China’s Top Financial Headlines for the Week of 5 – 9 June 2023

846

A round-up of China’s top financial headlines from the week of 5 – 9 June. 

Deposit rates of big banks fall, rates on jumbo certificates of deposit also decline 

(3年、5年期降15BP!多家大行存款挂牌利率下调 大额存单利率也降)

“As of 8 June, the six big state-owned banks – Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China, Bank of Communications, and Postal Savings Bank of China, had all lowered their advertised deposit rates. 

“The demand deposit rate has fallen 5 basis points from the 0.25% to 0.2%, the 2-year time deposit rate has fallen 10 basis points to 2.05%, the 3-year time deposit rate has fallen 15 basis points to 2.45%, and the 5-year term deposit rate has fallen 15 basis points to 2.45%. 

“A staff member from ICBC said the bank’s three-year jumbo certificate of deposit interest rate has also dropped from 3.1% to 2.9%.”

SAFR head Li Yunze: resolutely eliminate regulatory gaps and blind spots, comprehensively strengthen institutional supervision and across-the-board regulation 

(李云泽:坚决消除监管空白和盲区 全面强化机构监管、穿透式监管)

“Li Yunze, head of the State Administration of Financial Regulation, said at the 14th Lujiazui Forum that he will strive to launch new conditions for financial regulation. 

“Strengthening and perfecting modern financial regulation is an important task in the current financial sphere. We will focus on the full process of Chinese-style modernization, comprehensively strengthening institutional supervision, behavioural supervision, functional supervision, across-the-board supervision, and continuous supervision, and effectively improving the forward-looking, accurate, effective and synergistic nature of regulation. 

“[We will] resolutely eliminate regulatory gaps and blind spots, clarify boundaries for responsibility, tighten responsibility chains, strengthen comprehensive governance, improve multi-subject participation, multi-field collaboration, and multi-level responsibility systems, and truly achieve ‘full coverage and no blind spots’ in financial regulation

“[We will] strengthen the coordination of central and local supervision, improve institutional arrangements, improve working mechanisms, and achieve seamless connection and coordination between the central and local levels. 

[We will] continue to rectify the chaos in the financial market, severely punish serious violations of laws and regulations, effectively protect the legitimate rights and interests of financial consumers, and continuously improve the people’s sense of gain, happiness, and security.”

Yi Gang, Chinese central bank governor calls for actively practising green development and promoting successful realisation of carbon reduction goals during keynote speech at the 14th Lujiazui Forum

(积极践行绿色发展理念 促进30/60目标平稳实现——人民银行行长易纲在第十四届陆家嘴论坛上的主题演讲)

“In September 2020, President Xi Jinping announced at the United Nations General Assembly that China will strive to achieve peak carbon dioxide emissions by 2030 and carbon neutrality by 2060. Since then, the central government has launched a series of major deployments to achieve the 30/60 goal

“After the central government outlined the 30/60 goals, the People’s Bank of China (PBOC) has resolutely put the work of green finance in a prominent position, focusing on three aspects in particular. 

“One is to strengthen the disclosure of environmental information. The other is to improve the policy incentive and restraint system. The third is to carry out climate risk stress testing.”

Yi Huiman, head of the China Securities Regulatory Commission, outlines seven key points for future capital market regulatory work

(易会满重磅发言!回应市场热点、部署最新改革措施,七大要点全梳理!)

“At the 14th Lujiazui Forum held in Shanghai, Yi Huiman, chairman of the China Securities Regulatory Commission, delivered a landmark speech outlining seven key points for regulatory work.

“1. Timely introduction of policies and measures for the capital market to further support high-level technological self-reliance and self-improvement

2. Upholding the coordinated promotion of investment and finance reform.

  1. Consolidating the internal foundation of a valuation system with Chinese characteristics. 
  2. Resolutely cracking down on illegal activities such as insider trading and market manipulation.
  3. Continuing to vigorously develop equity funds and promote the ‘capacity increase and structural optimization’ of the public offering fund industry.
  4. Promoting regulatory concepts, methods and means to keep pace with the times. Adhere to the main responsibility and main business of supervision from the four aspects, and firmly protect the bottom line against risk. 
  5. Helping Shanghai to further improve financial markets, products, institutions, and infrastructure systems.”

Ministry of Commerce, NDRC and SAMR call for accelerated development of a unified national market

(三部门发声:加快建设全国统一大市场)

“On June 5, the State Council Information Office held a regular briefing on the State Council’s policy for building a unified national market. The relevant persons in charge of the National Development and Reform Commission, the Ministry of Commerce, and the State Administration for Market Regulation discussed conditions for the development of a unified national market.

“With regard to better promoting the development of a national unified market in the future and more effective implementation, Li Chunlin, deputy director of the National Development and Reform Commission, said:

‘Firstly, a series of special actions should be promptly carried out in response to the current outstanding problems. [We must] carry out the clean-up of policies and measures that hinder a unified market and fair competition, and carry out special rectification of outstanding issues in the fields of market access and exit, compulsory industrial support or investment, engineering construction, bidding and government procurement, etc. 

‘Secondly, [we must] speed up the improvement of supporting policies for building a unified national market. Thirdly, [we must] improve the long-term system and mechanisms suitable for the development of a unified national market. Guided by the development of a unified national market, we must further improve the fiscal and taxation, statistics, and local performance appraisal systems. 

‘Fourthly, we must earnestly implement our work and give full play to the role of the coordinating mechanism of the national unified market development department.'”

New credit set to rebound in May, structural monetary policy tools will continue to exert force 

(5月新增信贷规模料环比回升 结构性货币政策工具将持续发力)

“With financial data for May on the verge of release, experts predict that the scale of new credit in May will rebound month-on-month, with medium and long-term loans to enterprises serving as an important support. Monetary policy will continue to focus on structural policy tools for some ttime to come, and it is expected that required reserve ratio cuts and interest rate cuts will be possible in the second half of the year.

“‘Against the background of last year’s high base, the steady pace of credit issuance, and the continued slowdown of the economic recovery slope, it is estimated that the scale of new credit in May will be around 1.5 trillion yuan, which is a drop from the same period last year, but an increase from the previous month,’ said Wen Bin, chief economist at China Minsheng Bank.

“Wen Bin said large-scale credit extension in the first quarter of this year created an overdraft for the subsequent month, and reserves could be temporarily insufficient. However, against a background of policies that continue to guide and support manufacturing, infrastructure and other fields, as well as structural monetary policy tools and policy development financial tools, it is expected that corporate medium and long-term loans will continue to grow at a relatively high level in May, becoming an important support for new credit. 

“Experts said that the monetary policy will continue to focus on structural policy tools for some time to come. Zou Lan, director of the Monetary Policy Department of the People’s Bank of China (PBOC), recently made it clear that PBOC will implement a sound monetary policy that is precise and forceful, maintain the stability of long-term tools such as re-lending and re-discounting, and implement a number of phase-based tools to provide continuous support for key areas and weak links such as financial inclusion, technological innovation, and green development.

“‘At present inflationary pressure is low, and there is still room for monetary policy to exert force,’ said Zhang Ming, deputy director of the Institute of Finance, Chinese Academy of Social Sciences. Targeted RRR cuts and further interest rate cuts could be implemented to reduce the borrowing costs of micro-entities.”