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Yi Gang: Further open up the financial sector to promote high-quality growth

May 6, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: FTSE Russell Indexes, MSCI, People's Bank of China, RMB, SIFI, The People’s Bank of China - PBOC, Xi Jinping

Ladies and Gentlemen,

Distinguished Guests,

It is a pleasure to attend the China Development Forum and share with you observations on the progress and outlook of financial sector opening-up in China.

In 2018, under the leadership of the Party Central Committee with Comrade Xi Jinping at the core, the financial sector has enhanced support to the real economy, effectively mitigated and resolved financial risks, and deepened reform and opening-up. First, providing a proper monetary environment, enhancing the counter-cyclical role of monetary policy and providing adequate liquidity. Second, providing targeted support to key areas and weak links in the economy, through the “synchronized use of three arrows”, i.e. bank lending, supporting bond issuing by private enterprises, establishing equity financing instruments for private enterprises. Better financial services have been made available to the micro and small enterprises and the private sector. Third, managing and resolving financial risks effectively, the macro leverage ratio has stabilized and a balance achieved between stable growth and risk prevention. Fourth, achieving both the external and internal balance, the RMB exchange rate has been basically stable at an adaptive and equilibrium level and the BOP position has been broadly balanced. Fifth, making progress in financial sector opening up, as reflected in new measures of regulatory system reform, the improvement in the interest rate and exchange rate regime, and further opening-up of the financial sector. Promoting greater openness has been our priority in the financial sector.

I.Breakthroughs in Financial Sector Opening-up

In terms of financial service sector opening-up, President Xi Jinping announced last April in Boao to further open up the service sector “sooner rather than later”, in particular the financial service sector. The People’s Bank subsequently released in Boao on behalf of the Chinese Government a timetable for the implementation of 11 specific measures. Up till now, most of the measures have materialized. The very few measures that are yet to materialize have reached the final stage of law amendment, and applications from foreign investors have been received and are being processed. Foreign financial institutions now have improved market access: the UBS has increased its shareholding in UBS Securities to 51 percent, effectively holding a controlling stake; Allianz has been approved to establish the first foreign controlled insurance company in China; the Standard and Poor’s has received a credit rating license in China; American Express is creating a joint venture in China and it has been approved to start preparation to provide electronic payment service in China.

On financial market opening, China has been working to expand access to the onshore bond, stock and derivatives markets in line with international standards, mostly by offering more channels for cross border investment flows, and improving institutional arrangements. These efforts have contributed to increased openness, stronger competitiveness and greater influence of the Chinese financial markets, which have been widely acknowledged in international markets, as highlighted by the inclusion of China’s A shares in the MSCI index in June 2018, and the announcement by FTSE Russell in September 2018 on including A shares in its key emerging market indexes. Overseas investment in China’s bond market increased by nearly 600 billion yuan in 2018, and the outstanding investment by overseas bond investors has reached 1.8 trillion yuan. Moreover, Bloomberg has confirmed that it will include Chinese bonds in its Bloomberg Barclays Global Aggregate Index starting in April this year.

Reforming the RMB exchange rate regime has also made progress. China remains committed to market based reforms, which we believe are essential for improving the managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. The People’s Bank has largely phased out regular interventions in the foreign exchange market, and the RMB has become more flexible. Market participants are able to adapt to this increased flexibility.

II.Further Financial Sector Opening-Up is a Task that We Must Continue Carrying Out

Financial sector opening is a key component of China’s broader opening up strategy. Further opening is an independent policy choice we have made. It is essential for the development of the financial sector and a necessary step towards deepening supply-side structural reform in the financial sector and quality development of the real economy.

First, the financial sector is in essence a competitive service industry. The financial sector and financial markets have three major functions. The first one is efficient resource allocation. The savings rate is high in China. On the one side are those who save money, on the other side are those who need money. The financial sector performs the function of asset allocation in that it allocates them to banking, securities and insurance products and transforms savings into financial assets. In addition, more and more institutional investors need to invest in China’s financial market, including central banks, asset management companies and pension funds. One of the tasks for financial market is to open up in an orderly manner to enable convenient and effective asset allocation by both foreign and domestic investors. This is the first important function of the financial markets.

The second major function is risk management, i.e. through price discovery and risk management tools. The day-to-day tradings on the financial market necessitate continued price discovery and accurate pricing. If we take Government securities yield curve as the risk-free interest rates, financial market will price all kinds of risk premiums of financial products in transactions and send clear signals. Moreover, financial market also provide all kinds of hedging tools and adequate liquidity to facilitate the selling and buying activities of market participants, and enable effective hedging of risks. Once the foreign investors are investing in the onshore market, they will find a lack of derivatives, hedging tools and other financial products. This year our priority is to create a supportive environment to provide hedging tools for investors to effectively hedge and manage risks.

The third function is to provide financial services to households and enterprises. Financial services are mostly about resource allocation and risk management. Here I wish to emphasize that professional financial services lower transaction cost and save time. Efficiency of financial services can be measured by the time saved. For example, 20 years ago, one had to spend half a day to go to several places to pay the water, electricity and housing bills. Ten years ago, a one-hour visit to the bank would do the job. Today, the bills can be paid in five minutes through online banking service or mobile payment applications. This shows that financial services are much more efficient today. It save consumers time just like eating out is more efficient than cooking at home, and buying apparel in a store is more efficient than making it yourself. Therefore, the financial sector is in essence a competitive service industry.

We will advance supply-side structural reform and open up to foreign investors so that the financial system can perform the three functions properly. On one hand, it increases the supply of financial factors by bringing in financial institutions, services and products. It allows us to make better use of both overseas and domestic markets and resources, improve resources allocation, and meet the needs for diversified financial services. On the other hand, opening up of the financial sector will help improve domestic institutional arrangements. In this process, China has been learning from institutional arrangements from the advanced economies, making rapid progress in corporate governance of financial institutions, financial market development and financial regulation.

III. Some thinking on Further Opening up the Financial Sector

In recent years, remarkable progress has been made in the opening up of China’s financial sector. Nevertheless, the degree of openness is not high and there is much room for further improvement. We should aim high and continue our efforts in opening up the financial sector.

Firstly, we should promote financial service sector opening-up, financial market opening up and RMB exchange rate regime reform in a well-coordinated way. For the opening up of the financial sector, equal treatments should be provided for both Chinese and foreign institutions in terms of regulatory requirements and standards such as equity holding, form of establishment, shareholder qualification, scope of business and number of licenses. Chinese and foreign-funded institutions should be treated equally in a way that is more transparent and consistent with international practice. To open up the financial market, we will further connect domestic and foreign capital markets, by further improving the QFII regime, Shanghai-Hong Kong Connect and Shenzhen-Hong Kong Connect. We will also continue the exchange rate regime reform, to enhance the flexibility of RMB exchange rate and its role as the automatic stabilizer for the macro economy and balance of payments.

Secondly, pre-establishment national treatment and negative list should be applied. Financial institutions, Chinese and foreign alike, shall have equal access to all areas excluding those listed on the negative list.

Thirdly, institutional arrangements for financial sector opening-up should be improved to achieve institutional and systemic opening-up. Convergence with international rules and standards will accelerate and accounting, taxation and other supporting rules will be improved. We will also strengthen top-level design and unify relevant rules. For financial services of the same or similar category, different rules should be harmonized.

Fourthly, the business environment should be improved. We will further cut red tapes, streamline procedures for administrative approval, and enhance its transparency and efficiency. There will be improved coordination and communication in policy making to increase transparency and have simple and transparent rules.

Fifthly, financial regulation will be improved. Financial institutions, domestic or foreign, shall operate with licenses and under regulation. Greater market access will go hand in hand with better financial regulation and regulatory capacity will match openness.

IV. Improve Risk Prevention System for a More Liberalized Financial Sector

Financial sector opening up does not by itself lead to financial risks, but may add to the complexity of financial risk prevention. Therefore, efforts should be made to improve the financial risk prevention system to catch up with the progress of openness.

Since 2018, significant progress has been made in the prevention of financial risks in China. Firstly, the financial regulatory system has been reformed. The State Council Financial Stability and Development Committee have enhanced the coordination in the financial sector. The PBC serves as the Committee’s Secretariat to support its day-to-day operation. Mandates of the PBC have been strengthened with more coordination responsibility. Allocation of the regulatory resources has been improved. Secondly, macro leverage ratio stabilized. As the supply-side structural reform deepens, macro leverage ratio fell by 1.5 percentage points from end-2017 to 249.4 percent at end-2018. Going forward, as China’s financial market evolves and the share of direct financing rises, part of the debt financing will be converted into equity financing, which will facilitate stabilization of macro leverage ratio. Third, the shadow banking sector has been better regulated. We introduced new regulations and supporting measures to address the irregular and unlawful activities in the financial markets, effectively containing the disorderly development of shadow banking system. Fourth, macro-prudential management has improved, with measures to strengthen regulation of the Systemically Important Financial Institutions (SIFIs), to improve the macro-prudential management of cross-border capital flow, resulting in stronger resilience to withstand the impact of cross-border capital flows. In addition, we have made important progress in the resolution of high-risk institutions in a smooth and orderly manner, so as to maintain the order in the financial market.

Going forward, we will continue to improve the financial risk prevention and management system to keep pace with further opening-up.

First, the coordinating role of the State Council Financial Stability Development Committee should be fully utilized, to make better overall plans in rolling out policy measures with proper strength and paces to generate synergy.

Second, the two-pillar framework of monetary and macro-prudential policies should be enhanced. We will strengthen the counter-cyclical role of monetary policy to ensure that the economy operates within a reasonable range. We will constantly improve the macro-prudential policy framework and strengthen regulation of financial holding companies and SIFIs. We will also add new instrument to the policy toolkit, enhance the real-time monitoring of the financial market, and prevent risk contagions across markets, regions and borders.

Third, we will accelerate the development of financial market infrastructures and improve comprehensive financial sector statistics. We will use advanced technologies and payment and settlement system to monitor and regulate the online, offline fund flows within China and across the borders, so that all fund flows are under the radar of financial regulators.

Fourth, we will improve the resolution mechanism for failing financial institutions. We will explore ways to develop market-oriented and law-based exit mechanism for financial institutions, with deposit insurance as its platform.

This year, we will follow President Xi Jinping’s remarks that “when it comes to improving financial services and preventing financial risks, a key component is to deepen reform and opening up”, steadily promote the opening up of the financial sector to facilitate the supply-side structural reform and the structural improvement of the financial system, and to support high-quality economic growth.

Thank you!

Appendix

Transcript of the Question and Answer Session

Question: Financial sector opening up is politically controversial in some countries. Does China face a similar situation?

Answer: There are different opinions with regards to financial sector opening up in China. Some support greater opening while others have concerns. Looking at China’s experience in opening up, all the liberalized sectors have become more competitive and provided better services, while the closed ones are less efficient and backward. So I think financial sector opening up is good for China, especially for the Chinese people, because it enables competition between domestic and foreign institutions. As a result this improves services and efficiency in China’s financial market. Our conclusion is that further opening up do more good than harm. Meanwhile, we have make preparation in terms of laws and regulations accordingly and formulated a roadmap and timetable based on Chinese circumstances. All these are in China’s own interests.

Question: Thank you, Governor Yi, for the very encouraging update on the progress of financial market opening-up. Some foreign media seems to think that the lack of central bank independence in China provides room for risk control on the one hand but does not facilitate monetary policy flexibility on the other hand. Could you share your thoughts with us?

Answer: The central bank formulates and implements monetary policy in accordance with the Law of the People’s Republic of China on the People’s Bank of China promulgated in 1995. Since 1995, the conduct of monetary policy in China has been sound. Domestic prices have remained stable. The RMB has been a strong currency, appreciating about 30 percent and more than 20 percent respectively against a basket of currencies and the US dollar in the past two decades and more. Looking at the capital flows and balance of payment, current account surplus as a share of GDP declined from 10 percent in 2007 to 0.5% in 2018. The BOP is broadly balanced.

Under the current monetary policy framework, we have plenty of monetary policy instruments including interest rate policy and required reserve ratio and are capable of managing risks effectively. As I see it, we are able to meet the need of financial industry opening-up. Many global investors want to invest in RMB assets. To meet this demand, we will facilitate foreign investment, and improve the transparency of legal framework, regulations, accounting system and tax regime. The opening-up for financial institutions and financial service will follow the same rationale. Under the current monetary policy framework we are able to manage financial risks associated with China’s integration into the global economy and economic globalization. As the country has integrated into the global economy through trade, investment, services and tourism, we will further open up financial sector and improve monetary policy accordingly.

Question：Financial innovation, including the rapid development of Fintech, drives the global expansion of new financial business, and brings increasing challenges to regulators. What are your views on regulatory coordination with other countries in this field?

Answer：First of all, financial innovation is good. Technologies in financial innovation reduce cost, promote financial inclusion, and benefit the general public. Second, financial sector is a licensed sector. In particular, when it involves raising money from general public, special attention should be paid to risk prevention. In licensing businesses, the emphasis is to protect public interest, especially interests of retail depositors and investors. This is of utmost importance. Third, financial innovation has increased the importance of cross-border regulatory coordination. Many financial innovations involve cross-border flows of money, service and asset management. Cross-border regulatory coordination is thus imperative. We discuss many of these issues in the FSB meetings, talking about how to have effective liquidation when problem arises to protect the interests of creditors in different countries more fairly.

PBC Holds 2019 Financial Stability Conference

March 12, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: CPC, PBC, Socialism, The People’s Bank of China - PBOC, Xi Jinping

On February 21, 2019, the 2019 Financial Stability Conference of the People’s Bank of China (PBC) was held in Chengdu. Under the guidance of the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, participants at the conference studied the spirit of the 19th National Congress of the Communist Party of China (CPC) and the Central Economic Work Conference in a in-depth way, earnestly comprehended the speech on preventing and defusing major financial risks delivered by General Secretary Xi Jinping, firmly implemented the decisions and arrangements of the CPC Central Committee and the State Council as well as the arrangements of the PBC CPC Committee regarding financial stability, and mapped out key areas of financial stability work in 2019, so as to deepen the tough battle against major financial risks. The conference also conveyed the instructions of PBC Governor Yi Gang and Secretary of PBC CPC Committee Guo Shuqing on properly preventing and defusing major financial risks and effectively ensuring financial stability. Zhu Hexin, member of PBC CPC Committee and PBC Deputy Governor attended and addressed the conference.

The achievements made by the PBC with regard to financial stability was fully recognized at the conference. In 2018, with the support and coordination of local governments and authorities, the PBC financial stability system took on responsibilities with courage, forged ahead with determination, stayed realistic and pragmatic and overcame difficulties, took the battle against major financial risks as the priority among priorities, and coped with various risks and challenges appropriately. As a result, important progress and remarkable achievements have been made in many key areas. Financial regulation system has been further improved, the philosophy of prudent operation strengthened, market discipline gradually enhanced, reckless expansion and other misbehaviors restrained on the whole, and rectification on financial chaos has produced initial effects. Generally speaking, financial operation remained sound and stable, financial risk was brought under control, and the bottom line of no systematic financial risk has been defended, which was a good start for winning the tough battle of preventing and defusing major financial risks.

It was pointed out at the conference that in 2019, financial stability work is facing more glorious yet difficult tasks. The overarching working principle of making progress while maintaining stability should be adhered to. The entire system should strike a delicate balance between ensuring growth and preventing risks and forestall credit risks in key areas. Work should be done to properly resolve shadow banking risks, promote orderly rectification and smooth transformation of the asset management business of financial institutions. Efforts should also be made to handle the risks associated with high-risk financial institutions in an orderly fashion, improve corporate governance of financial institutions, steadily promote the implementation of deposit insurance system, perfect the market-based and law-based financial risk disposal mechanism, clean up order in the financial sector, and resolutely crack down on illegal financial institutions and activities. Measures should also be taken to intensify financial risk monitoring and assessment, dynamically check for financial risks, draw up risk disposal plans, appropriately conduct the rating, stress test and stability assessment of financial institutions, and improve the policy toolbox for financial risk prevention and control. The PBC will also actively take part in the rule-making for international financial supervision, help improve the global financial stability governance system, continue deepening the reform and opening-up of the financial sector, enhance the institutional building of the capital market, and maintain sound operation of the financial market.

It was required at the conference that preventing and defusing financial risks, especially preventing systematic financial risks, should be the fundamental task of the financial work. To ensure good performance in financial stability work, the system must adhere to the unified leadership of the Party for the financial work, more consciously implement the decisions and arrangements of the CPC Central Committee with Comrade Xi Jinping as the core, follow the requirements of the PBC CPC Committee to further enhance political awareness and the awareness for the overall situation, hold the bottom line, strengthen the sense of responsibilities, and fulfill due responsibilities at various levels so that those who are responsible are held accountable and fully assume their responsibilities. It was also required that the entire system practically strengthen integrated coordination, proactively support and assist local governments and authorities to completely motivate relevant parties and give play to the synergy. In the spirit of driving nails and with great sense of responsibility and mission, officials and staff should blaze new trails in a pioneering spirit, immerse themselves in hard work, and perform duties in a courageous and enterprising way to open up new prospects for financial stability work and embrace the 70th anniversary of the founding of the People’s Republic of China with new achievements.

Officials from the PBC Shanghai Head Office, branches and operations offices, central sub-branches of the PBC in capital cities of provinces (autonomous regions) and sub-provincial cities, and relevant departments and bureaus of the PBC attended the conference.

PBC Holds 2019 Financial Consumer Rights Protection Work Conference

March 12, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: CPC central committee, PBC, Socialism, The People’s Bank of China - PBOC, Xi Jinping

On February 27-28, 2019, the 2019 PBC Work Conference on Financial Consumer Rights Protection was held in Taiyuan, Shanxi Province. Under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, all participants at the conference thoroughly studied and implemented the spirits of the 19th National Congress of the Communist Party of China (CPC), the Second and the Third Plenary Sessions of the 19th CPC Central Committee as well as the Central Economic Work Conference, and fully implemented the requirements of the PBC Work Conference. Efforts in financial consumer rights protection in 2018 were summarized, with an analysis of the current situation, while priorities in 2019 were arranged at the conference. Zhu Hexin, PBC Deputy Governor and member of the CPC PBC Committee, attended the conference and delivered a speech.

The conference fully affirmed the achievements of the PBC on financial consumer rights protection in 2018. It pointed out that in 2018, under the leadership of the CPC PBC Committee, the PBC financial consumer rights protection system achieved positive results in in all aspects of its work progress as it thoroughly studied and implemented Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and followed the overall arrangements of the Central Economic Work Conference and the PBC Work Conference, upheld the underlying principle of pursuing progress while ensuring stability, and focused on priorities of its responsibilities in a law-based manner.

The conference stressed that the PBC financial consumer rights protection system should raise its political stance, take the initiative to fulfill the new missions of financial consumer rights protection in the new era in a scientific way, and analyze in depth new challenges that will be faced in the work of financial consumer rights protection against the new situation. With an enhancing sense of responsibility and mission, the whole system should perform its new duties in financial consumer rights protection granted by the newly released “Provisions on the Functions, Organization Structure and Staffing of the People’s Bank of China”.

The meeting called on that in 2019, the PBC financial consumer rights protection system should earnestly study and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, enhance the awareness of “maintaining political integrity, thinking in terms of the big picture, following the leadership core, and keeping in alignment with the central Party leadership”, have “firm confidence in the path, theory, system, and culture of socialism with Chinese characteristics”, and resolutely safeguard the core position of General Secretary Xi Jinping in the CPC Central Committee and the entire Party as well as the centralized, unified leadership of the CPC Central Committee. According to the overall arrangements by the Central Economic Work Conference and the PBC Work Conference, the whole system should understand and grasp the position and direction of financial consumer rights protection work at the current stage, remain committed to the new development philosophy, and promote the New Normal of economic development in a scientific manner. It should uphold the underlying principle of pursuing progress while ensuring stability, clarify its working plan with priorities highlighted and ensure full and strict governance over the Party. It should further clarify the functions and responsibilities in terms of financial consumer rights protection, so as to advance the priorities, and take the lead in establishing a sound coordination mechanism for financial consumer protection. In-depth surveys and researches should be carried out while the talent development of the officials in the system should be enhanced. In this way, the financial consumer rights protection can better serve the real economy, prevent and control financial risks, and deepen the financial reform.

Officials in charge of financial consumer rights protection from PBC Shanghai Head Office, branches, operations offices, and provincial level and sub-provincial level central sub-branches, responsible officials from departments of financial consumer rights protection, and representatives from relevant departments and bureaus of PBC headquarters attended the conference.

PBC Holds 2019 Financial Market Work Conference

March 5, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: Bank of China, MSE, People's Bank of China, Socialism, Xi Jinping

Braving Challenges and Carrying out Financial Market and Credit Policy Work in 2019 with Innovative Efforts

On February 25-26, the 2019 PBC Financial Market Work Conference was held in Beijing. The conference thoroughly studied the guidelines of the 19th National Congress of the Communist Party of China (CPC), the second and third plenums of the 19th CPC Central Committee and the Central Economic Work Conference, as well as the requirements put forward at the 2019 PBC Work Conference. It reviewed the work of the PBC in the past year regarding financial markets and credit policy and set priorities for relevant work in 2019. Pan Gongsheng, member of the CPC PBC Committee and deputy governor, attended and addressed the conference. Zhu Hexin, member of the CPC PBC Committee and deputy governor, chaired the conference and made concluding remarks.

Communist Party of China

In 2018, under the guidance of the CPC PBC Committee, the financial market units of the PBC thoroughly studied the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, upheld the people-centered approach, faced up to challenges, and achieved progress in their work in an innovative spirit. Efforts were made to push forward regulated and innovative development of financial markets, enhance the role of macro credit policy in structural adjustment, and improve the capabilities and performance of the financial sector in serving the real economy. Various measures were taken to step up financing support for private enterprises and micro and small enterprises (MSEs). The bond market and other financial markets witnessed stable development and progressive opening-up. The special rectification campaign against internet financial risks was steadily pushed ahead. The macro regulation of real estate finance and the long-term mechanism for the regulation underwent continuous improvement. Increasingly more efforts were put into targeted poverty alleviation by the financial sector. Financial services for rural revitalization were rolled out in an all-round way. With multiple efforts underway to provide financial support for major national strategies and key areas, positive results were achieved on all fronts.

It was pointed out at the conference that the financial market staff of the PBC should follow the guide of the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, strengthen the “Four Consciousnesses”, solidify the “Four Confidences”, and uphold the “Two Safeguards”. By adhering to the underlying principle of pursuing progress while ensuring stability, following the new philosophy of development, strengthening confidence, and taking pragmatic approaches to meet challenges, we should conduct guidance on macro credit policy and promote innovation-driven development of financial markets with best effort. Work needs to be done to deepen supply-side financial structural reform and to optimize financing structure, the financial market system and the financial product system with a view to providing higher-quality and more efficient financial services for the development of the real economy.

It was stressed at the conference that active steps should be taken to promote regulated and healthy development of financial markets with the aim of serving the real economy. We should explore the role of the bond market in supporting the real economy as well as capital replenishment by commercial banks and other institutions, promote the issuance of debentures with multiple measures, and move ahead with asset securitization stably. A market- and law-based default resolution mechanism should be established to safeguard stable bond market operation. Bond market opening-up, institutional innovation and product innovation should take steady steps forward. Coordinated regulation of financial infrastructures, monitoring of institutions and risk prevention should be strengthened. With regard to the gold market, the commercial paper market and the interbank lending market, more work needs to be done to enhance regulation, institution building and risk prevention so that all the markets will achieve innovative and regulated development. The special rectification campaign against internet financial risks should be carried on, and the making of rules for long-term regulation of internet finance be pushed ahead.

The conference required that the uses of loans and credit structure be optimized based on the law of market development. The role of the financial sector in providing services for the real economy should be stressed and financial services be extended exactly where they are most needed, so that credit policies can be better implemented to serve the real economy and the people’s well-being. Efforts should be intensified to carry out prudential management of real estate finance and the building of a long-term mechanism for stable and healthy development of the real estate market. Work should be done to enhance financial services for private enterprises and MSEs in an all-round way by improving monetary policy transmission mechanism, scale up the input of loans, promote bond financing, and pool the efforts of related government agencies. We should provide all-out support for fighting the tough battle against poverty, ensure the effectiveness of the work done, stress risk prevention, and promote sustainable development of the endeavors. More work needs to be done to step up financial support for major national strategies, key areas and weak links, such as rural revitalization, high-quality development of the manufacturing sector, coordinated regional development, and the follow-up to the expiration of the existing pilot program allowing farmers to collateralize their contracted land-use rights and housing property rights for loans.

It was noted at the conference that with China’s economic and financial development entering a new phase and the economy under downward pressure, we are faced with the arduous tasks of preventing and defusing financial risks and other major risks while many problems remain prominent. The financial market staff of the PBC should combine theory with practice to beef up research on subjects in focus, such as bond innovation aimed at supporting financing for the real economy, the improvement of commercial paper market, gold leasing, transmission of private enterprise- and MSE-related policies, rural revitalization, and high-quality development of the manufacturing sector, trying to grasp the pulse of financial market and credit operation and find solutions to difficult problems, so that policy making and implementation can become more effective. Efforts should be made to further improve our work style by complying strictly with the eight-point code and rectifying formalism as well as bureaucratism, shoulder our responsibilities enthusiastically, strive for achievement, and bring financial market and credit policy work to a new height in every way.

Attendees included officials in charge of financial market and credit policy work from PBC Shanghai Head Office, branches, operations offices as well as provincial level and sub-provincial level central sub-branches, and responsible officials from relevant PBC departments. Also present at the conference were responsible persons from the China Foreign Trade System, China Central Depository & Clearing Co., Ltd., Shanghai Gold Exchange, National Association of Financial Market Institutional Investors, Shanghai Clearing House, Shanghai Commercial Paper Exchange, and National Internet Finance Association of China.

EURUSD Corrects Lower, US – Sino Trade Talks Ended with no Deal

February 1, 2019 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: brokerage, Capital Markets, economy, EUR-USD, foreign exchange, FX trading, monetary policy, Sino-U.S trade, trade talks, trading platform, Trump, Xi Jinping

Trade talks in Washington between the two biggest economies ended without a deal. Trump has insisted that if a satisfactory deal is not reached, the tariffs will be imposed at the deadline. The China Caixin Manufacturing PMI came in at 48.3 below analyst’s forecasts (49.5) in January. The reading was the lowest since early 2016. The Shanghai Composite index outperformed the Asian peers reporting 1.30 percent gains at 2,618. In Tokyo Nikkei 225 ended 0.07 percent higher at 20,788 while Hong Kong’s Hang Seng index lost 0.13% to 27,908. Aussie stocks finished 2 points lower at 5862.

Yields on two-year Treasuries were down 15 basis points on the week, which if remains would be the largest weekly decline since mid-2010. Crude oil lost 44 cents to settle at $53.79 per barrel as did the Brent oil, which dropped 70 cents to $60.84/per barrel.

On the Lookout: US President Trump said on Thursday that he would meet with Chinese President Xi Jinping soon to seal a deal on trade — speaking at the White House during a meeting with Chinese vice premier Liu He following two days of trade talks between US and Chinese delegates. On the economic calendar, the UK manufacturing PMI update will be released at 9.30am (UK time), and 53.5 is the consensus estimate. Later, more manufacturing PMI data from across Europe and from the U.S. will make headlines. In the US, Nonfarm payrolls will be the key event released at 1330 GMT, while we expect a bunch of companies to report such as Exxon Mobil Corp. and Chevron Corp, Honeywell Inc. and drugmaker Merck & Co.

Trading Perspective: In forex markets today the US Dollar index is 0.02 percent higher at 95.57, the Kiwi is trading lower against USD down to 0.69 while Euro is adding 0.11 percent to 0.8741 against the pound and 0.01 percent against the Swiss Franc.

EURUSD was under selling pressure during the Asian session after the pair rejected at 1.15. Now bulls are waiting at the 100-day moving average at 1.1450 area which if breached will drive prices down to 1.1415 the low from yesterday.

EURUSD Daily Chart

In EUR futures markets open interest rose for the second session in a row on Thursday, this time by around 2.9K contracts from Wednesday’s final 528,527 contracts. In the same line, the volume went up by nearly 13.4K contracts, recording the third daily advance in a row.

AUDUSD is trading 0.36 percent lower to 0.7249 after weaker Chinese data. The pair will face resistance at 0.7296 yesterday high while support stands at 0.7228 and then at 0.7185 the weekly low.

GBPUSD is trading slightly lower at 1.3107 as traders await the UK manufacturing PMI data and the US payrolls for further clues. Traders trimmed their open interest positions by almost 4.4K contracts on Thursday from Wednesday’s final 202,157 contracts, according to preliminary readings from CME Group. Volume followed suit, down by around 2.8K contracts.

XAUUSD is down 0.13 percent to $1318,25 after touched yesterday the 9-month highs. The correction is supported by greenback strength and bulls are looking for the support at 1312 which if breached will accelerate the fall down to $1300 psychological mark.

XAUUSD Daily Chart