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Keywords summary
Chinese regulators urge financial institutions to take main responsibility in tackling risks;
Eightteen provinces post GDP growth above national 3.0% in first three quarters.
Here’s what you need to know about China in the past 24 hours
China Economic News
China's newly established financial stability fund, its depositml11 insurance fund and other industry security funds shall not be used as the go-to bailout option while the country is dealing with financial risks, said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission.
Guo has warned of so-called “black swan” events, or unforeseen occurences that typically have extreme consequences, that can happen during China's economic development. All kinds of "black swan" and "grey rhino" events may occur at any time, he noted. A "grey rhino" event refers to a highly obvious yet ignored threat.
China's development has entered a period in which strategic opportunities, risks, and challenges co-exist, with uncertain and unpredictable factors increasing, Guo wrote in an article in a book titled "A Supplementary Reading of the 20th Communist Party Congress Report."
He said China should explore the launch of the financial stability law and clarify the criteria to trigger the disposal of financial risks as well as the procedures, mechanisms, sources of funds and legal liabilities during the process of handling risks, adding that financial institutions should set up "living wills," a contingency plan for an orderly resolution in bankruptcy during financial distress, to avoid bigger systemic risks.
CBC Chairman Guo Shuqing recently published an article entitled "Strengthening and Improving Modern Financial Supervision". Guo Shuqing said that at a new historical starting point, the task of financial supervision reform is very arduous.
Guo Shuqing explained the basic connotation of modern financial supervision in the article, including macro-prudential management , micro-prudential supervision, protecting consumer rights, combating financial crimes, maintaining market stability, and dealing with problem institutions.
Among them, in terms of problem-solving institutions, Guo Shuqing pointed out that picking up the "rotten apples" as soon as possible is crucial to building a stable and efficient risk treatment system. The first is "living will". Financial institutions must formulate and regularly revise detailed and feasible recovery and disposal plans to ensure that problems arise in an orderly manner. The second is "self-rescue arrangement". Implement the main responsibilities of institutions and their major shareholders, actual controllers and ultimate beneficiaries, and comprehensively implement the loss absorption mechanism of capital instruments. Problematic institutions that fail to rescue themselves must be reorganized or closed in bankruptcy in accordance with the law. The third is to "inject fund ". If necessary, use industry guarantee funds such as deposit insurance and financial stability guarantee funds to prevent systemic regional risks from being squeezed, surrendered and individual risks. Fourth, "Timely stop loss ". In order to maximize the protection of the fundamental interests of the people, the principle of minimum costs must be used to allow financial enterprises to exit the market if they fail to operate. The fifth is “emergency preparation”. Adhere to bottom-line thinking and extreme thinking, and formulate plans to deal with systemic crises. Sixth, "Quick Start". The risk outbreak of some financial institutions is sudden, and the situation deteriorates like a fire alarm. Special authorization arrangements must be made to initiate the disposal mechanism.
Yi Gang, governor of People's Bank of China, also said in an article that clarity on both responsibility and the division of labor is a prerequisite for effective disposal of financial risks.
Yi said financial regulators should bearder the responsibility of handling risks associated with financial institutions within their respective jurisdictions; the PBOC is responsible for dealing with systemic financial risks; and local governments should improve financial risk disposal mechanisms and implement territorial responsibility.
He said “self-help” should become the main way of dealing with financial risks at present and in the future. Financial institutions and their shareholders that are market players must should the main responsibility of operating independently, being responsible for their own profits and losses, and defusing Their own risks.
People's Bank of China Governor Yi Gang recently wrote in a signed article entitled "Building a Modern Central Bank System" that four tasks must be done well in building a Modern Central Bank System. First, improve the monetary policy system and maintain currency stability and economic growth; second, deepen financial system reform and enhance financial ability to serve the real economy; third, implement the main responsibilities of financial institutions and shareholders, and enhance the stability of financial institutions; fourth, strengthen and improve modern financial supervision, strengthen the financial stability guarantee system, and maintain the bottom line of no systemic financial risks.
Among them, in terms of implementing the main responsibilities of financial institutions and shareholders and improving the stability of financial institutions, Yi Gang believes that "self-rescue" should become the main way to deal with financial risks at present and in the future. He said that at present, my country's socialist market economic system, , has been fully established. Financial institutions and shareholders, as market entities, should bear the main responsibility for independent operation, self-bearing profits and losses, and "self-rescue" risks. Financial institutions should establish a market-oriented capital replenishment mechanism, make provisions for in accordance with regulatory rules, increase efforts to dispose of non-performing assets, and shape a healthy balance sheet of financial institutions. Improve the incentive and constraint mechanism, respect the independent operating rights of financial institutions, and reduce administrative intervention in the business activities of financial institutions. Promote the orderly market-oriented exit of institutions with insolvent assets, and bear losses through zero equity and discounts on large debts.
The economic growth of 18 Chinese provinces has exceeded the 3-percent national growth rate in the first three quarters, according to the data they released yesterday. Shanxi province reported a 5.3 percent GDP growth in the nine months ended Sept. 30 from a year earlier, ranking first among China’s 31 provincial-level regions, driven by its industry, especially coal and electricity. Fujian ranked second with 5.2 percent as it experienced a rapid increase in fixed asset investments, followed by Jiangxi and Inner Mongolia with 5 percent each. Guangdong, Jiangsu, and Shandong ranked top three by economic volume growth, achieving 9.2 trillion yuan, 8.9 trillion yuan, and 6.4 trillion yuan, respectively. Henan, Sichuan, and Fujian completed the top six.
31 provinces and cities' GDP in the first three quarters was released: As of November 2, all the economic third quarter reports of 31 provinces (autonomous regions and municipalities, excluding Hong Kong, Macao and Taiwan) across the country have been released. Among the 31 provinces, the total GDP of 25 provinces exceeded one trillion yuan in the first three quarters. Guangdong, Jiangsu, Shandong, Zhejiang, Henan and Sichuan are still among the top, among which Guangdong (9172.322 billion yuan), Jiangsu (8865.27 billion yuan), Shandong (644.09 billion yuan), and Zhejiang (557.5 billion yuan) GDP exceeded 5 trillion yuan in the first three quarters. In terms of GDP growth rate, 18 provinces have had the year-on-year growth rate of GDP in the first three quarters higher than the national level (3%). Unlike before, central and western provinces performed outstandingly this year, and their overall performance ranks among the top. Shanxi Province continued its momentum in the first half of the year with a growth rate of 5.3%, followed by Fujian, Jiangxi, Inner Mongolia, Ningxia, Hunan, Shaanxi, Hubei, Gansu and Shandong.
Next on industry and company news
Industry and company news
Chinese local governments should make better use of state-owned assets, such as houses, land and cars, in order to help plug the gap between fiscal revenue and expenditure, the Ministry of Finance said Tuesday. Local governments should conduct a thorough industry of the assets that they
Ministry of Finance guides the revitalization of state-owned assets : On November 1, the Ministry of Finance demanded to accelerate the revitalization and utilization of various state-owned assets such as houses, land, vehicles, etc., improve the efficiency of asset revitalization and utilization, and truly implement the requirements for tight life. The state-owned assets of administrative and public institutions that are required to be revitalized include inefficient operation and idle houses, land, and vehicles, as well as office equipment and furniture, large instruments, software and other assets. In addition to physical assets , state-owned assets of administrative and public institutions in the form of monetary form are also managed and revitalized in accordance with budget management regulations. The means of activation include self-use, sharing, adjustment, rental, and disposal. Official data shows that in 2020, the total amount of administrative and institutional state-owned assets nationwide was 43.5 trillion yuan, the total amount of liabilities was 11.2 trillion yuan, and the net assets were 32.3 trillion yuan.
China's logistics sector was less upbeat in October due to the recent COVID-19 recovery, as the index tracking the country's logistics market performance stand at 48.8 percent last month, down 1.8 percentage points from September, according to the China Federation of Logistics and Purchasing (CFLP) on Wednesday.
htmlChina's logistics industry prosperity index fell to 48.8% in October: China Federation of Logistics and Procurement html announced the October China logistics industry prosperity index on the 112th. Affected by the epidemic and seasonal factors, the logistics industry's prosperity index has been pulled back and logistics operations have fluctuated, but it has basically maintained a stable trend. In October, China's logistics industry prosperity index was 48.8%, down 1.8 percentage points from the previous month. Among them, the total volume index of postal express , loading, unloading, and pipeline transportation businesses that guarantee people's livelihood is in the expansion range.
A total of 46 Chinese-manufactured wide gauge railway coaches have been loaded in North China’s Tianjin Port and will be shipped to Pakistan on Thursday, marking the first time China will have Exported its technology for constructing railway coaches capable of speeds of 160 kilometers per hour. Another 184 units will be delivered to Pakistan in parts and will be assembled locally.
speed 160 kilometers per hour passenger bus technology is exported for the first time : Recently, 46 domestic wide-rail railway buses were loaded at Tianjin Port and will be taken to Pakistan on a freighter, which will also be the first international output of my country's 160 kilometers per hour railway bus technology. It is understood that the 46 wide-rail buses were delivered in domestic complete vehicle production, and 184 buses will be delivered in Pakistan in the form of bulk assembly, thereby realizing localized manufacturing of the vehicle.
Global electric vehicle battery installations totaled 341.3 gigawatt-hours in the first three quarters this year, rising 75.2 percent from the same period last year, data by global information agency SNE Research showed Tuesday. The growth rate was particularly impressive in China, with CATL ranking first with 119.8 GWh of installed power batteries from January to September, Surging 100.3 percent from last year and taking a global market share of 35.1 percent. BYD ranked third with 43.6 GWh, a whopping 177 percent gain, with its market share jumping from 8.1 percent last year to 12.8 percent.
CATL leads the global power battery installation list : On November 1, global information agency SNE Data released by Research shows that the total number of electric vehicle batteries installed in the global reached 341.3GWh, and increased by 75.2% year-on-year. CATL and LG New Energy ranked among the top two in the world's power battery installation volume, and BYD ranked third. Among them, CATL's power battery installed capacity was 119.8GWh, a year-on-year increase of 100.3%, and the global market share of was 35.1%, an increase of 4.4% from 30.7% in the same period last year. BYD ranked third with a loading volume of 43.6GWh, with a year-on-year increase of 177.0%, and its market share increased from 8.1% last year to 12.8%.
Switching gears to financial news
Financial market news
China's local government bond issue reached 32.2 trillion yuan in September with a net 24.1 billion yuan in special bonds, data from the Ministry of Finance showed on Thursday. The figure took the total local government bond issue for the year to 6.3 trillion yuan by the end of September, among which new sales amounted to 4.2 trillion yuan.
html New local government bonds added 4.24 trillion from November to September: On November 3, the website of the Ministry of Finance announced the issuance and debt balance of local government bonds in September 2022. In September, 32.2 billion yuan of new local government bonds were issued nationwide, including 8.1 billion yuan of general bonds and 112.41 billion yuan of special bonds. From January to September this year, 4242.2 billion yuan of new local government bonds were issued nationwide, including 699 billion yuan of general bonds and 3543.2 billion yuan of special bonds. A total of 6348.5 billion yuan of local government bonds were issued nationwide, including 1936.8 billion yuan of general bonds and 4411.7 billion yuan of special bonds.
The central banks of China and Pakistan recently signed a memorandum of cooperation (MOC) on establishing yuan clearing arrangements in Pakistan, the People's Bank of China announced on Wednesday.
China-Pakistan established Pakistan RMB clearing arrangements : According to the website of the People's Bank of China on November 2, recently, the People's Bank of China and the State Bank of Pakistan signed a memorandum of cooperation on establishing RMB clearing arrangements in Pakistan. The establishment of Pakistan's RMB clearing arrangements will help enterprises and financial institutions in China and Pakistan use RMB for cross-border transactions, and further promote bilateral trade and investment facilitation.
China's policy bank responsible for facilitating the country's foreign trade has rolled out specific credit support worth 200 billion yuan for imports from countries that are members of the Regional Comprehensive Economic Partnership (RCEP), according to the Export-Import Bank of China on Wednesday. In the first 10 months of 2022, the policy bank has offered over 310 billion yuan in Total credit to support imports.
Export-Import Bank sets a special quota for imports of 200 billion RCEP: In order to help amplify the spillover effect of the CIIE and continue to stimulate import potential, the Export-Import Bank of China recently announced that it will set up a special quota for imports from RCEP member countries to focus on key areas such as foreign trade and manufacturing, and fully meet the capital needs of related enterprises. As of the end of October this year, the balance of import credit of the Export-Import Bank was 720 billion yuan; from January to October this year, the cumulative supply of imported credit exceeded 310 billion yuan.
Wrapping up with a quick look at the stock markettml2
Stock market closing
Chinese shares fall on Thursday, as a two-day rally lost steam after fresh U.S. rate hike and rising COVID-19 cases in China hit confidence. The benchmark Shanghai Composite ended down 0.19 percent while the Shenzhen Component dipped 0.34 percent. Hong Kong stocks closed sharply lower, as the Hang Seng ended down 3.08 percent and the TECH index sank 3.84 percent.
A shares fluctuated Hong Kong stocks fell : On Thursday, the three major A-share indexes fluctuated and rebounded in the afternoon. As of the close, the Shanghai Composite Index fell 0.19%, the Shenzhen Component Index fell 0.34%, the ChiNext Index rose 0.01%, and the Shanghai and Shenzhen stock markets had a full-day turnover of 8865 billion yuan. The Hang Seng Index index fell 3.08%, and the Hang Seng Technology Index fell 3.84%.
Biz Word of the Day
Financial Vocabulary Focus
A Memorandum of Cooperation (MOC)is defined as an agreement between countries or diplomatic parties. The MOC expresses the factual or legal details of a certain issue in question or depicts the details of the diplomatic dialogues the parties had.
Memorandum of Cooperation generally refers to diplomatic documents used between countries or between diplomatic representative organs in diplomatic practice, and are actually a kind of oral notice or conversation record. Used to explain the factual or legal details of a certain issue, or to clarify the content of the conversation in diplomatic talks; to state, supplement one's own views, or refute the other's views.
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