Xi warns against new cold war, China to include big data on balance sheets

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A round-up of the top economic and financial headlines in the Chinese press as of 25 August, 2023.

Big state-owned lender China Construction Bank sees profits rise 3.12% (National Business Daily)

On 23 August, China Construction Bank (CCB) disclosed its operating data for the first half of the year. As of the end of the reporting period, the total assets of CCB were 38.25 trillion yuan, for an increase of 10.56%. CCB realised a net profit of 167.295 billion yuan, for an increase of 3.12%.

According to CCB’s semi-annual report, due to factors such as the continuous sharing of profits with the real economy and the overall decline in market interest rates, net interest income decreased by 5.484 billion yuan, or 1.73%, compared with the same period last year.

Data resources included on balance sheets starting from next year: Ministry of Finance (Chinese government)

Data is a key element of the digital economy. In recent years, the level of digitalization of China’s industries has increased significantly, and data resources have increasingly played an important role in the value creation of enterprises, especially data-related enterprises.

Can data resources be recognized as assets and how should they be measured? Can they be included as assets on balance sheets? On 21 August, the Ministry of Finance issued the “Interim Provisions on Accounting Treatment Related to Enterprise Data Resources” (企业数据资源相关会计处理暂行规定), which clarified the scope of confirmation of data resources and the applicable standards for accounting treatment. The Provisions come into effect on 1 January 2024.

Xi Jinping delivers speech at BRICS forum (People’s Daily

On the afternoon of 22 August local time, President Xi Jinping addressed the closing ceremony of the BRICS Business Forum in Johannesburg, delivering a speech entitled “Deepening Unity and Cooperation to Respond to Risks and Challenges and Build a Better World”. 

Xi Jinping pointed out that at present, global and historical changes are unfolding in unprecedented ways, and human society has reached a critical juncture. Should we stick to cooperation and integration, or move towards division and confrontation? Should we work together to maintain peace and stability, or slide into the abyss of a “new cold war”? Will the world prosper through openness and inclusiveness, or will it fall into depression amidst bullying? Should mutual trust be enhanced through exchanges and mutual learning, or should arrogance and prejudice blind conscience? Where the pendulum of history goes depends on our choices.

Xi Jinping emphasized that today’s world is a community of shared destiny in which all prosper and all suffer together. What the people of all countries hope for is not a “new cold war” or a “small circle”, but a world of lasting peace and universal security, an open, inclusive, clean and beautiful world of common prosperity. This is the logic of historical progress and the trend of the development of the times. 

Xi Jinping emphasized that China firmly pursues an independent foreign policy of peace and is committed to promoting the building of a community with a shared future for humanity. As a developing country and a member of the “Global South”, China has always shared the same fate with other developing countries, resolutely safeguarded the common interests of developing countries, and promoted an increase in the representation of emerging market countries and developing countries in global affairs and the right to speak. China does not have the genes for seeking hegemony, nor does it have the urge to engage in conflict with major powers. It firmly stands on the right side of history and firmly upholds the principle that “when one walks on the right path, justice prevails through the world.”

Securities regulator Li Chao calls for further improvements to channels for Chinese enterprises to list overseas (China Securities Regulatory Commission)

(From a speech delivered by CSRC deputy chair Li Chao at an event to celebrate the 30th anniversary of the launch of mainland Chinese H-shares in Hong Kong held on 24 August, 2023). 

In this new era, the China Securities Regulatory Commission will give full play to the role of Hong Kong as an international platform to support financing by Chinese enterprises, promote the formation of more transparent, efficient and smooth supervisory and coordination mechanisms for overseas listing, and continue to facilitate the overseas listing channels of mainland enterprises, and introduce more representative “green light” cases.

Chinese central bank sends key signals for appropriate optimisation of real estate policies (Beijing Business Daily)

On 17 August, the People’s Bank of China (PBOC) released its report on the execution of Chinese monetary policy for the second quarter of 2023 

Regarding the work arrangements for the next stage, PBOC pointed out that it would employ prudent monetary policy that is precise and powerful, better employs the dual functions of monetary policy tools in terms of aggregate quantity and structure, and firmly support the recovery and development of the real economy. 

A variety of monetary policy tools shall be comprehensively used to maintain reasonable and sufficient liquidity, and to keep the growth rate of the money supply and social financing basically in line with the nominal economic growth rate. 

To resolutely guard against the risk of exchange rate overshooting and adjust and optimize real estate policies in a timely manner, the latest quarterly report released important policy signals in many aspects, pointing out the phased direction for the precision use of monetary policy.

PBOC said that money and credit levels have maintained reasonable growth. In the first half of the year, new renminbi loans were 15.7 trillion yuan, for an increase of 2 trillion yuan year-on-year. As of the end of June, the balance of renminbi loans, broad money (M2), and total social financing increased by 11.3% and 11.3% and 9% respectively (in year-on-year terms). 

In the report, PBOC also stated that to adapt to the new situation of major changes in the relationship between supply and demand on the real estate market, it would make timely adjustments to real estate policies to promote the stable and healthy development of the real estate market. 

Beijing Business Daily notes that this is a new section of content compared with the first quarter monetary policy execution report.

State Council calls for unwavering push towards high-quality development (Xinhua News Agency)

Premier Li Qiang of the State Council presided over the second plenary meeting of the State Council on 16 August, to thoroughly implement the spirit of General Secretary Xi Jinping’s key speech on the current economic conditions and economic work, and fully implement the decision-making and arrangements of the CPC Central Committee

Li Qiang stressed that efforts should be made to expand domestic demand, continue to expand policy space for expanding consumption and promoting investment, boost large-scale goods consumption, mobilize the enthusiasm of private investment, and do an effective job in preliminary research and preparations for major projects.

It is necessary to focus on building a modern industrial system, accelerating the transformation and upgrading of traditional industries with new technologies and new models, vigorously promoting the development of strategic emerging industry clusters, and comprehensively accelerating the pace of digital transformation of the manufacturing sector. 

It is necessary to focus on deepening reform and opening up, implementing a new round of state-owned enterprise reform, optimising the development environment for private enterprises, promoting stabilisation and structural optimisation of foreign trade, and making greater efforts to attract and utilize foreign capital. 

Efforts should be made to prevent and defuse major risks, and effectively promote the substantive reduction of risks in key areas in an orderly and effective manner. Efforts should be made to protect and improve people’s living standards, increase social assistance for those in need, and promote employment and income through multiple channels.

China’s outbound foreign investment rises 18.1% YoY (Chinese government

According to the data released by the Ministry of Commerce on 17 August, from January to July this year, outbound non-financial foreign direct investment was 500.94 billion yuan, for an increase of 18.1% year-on-year. 

The non-financial direct investment of Chinese enterprises in the countries along the “Belt and Road” initiative was 95.34 billion yuan, for a year-on-year increase of 23.2%, accounting for 19% of the total over the same period.

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