maximise employment, Yi said. It will also continue to focus on structural policies such as those supporting small businesses and green projects, he said.
Growth of broad money M2 and total social finance is in line with the nominal GDP growth rate, and provides ample liquidity and support to small- and medium-sized enterprises with the purpose of maximizing employment, Yi said.
China’s “real interest rate is pretty low” after taking inflation into account, Yi said, adding that the inflation outlook is stable, with consumer prices rising 2.1 percent in May and producer prices increasing 6.4 percent. In China, interest rates are determined by market supply and demand, and the central bank guides market interest rates with monetary policy instruments.
Recent data suggested activity in the world's second-largest economy is beginning to recover in some sectors after widespread Covid-19 lockdowns in April and early May, but headwinds persist.
The PBOC has pledged to step up support for the slowing economy, but analysts say the room to ease policy could be limited by worries about capital outflows, as the US Federal Reserve raises interest rates.
In response to a question about the yuan’s recent depreciation, he said China has a flexible and market-determined exchange rate system using a basket of currencies as reference. The yuan has strengthened against the US dollar by 25 percent over the past two decades and even more in real terms, he said.
To tackle global warming, China has pledged to bring its emissions to a peak before 2030 and to become carbon neutral by 2060. Yi said China’s outstanding green loans exceeded 18 trillion yuan as of March, while outstanding green bonds reached about 1.3 trillion yuan.
The country will promote its climate information disclosure and guard against various "moral hazards", such as green-washing, low-cost fund arbitrage, and green project fraud, the governor said.
The State Administration for Market Regulation, China's top market watchdog, raised the revenue bar for declaring a "concentration of operators" in a revised draft, after another five draft rules and provisions related to anti-monopoly practices were opened to public comment on Monday. According to the draft, China will raise the bar for companies to declare such behaviour, from the current 10 billion yuan and 2 billion yuan to 12 billion yuan and 4 billion yuan, respectively, in terms of global and China turnover.
Update on COVID-19
China will halve its COVID-19 quarantine period for visitors from overseas to seven days, with a further three days spent at home, health authorities said on Tuesday, the first step towards easing its border restrictions. The change came in the National Health Commission's latest guideline on measures against the disease. The new playbook also stipulate standards and disease control measures for medium- and high-risk areas.
Moving on to regional highlights
The PBOC has effectively improved the level of connectivity in the financial markets of the Greater Bay Area, by exploring an array of innovative cross-border businesses such as the cross-border trade and investment pilot program, cross-boundary wealth management connect, and free trade (FT) pilot scheme, deputy chief of Guangzhou branch of the PBOC said Tuesday at a press conference on the opening up and development of the city’s Nansha district. By the end of May, over 7,000 FT accounts had been opened in Nansha Pilot Free Trade Zone, handling capital transactions worth over 1 trillion yuan.
Shanghai's foreign trade volume reached 1.5 trillion yuan in the first five months of 2022, a year-on-year decline of 14.7 percent due to an Omicron outbreak in early March that lasted till late May, media reported on Monday.
Next on industry and company news
Shanghai Disney Resort said on Tuesday it would reopen the Disneyland theme park on June 30, a month after the Chinese economic hub lifted a two month-long COVID-19 lockdown. The theme park has been shut since March 21, when the resort closed its doors amid an uptick of cases in Shanghai. Related searches of “Disney” on online travel platforms saw a 6-fold surge today.
China announced on Tuesday that it will cut the price of retail oil in reaction to global markets, with the National Development Reform Commission (NDRC) saying that the price of gasoline and diesel will go down by 320 yuan and 310 yuan per tonne, respectively. Starting midnight tonight, private car owners would be able to save up to 12.5 yuan to fill up a 50L tank of 95# gasoline.
Shares in Tianqi Lithium advanced as much as 4 percent today after China’s biggest lithium extractor said a unit will supply South Korean chemicals and electric car battery giant LG Chem with raw materials over a four-year period. The Shenzhen-listed lithium giant plans to debut in Hong Kong's stock market on July 13, looking to raise up to US$1.2 billion, which could be the largest listing in Hong Kong in recent years.
Chinese tech giant Tencent Holdings Group has reported a large-scale hacking operation to access users' QQ social media accounts via fake QR codes. The stolen accounts were used by a criminal gang to disseminate pornographic images and advertisements, the Shenzhen-based firm said in a statement on Weibo yesterday. On June 26, some QQ users reported that their accounts had been hacked.
Miniso Group Holding, a Chinese budget retailer of lifestyle and household goods, has passed the hearing for a dual primary listing in Hong Kong, the bourse said Monday. The New York-listed retailer is considering a stock offering to raise up to US$100 million and is planning to start assessing investor demand as early as this week, media reported. Bank of America Securities, Haitong International Securities Group, and UBS Securities will be the joint sponsors.
Wrapping up with a quick look at the stock market
Chinese stocks closed higher on Tuesday, propelled by China’s decision to ease some quarantine requirements for international arrivals, supporting gains across the tourism and hospitality sectors. By the close, the benchmark Shanghai Composite edged up 0.89 percent and the Shenzhen Component gained 1.23 percent. Hong Kong’s Hang Seng index also climbed 0.85 percent.
Biz Word of the Day
Real economy refers to the part of a country's economy that produces goods and services, rather than the part that consists of financial services such as banks, stock markets, etc.
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Host: Stephanie LI
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