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Keywords summary
The PBOC will set up a 200-billion-yuan special relending facility for equipment renovation;
China warns speculators not to bet against the yuan.
Here’s what you need to know about China in the past 24 hours
China Economic News
The People's Bank of China has created a new relending facility to support businesses in upgrading their equipment - the central bank's latest effort to boost market confidence and spur demand in the manufacturing and services sectors.
The special relending facility will provide low-cost foundation for loans issued to support equipment upgrades and renovation in the manufacturing and social services sectors, medium, small and micro-sized enterprises, and self-employed businesses, the PBOC said in a statement on Wednesday.
For qualified lenders that issue such loans at an interest rate of no more than 3.2 percent in the fourth quarter of the year, the PBOC will provide them with foundation support worth equal to the principal of the loans, the statement said.
With an interest rate of 1.75 percent and a term of one year, the new facility will total more than 200 billion yuan ($27.58 billion), according to the statement.
The PBOC listed 10 specific areas that the new facility will support, including education, sanitation and health, culture, tourism and sports, charging pile, new infrastructure, and industrial digitalization.
On September 13, an executive meeting of the State Council proposed special relending and financial discounts to support the renovation of equipment in some fields, so as to expand market demand and increase development potential.
The People's Bank of China announced on September 28 that in order to implement the decisions and deployments of the State Council Executive Meeting on supporting the renewal and transformation of equipment in weak areas of economic and social development, increase the actual demand for manufacturing and service industries, and boost market confidence, the People's Bank of China has set up a special re-loan for equipment renewal and transformation, and specifically support financial institutions to provide loans to the renewal and transformation of equipment in manufacturing, social services, small and medium-sized enterprises, individual industrial and commercial households at an interest rate of no more than 3.2%.
This is another re-lending created by the central bank this year, which helps promote loose credit while supporting specific areas. Under the internal and external trade-offs, structural monetary policy tools represented by re-lending are still the main tools to support the real economy.
The State Council Meeting held on September 13 decided to update and transform equipment for manufacturing, service industry, social service fields, small and medium-sized enterprises, individual industrial and commercial households in the fourth quarter, and support national commercial banks to actively issue medium- and long-term loans at an interest rate of no more than 3.2%.
special re-loan amount is more than 200 billion yuan, trying to meet actual needs, with a term of 1 year and two extensions. At the same time, the established policies were implemented, and the central government subsidized interest rates for loan entities by 2.5%. The actual loan cost of loan entities for renewal and renovated equipment in the fourth quarter of this year shall not be higher than 0.7%.
Information disclosed by the central bank shows that the interest rate for special re-loan quota for equipment update and transformation is 1.75%, which is the same as other types of re-loans such as technological innovation created this year. But the difference is that fiscal interest subsidy will provide supporting support to form a central fiscal interest subsidy + special re-lending model.
Relevant person in charge of the Central Bank introduced that the areas of special re-lending policy support include equipment purchase and update in 10 fields, including education, health, culture, tourism and sports, training bases, charging piles, urban underground comprehensive pipeline corridors, new infrastructure, industrial digital transformation, key areas of energy conservation, carbon reduction transformation and upgrading, and waste home appliance recycling and treatment system.The special re-loans for equipment renewal and transformation include 21 financial institutions including National Development Bank , policy banks, state-owned commercial banks , China Postal Savings Bank , Joint-stock commercial banks and other 21 financial institutions.
This type of re-lending also adopts a direct delivery mechanism of "loan first and then borrow", that is, financial institutions independently issue loans and management ledgers to enterprises in accordance with the principles of marketization and rule of law, and then apply for re-lending or incentive funds from the People's Bank of China. The People's Bank of China issues re-lending or providing incentive funds to financial institutions at a certain proportion of the loan issuance or the increase in balance.
China's GDP growth is expected to reach around 5 percent in the fourth quarter and around 3.5 percent this year, said the Bank of China Research Institute in a report published on Wednesday. Looking ahead, the report added that China's exports may weaken, the impact of COVID-19 on the economy will remain, and the recovery of domestic demand will rely on continuous Strengthening of policies to stabilize growth and continuous optimization of pandemic control policies.
BOC Research Institute expects GDP to grow by 5% in the fourth quarter : The Bank of China Research Institute released the "2022 Fourth Quarter Economic and Financial Outlook Report" on the 28th, and is expected to grow by about 3.8% in the third quarter, a rebound of about 3.4 percentage points from the second quarter. Looking ahead to the fourth quarter, China's exports may weaken, the impact of the domestic epidemic still continues, and the recovery of domestic demand depends on the continued efforts of policies to stabilize growth and the continuous optimization of epidemic prevention policies. GDP is expected to grow by about 5% in the fourth quarter and about 3.5% for the whole year.
Moving on to regional highlights
area observation
China's Xiong'an New Area saw robust growth in foreign trade in the year's first eight months, with its total import and export volume in cross-border e-commerce increasing sevenfold, media reported Wednesday. The value reached 208 million yuan from January to August, compared with 25 million yuan in 2021, official data showed.
Xiong'an cross-border e-commerce trade volume reached 208 million yuan in the first eight months : According to the Management Committee of Xiong'an Free Trade Pilot Zone on the 28th, from January to August this year, new foreign trade formats and new models such as cross-border e-commerce in the new district achieved leapfrog development, and the import and export volume of cross-border e-commerce reached 208 million yuan, an increase of about 183 million yuan over the whole year last year, an increase of more than 7 times.
Shanghai's State-owned enterprises contributed to more than one-fourth of the city's GDP in 2021, official data showed Wednesday. Output value of Shanghai's SOEs came to 1.23 trillion yuan last year, accounting for 28.5 percent of the city's overall GDP.
Shanghai local state-owned enterprises contributed nearly 30% of GDP: On the 28th, in 2021, the GDP of local state-owned enterprises in Shanghai was 1.23 trillion yuan, accounting for 28.5% of Shanghai's GDP last year. The total assets, operating income and profits of local state-owned enterprises in the city account for about 1/7, 1/9 and 1/6 of local state-owned enterprises in the country.
Greater Bay Area, Greater future
New mission, Greater future
The Hong Kong Monetary Authority (HKMA) said on Thursday that its Global Financial Leaders’ Investment Summit will take place on November 2 with participants from over 100 major institutions. Thirty chief executives of global banks and funds including Blackstone, Goldman Sachs, HSBC, Morgan Stanley, Standard Chartered and UBS will attend. The meeting, with the theme of “Navigating Beyond Uncertainty”, will be the biggest congregation of global financial heavyweights in Hong Kong since the Covid-19 pandemic drove the city into three years of quarantines and social-distancing.
Hong Kong held the International Financial Leaders Summit in early November :Hong Kong Financial Authority announced on the 929th that the latest confirmation of the International Financial Leaders Investment Summit hosted by it will be held on November 2, and about 200 financial leaders will attend.The International Financial Leaders Investment Summit will bring together the main leaders of more than 100 important global financial institutions, including Morgan Stanley , Blackstone , UBS Group and more than 30 institutions are represented by the chairman or CEO to discuss the challenges and opportunities facing the global financial interface. The meeting will be the largest gathering held by global financial giants in Hong Kong in three years since Hong Kong implemented social distancing measures.
The HKMA will find a “suitable use case” for the proposed digital Hong Kong dollar, with pilot projects set to be launched soon to make it convenient for the public to adopt the virtual currency, media reported Thursday. The HKMA will launch a series of pilot schemes with banks and technology firms to test the digital currency - e-HKD - from the fourth quarter. The e-HKD will not have conflicts with the current three note-issuing banks as they may be the distributors.
Hong Kong Monetary Authority will launch a digital Hong Kong dollar pilot: According to media reports on the 29th, the Hong Kong Monetary Authority will jointly launch a series of central bank digital currency pilot programs in the fourth quarter, exploring the central bank digital currency, that is, the privacy protection and application scenarios involved in the digital Hong Kong dollar in Hong Kong, so as to facilitate subsequent implementation to Hong Kong citizens. According to reports, the HKMA will consider issuing digital Hong Kong dollars by the current bank issuing bank, so the use of the digital currency will not conflict with the three major bank issuing banks in Hong Kong.
The world's first 2,000-ton-class offshore wind power installation platform named Baihetan was formally delivered and put into operation in Guangzhou on Wednesday. The 126-meter-long, 50-meter-wide vessel also integrates functions such as transport, self-elevation, lifting and dynamic positioning and can meet the requirements needed for operating in deep and remote seas.
Guangzhou 2000-ton offshore wind power installation platform was put into operation : On September 28, the world's first new generation 2000-ton offshore wind power installation platform invested and built by Sanxia Group - the "Baihetan" was officially delivered and put into operation in Nansha, Guangzhou. The ship is 126 meters long and 50 meters wide. It integrates transportation, self-lifting, self-aircraft, lifting, installation, power positioning and other functions. It has the capacity of 10 megawatt Shanghai upwind power unit installation, which can meet the needs of integrated offshore wind power construction in the deep sea.
Next on industry and company news
Industry and company news
China’s new list of officially recognized occupations has added 97 jobs in the digital economy, according to an official at the Ministry of Human Resources and Social Security on Wednesday. The latest update adds 158 new occupations, raising the total number of occupations in the National Occupational Classification Code to 1,639.
Occupational Classification Ceremony marked 97 digital occupations for the first time: On September 28, the Ministry of Human Resources and Social Security released the 2022 edition of the "Occupational Classification Ceremony of the People's Republic of China". The new edition of the ceremony included 158 new occupations, with a total of 1,639, and 97 digital occupations were identified for the first time.
CATL said Wednesday that it would invest 14 billion yuan for a capacity expansion project, the third one the Chinese power battery giant has announced so far in the second half of the year. The new battery production facility will be located in Luoyang, central China's Henan province, and be completed in up to 36 months.
CATL 14 billion yuan to build a new energy battery project :CATL issued an announcement on the evening of the 28th stating that with the rapid development of the domestic and foreign new energy industries, the market of power batteries and energy storage industries continues to grow. In order to further promote business development, meet market demand and improve production capacity layout, the company plans to invest in the construction of the Luoyang New Energy Battery Production Base Project in Yibin District, Luoyang City, Henan Province, with the total investment of the project shall not exceed 14 billion yuan.
Sinopharm has been granted import and dealership rights for US pharmaceutical giant Merck's antiviral Covid-19 drug. The pair will also evaluate the feasibility of technology transfer for the drug to be produced, supplied, and commercialised in China, Merck announced Wednesday.
Sinopharm exclusively introduces Merck's new crown oral drug : On September 28, Merck's and Sinopharm Group jointly announced that the two parties signed a cooperation framework agreement, and Merck granted the distributor rights and exclusive import rights of the anti-COVID-19 oral drug Monoravir, which it jointly developed with Ridgeback, to Sinopharm Group. At the same time, both parties will evaluate the feasibility of technology transfer so that the drug can be produced, supplied and commercialized in China.
Chinese electric vehicle maker Nio said on Wednesday that the company will evaluate the demand-and-supply scenario in the market and carry out businesses in upstream industries related to the manufacturing of EV core parts. Nio reportedly invested an estimated 600 million yuan in Greenwing Resources Ltd, said the Australia-based miner on Sunday, which is said to be stepping up its development of lithium project in Argentina.
NIO invests in Argentina lithium mine project : On September 25 local time, Australian lithium miner Green Wing Resources announced that the company reached a strategic financing agreement with NIO to accelerate its exploration plan for a lithium salt lake project in Argentina. It is reported that the total amount of NIO's investment this time may exceed 600 million yuan. In response, NIO responded on the 28th, "We will evaluate and lay out the upstream related to the core components of the smart electric vehicle to ensure long-term competitive advantage."
Switching gears to financial news
Financial market news
Chinese officials stressed in a meeting that the yuan's exchange rate has maintained "basic stability" at a reasonable and balanced level this year, warning the market not to bet on the redback's unidirectional movement as not a single gambler will win, said the PBOC on Wednesday, as the yuan plunged to fresh lows against a buoyant greenback. Although the yuan has depreciated against the US dollar, the range of depreciation is just half of the US dollar's appreciation range, the meeting noted.
The central bank stated that it should not bet on the unilateral appreciation or depreciation of the RMB exchange rate : On September 27, the national foreign exchange market self-discipline mechanism video conference was held. The meeting pointed out that since the beginning of this year, the RMB exchange rate has remained basically stable at a reasonable equilibrium level. The RMB exchange rate against the US dollar depreciated, but the depreciation was only half of the appreciation of the US dollar during the same period; the RMB appreciated significantly against the euro, pound and yen, and is one of the few strong currencies in the world at present. The meeting emphasized that the exchange rate point is inaccurate, and two-way fluctuation is the norm. Don’t bet on the unilateral appreciation or depreciation of the RMB exchange rate. If you bet for a long time, you will lose.
China will deepen the market-based reform of exchange rate of the Chinese currency, and guide enterprises and financial institutions to improve the management of market expectations with the concept of “prudent risk”, maintaining the basic stability of yuan’s exchange rate at a reasonable and balanced level, said the PBOC at its third-quarter monetary policy committee meeting. The country will set up mechanisms and institutions to support the real economy, improve innovative financial support system, encourage financial institutions to increase medium and long-term lending, and stabilize the industrial and supply chain to meet the nation’s carbon emission and carbon neutrality goals.
The central bank stated that it will deepen the reform of exchange rate marketization : On the 29th, the Monetary Policy Committee of the People's Bank of China recently held a regular meeting for the third quarter of 2022. The meeting pointed out that we should deepen the market-oriented exchange rate reform, enhance the flexibility of the RMB exchange rate, guide enterprises and financial institutions to adhere to the concept of " risk neutral ", strengthen the management of expectations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.Build a system and mechanism for financial support to effectively support the real economy, improve the financial support innovation system, guide financial institutions to increase medium- and long-term loans in manufacturing, focus on stabilizing the industrial chain and supply chain, and strive to ensure that financial support for private enterprises is in line with the contribution of private enterprises to economic and social development, and improve the green financial system with the goal of promoting the realization of carbon peak and carbon neutrality .
China will carry out pilot inclusive finance reform in Tongchuan, Shaanxi Province, Lishui in Zhejiang Province, and Chengdu in Sichuan Province, according to the plans released by the PBOC and seven relevant authorities on Wednesday. The plans would optimize the rural financial systems and improve financial support in key areas.
三地普惠金融改革试验区总体方案出炉：9月28日，人民银行网站发布信息显示，经国务院同意，人民银行于近日联合多部门印发了关于陕西省铜川市、浙江省丽水市以及四川省成都市的普惠金融改革试验区总体方案，在三地开展普惠金融改革试验，探索普惠金融服务乡村振兴的有效路径。
The multiple central bank digital currency bridge has successfully completed its first real-trade pilot test based on four national or regional central bank digital currencies from August 15 to September 23. A total of 20 commercial banks from four regions or countries jointly participated in the digital currency bridge pilot. The total amount of central bank digital currency issued in the pilot test was equivalent to more than 80 million yuan, realizing more than 160 cross-border payment and foreign exchange operations, with a settlement amount equivalent to more than 150 million yuan.
多边央行数字货币桥完成真实交易试点：27日消息，由人民银行数字货币研究所参与的“多边央行数字货币桥项目”迎来新进展。 From August 15 to September 23, the real transaction pilot test based on the digital currencies of central banks in four countries or regions was successfully completed for the first time. 20 commercial banks from four places completed multi-scenario payment and settlement business mainly based on cross-border trade for their customers based on the currency bridge platform.试点测试中发行的央行数字货币总额为8000余万元，实现跨境支付和外汇兑换同步交收业务逾160笔，结算金额折合人民币超过1.5亿元。
Wrapping up with a quick look at the stock market
股市收盘情况
Chinese stocks closed mixed on Thursday, with the benchmark Shanghai Composite edging down 0.13 percent, while the Shenzhen Component was up 0.18 percent. Hong Kong stocks finished with more losses, with the benchmark Hang Seng sliding 0.49 percent, and the TECH Index fell 1.2 percent after briefly touching the lowest since its 2020 inception.
恒生科技指数创历史新低。 据南财金融终端显示，截至收盘，上证指数跌0.13%，报收3041.20点，深证成指涨0.18%，报收10919.44点，创业板指涨0.83%，报收2333点。板块方面，医疗器械、CRO概念等板块涨幅居前，房地产开发及服务、港口航运等板块指数跌幅居前。港股恒生指数收跌0.49%，恒生科技指数收跌1.24%，盘中创历史新低。
Biz Word of the Day
财经词汇划重点
A special relending facilityis a program to implement currency policy and support equipment purchasing and upgrading in several sectors with loans of relatively low interest rate.
专项再贷款是指中央银行为实现货币政策目标而对金融机构发放的专项贷款。狭义的再贷款指的是中央银行对金融机构贷款的总称；广义的再贷款指的是再融资的概念，其中包含票据再贴现。
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