1. Reuters: China's yuan dips in widened band, but scope for big swings seen limited
China's yuan eased against the dollar on Monday after the central bank doubled the
currency's daily trading band as part of its commitment to let markets play a greater role in the economy. Yet the currency moved in a relatively narrow
range reflecting market views that the People's Bank of China will seek to limit currency swings at a time when markets fret over China's cooling growth and the quality of corporate debt. "The PBOC, with the help of major state-owned banks, will for certain tighten the grip on
yuan's value in coming days and weeks to prevent what it sees excessive volatility," said a dealer at a European bank in Shanghai. In the longer run, however, the central bank is expected to allow the currency to move in a broader range in a sign of its confidence that it can keep speculators at bay and that the economy was mature enough to handle greater uncertainty about the exchange rate.
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2. FT: Freer renminbi will need more than wider corridor
When China doubled the
renminbi’s trading band on Saturday, the country’s central bank proclaimed that it was a move to let market forces determine the value of the long-controlled currency. If that sounds familiar, it is – because the People’s Bank of China said exactly the same thing in April 2012 when it last doubled the
renminbi’s trading band. The currency’s record over the past two years offers a cautionary tale about what to expect from this weekend’s band-doubling. Although indicative of China’s desire to eventually make the
renminbi freely
tradable, it will take more than a wider band for that to happen: traders and analysts say the central bank will have to step aside from managing the currency on a daily basis, something it has so far proved unwilling to do. At first glance, the reform appears to be a major step. The central bank said the range in which the
renminbi can move against the US dollar each day will be doubled to 2 per cent above and below a fixing rate it sets each morning. The new band will be effective from Monday.
FT Back to Top
3. WSJ: Chinese companies caught in yuan riptide
Bets by firms and individuals on a rise in currency face losses as
country changes tack.
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4. FT: China bond default has positive effect on local government groups
It looks like a colossal accident waiting to happen: China’s first true bond default has laid bare the country’s financial risks just as $400bn in debt comes due this year for cash-strapped local governments. But a curious thing has happened in recent days. Far from triggering a wave of defaults, the concerns about the Chinese bond market have instead nudged local governments closer to financial safety. Companies – long seen as one of the big problems hanging over the Chinese economy – have found
favour among domestic investors and brokerages. Credit costs for provinces and cities have declined as a result, making it easier for them to obtain the cash to pay off their maturing debts. When
Chaori, a struggling solar cell maker, missed an interest payment this month – the first real domestic default in the modern era of China’s bond market – it was seen as a sign that the government would finally allow companies to fail. Analysts predicted that investors would start to pick between borrowers in the bond market, flocking to
safe, lower-yielding paper and demanding higher rates from riskier companies.
FT Back to Top
5. NYT: China releases plan to incorporate farmers into cities
China has announced a sweeping plan to manage the flow of rural residents into cities, promising to promote urbanization but also to solve some of the drastic side effects of this great uprooting. The plan — the country’s first attempt at broadly coordinating one of the greatest migrations in history — foresees 100 million more people moving to China’s cities by 2020, while providing better access to schools and hospitals for 100 million former farmers already living in cities but currently denied many basic services. Underpinning these projections would be government spending to build roads, railways, hospitals, schools and housing. Formally announced on Sunday, the plan has been one of the most contentious projects in recent years. Originally scheduled to be announced last year, it backs away from more radical proposals, which predicted even more farmers leaving the land for
cities. But the plan is still ambitious, with 30 chapters, covering topics that include Internet access, building standards, environmental protection and safety.
NYT Back to Top
6. FT: China reveals blueprint to expand urbanisation
China’s leaders have revealed a plan for a
multiyear round of state-led infrastructure construction that they hope will prop up the economy amid flagging growth, as they move 100m more people from the rural hinterland into the country’s growing cities. The Chinese government’s “National New-type
Urbanisation Plan”, revealed on Sunday, envisions a massive building
programme of transport networks, urban infrastructure and residential real estate from now until 2020. While promising to make China’s
urbanisation more “human-
centred and environmentally friendly”, the plan also explicitly targets the boosting of headline growth at a time when China’s economy is slowing after years of frenetic credit-fuelled infrastructure and property investment. Over the longer term, China’s leaders want to shift the country’s growth model to make it less infrastructure driven and more reliant on services and consumption, but they insist that they must keep investment levels high in the short term to guarantee employment and political stability. “Domestic demand is the fundamental impetus for China’s development, and the greatest potential for expanding domestic demand lies in
urbanisation,” the plan stated.
FT Back to Top
7. Reuters: China vows to clean up 60 percent of cities by 2020
China pledged on Sunday that it will make sure that 60 percent of its
cities meet national pollution standards by 2020, with pressure growing to make cities liveable as hundreds of millions of migrants are expected to relocate from the countryside. China's environmental problems such as pollution and water scarcity are expected to intensify as rapid migration pushes urban infrastructures to the limit. Almost all Chinese cities monitored for pollution last year failed to meet the standards
.The environment has emerged as a key priority amid growing public disquiet about smog, dwindling and polluted water supplies and the contamination of farmland. Poor air quality is estimated to end hundreds of thousands of lives prematurely each year and has led to a series of riots and public protests. The pledge to clean up the nation's major metropolitan centers was made in a State Council plan for how to deal with China's rapid urbanization drive.
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8. WSJ: China FDI up 10.44% in first two months of 2014
$19.3 billion is attracted into
country, Ministry of Commerce says.
WSJ Back to Top
9. WP: Chinese e-commerce giant Alibaba picks United States for initial public offering
Chinese e-commerce giant Alibaba
Group said Sunday that it will go public on a U.S.
stock exchange in a move analysts
say might raise up to $15 billion in the year’s biggest initial public offering. The announcement
confirming plans for a U.S.
offering ended months of speculation over where the company would list its shares after
talks for a Hong Kong stock sale fell apart last year. Alibaba is one of the world’s biggest Internet companies and says that more than $150 billion worth of merchandise changes hands on its online platforms each year, more than Amazon.com and eBay combined. The company began as a service to link Chinese suppliers with retailers abroad and has expanded into retail e-commerce. It is little-known
abroad but has launched two consumer-oriented services in the United States. “Alibaba Group has decided to commence the process of an initial public offering in the United States,” the company said in a statement. “This will make us a more global company and enhance the company’s transparency, as well as allow the company to continue to pursue our long-term vision and ideals.”
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10. NYT - Editorial: China rethinks its judicial system
The Chinese leadership is displaying a conspicuous shift in attitude toward the judicial system. While the leadership has traditionally attached paramount importance to a judiciary that guarantees social stability, meaning Communist Party interests, the party is now calling for a system that safeguards people’s rights and interests. At the 12th National People’s Congress on March 10, Zhou Qiang, president of the Supreme People’s Court, warned that corrupt — and corruptible — judges damage litigants and also damage the credibility of the court. Mr. Zhou is seeking to create a more independent judiciary by preventing local officials from influencing court decisions. True reform will require more than ordering local officials not to weigh in on decisions; the party must also take away their power of appointment and transfer that power to the provincial authorities if not to the central party in Beijing
.The reforms proposed by Mr. Zhou
are important and would help deter corruption. But an independent judiciary can be had only when the courts are no longer beholden to local officials or bound by absolute loyalty to the party.
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11. WSJ - Editorial: Beijing stands with Moscow
The club of dictators sticks together in a crisis.
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12. SD: Yuan slips to 11-month low as band doubled
The yuan yesterday tumbled to an 11-month low after the Chinese central bank doubled the currency’s permitted trading band as it continues to relax its control over the exchange rate. The onshore spot rate slid 0.45 percent to close at 6.1781 per US dollar in Shanghai, the China Foreign Exchange Trade System prices showed. It touched as low as 6.1818 during the trading, the weakest since April 2013. Effective from yesterday, the yuan is allowed to fluctuate 2 percent on each side of the central parity rate set by the People’s Bank of China following the central bank’s notice on Saturday to double the band. The PBOC said that it is “withdrawing from routine intervention” of the exchange rates as authorities move toward a more market-driven foreign exchange system.
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13. Xinhua: China unveils landmark urbanization plan
China on Sunday unveiled an
urbanization plan for the 2014-2020 period in an effort to steer the country's urbanization onto a human-centered and environmentally friendly path. Urbanization is the road that China must take in its modernization drive, and it serves as a strong engine for sustainable and healthy economic growth, according to the plan released by the Central Committee of the Communist Party of China (CPC) and the State Council, the country's cabinet. "Domestic demand is the fundamental impetus for China's development, and the greatest potential for expanding domestic demand lies in urbanization," according to the National New-type Urbanization Plan (2014-2020). At present, the proportion of permanent urban residents to China's total population stands at 53.7 percent, lower than developed nations' average of 80 percent, and 60 percent for developing countries with similar per capita income levels as China.
( Registered urban population, or those who hold a "
hukou" under China's household registration system, accounted for only 35.7 percent
in total population by the end of last year, data from the National Bureau of Statistics (NBS) showed.
Xinhua Back to Top
14. SD: Urbanization plan brings hike for city stocks
Shanghai stocks advanced yesterday as construction and real estate received a boost from China’s urbanization plan. The key Shanghai Composite Index added 0.96 percent, or 19.33 points, to 2,023.67. China on Sunday published the 2014-2020 urbanization plan with an aim to spur domestic spending. It says that permanent urban residents should make up 60 percent of China’s population
by 2020, up from 53.7 percent now.
Higher urbanization rate can help increase the income of rural residents and unleash the potential of domestic consumption, the plan says. “Shares related to real estate development, ‘smart city’ construction and household appliances will benefit,” Yu Cheng, analyst with Northeast Securities.
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15. Bloomberg: 3M Sees China’s sales growth triple global pace, CEO says
3M Co. (MMM) forecasts China sales will grow three times faster than the company’s total revenue because of demand for health and consumer products such as face masks and water filters, Chief Executive Officer Inge Thulin said. The maker of Post-it notes, based in St. Paul, Minnesota, is targeting annual Chinese sales growth of about 15 percent over the next five years, compared with global growth of between four and six percent, Thulin said in a March 13 interview at 3M’s offices in Shanghai. China generated about 10 percent of its global revenue of $30.9 billion last year, he said. 3M is capitalizing on China’s push to increase the role of consumption in driving economic expansion as rising levels of pollution and higher labor costs force the country to reduce its reliance on exports, investment and manufacturing for growth. The government has set a target of doubling per capita incomes by 2020 from 2010 levels and emphasized improving the quality of economic growth. “We have capitalized on infrastructure and manufacturing and now we are
on safety, consumer and health care,” Thulin said.
Bloomberg Back to Top
16. LAT: China's thirst for milk gives U.S. dairy farms a boost
American dairy farmers see an opportunity as demand booms in China. In a Nevada town, a new factory will produce milk powder just for export.
LAT Back to Top
17. LAT: Twitter CEO is visiting China but still has no plans to launch there
Twitter Chief Executive Dick Costolo is on his first trip to China.
Costolo is spending three days meeting with Shanghai government officials and university administrators. He will also participate in a roundtable discussion with students at Fudan University in Shanghai, which sponsored his visa.
Costolo will not visit Beijing, a Twitter spokesman said. Twitter, which has been blocked in China since 2009, tamped down speculation that it is eyeing the Chinese market, the world’s most populous with 600 million Internet users.
Twitter also is not expected to ask Beijing to lift the ban on Twitter. “Dick is visiting China because he wants to learn more about the Chinese culture and the country’s thriving technology sector. We have no plans to change anything about our service in order to enter the market,” the Twitter spokesman said in an emailed statement.
LAT Back to Top
18. Bloomberg - Jim O'Neill: China and its currency grow up
China's central bank has announced a widening of the trading band of the
renminbi from a daily maximum of 1 percent to 2 percent. The move follows a recent increase in the
currency's volatility, and the apparent end of its long, slow rise against the dollar. What does the new policy mean? Some will say, not much. The People's Bank of China, on one view, is merely responding to market forces. The sudden downward pressure on the currency merely reflects a new reality, in which China faces economic challenges and its growth slows as a result. Perhaps officials welcome the depreciation because it will help to stimulate the economy. In any event, it's an essentially passive response to events they can't control. China has successfully moved toward more balanced trade while managing its currency more closely than many would have liked. That ought to command some respect -- and the same goes, if you ask me, for the thinking of the Chinese leadership on the pace of reform in domestic finance, and on whether and when the
renminbi should be granted a bigger role in global finance. We'll probably hear more from China on that second issue soon. I think it's time for the International Monetary Fund to consider including the
renminbi as part of the Special Drawing Rights basket. (An updated assessment of the SDR's role is due by the end of 2015.) Why not go further? Russia's actions in Ukraine have
prompted the idea that it should be kicked out of the Group of Eight. Maybe that place should be offered to China instead
Bloomberg Back to Top
19. Reuters - John Foley: Max factor
Uncle Sam’s new man in China arrives just as his employer seems to have lost interest in its biggest trading partner. Max Baucus, who starts as ambassador to Beijing this month, has little experience of China and even less of diplomacy. Yet used wisely by his bosses, Baucus may be well placed to prize open new trade agreements that would leave both sides better off. China know-how inside the White House has waned even as the U.S.
trade deficit with the Middle Kingdom has hit record levels. Kurt Campbell, the former Asia-tilted assistant secretary of state, and Tim Geithner, the Mandarin-speaking ex-Treasury secretary, left as President Barack Obama started his second term. Other key seats sit empty for now, like the Treasury’s diplomatically crucial international affairs post. Like joining the World Trade Organization in 2001, access to the TPP would expand China’s trade, but also tie it into more profound reforms - something political modernizers might appreciate. It could also help the United States to regain some stature as a global shepherd of free trade and increase its own outbound trade in the process. That would leave Baucus looking like the smartest U.S.
export in a long while.
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20. WSJ - Henry Miller: China's threat to American farm exports
The ban on imports of a genetically engineered corn sends shock waves through
U.S. agriculture.
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21. WSJ - Mack McLarty: Why Democrats should back the President on free trade
Bill Clinton saw the promise of the global economy—and America reaped the benefits.
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22. NYT - Joseph Stiglitz: On the wrong side of globalization
Trade agreements are a subject that can cause the eyes to glaze over, but we should all be paying attention. Right now, there are trade proposals in the works that threaten to put most Americans on the wrong side of globalization. The conflicting views about the agreements are actually tearing at the fabric of the Democratic Party, though you wouldn’t know it from President Obama’s rhetoric. In his State of the Union address, for example, he blandly referred to “new trade partnerships” that would “create more jobs.” Most immediately at issue is the Trans-Pacific Partnership, or TPP, which would bring together 12 countries along the Pacific Rim in what would be the largest free trade area in the world.
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23. FT - Minxin Pei: China admits its ills but faces an unpalatable cure
Beijing can either prop up ailing borrowers or allow them to fail.
FT Back to Top
