The State Council has assigned tasks to various regulators and government bodies to implement policies announced in China’s government work report last month.
The National Development and Reform Commission (NDRC) and the Ministry of Commerce will shorten the negative list for foreign investment this month. The reform for Shenzhen Stock Exchange’s ChiNext board will be led by the China Securities Regulatory Commission (CSRC) and carried out before the year end.
By the end of June, the People’s Bank of China (PBoC) and the China Banking and Insurance Regulatory Commission (CBIRC) will announce specific policies regarding the extension in loan payments for small and micro-sized enterprises to March 2021. To support more bond market financing from corporates, the PBoC, NDRC and the CSRC will roll out measures before the end of August.
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China’s consumer price index (CPI) rose by 2.4% year-on-year in May, while the producer price index (PPI) was 3.7% lower than a year ago, data from the National Bureau of Statistics (NBS) showed.
The May CPI was 0.8% lower compared to April, with the NBS attributing the drop mainly to falling food prices. The headline number came below the market consensus of 2.7%.
The PPI deflation was deeper than the market’s expectation of negative 3.3%, and was 0.4% lower than April. The NBS said the weak PPI data was largely because of the high base of comparison in May 2019, without which the PPI would have been just 3.2% lower year-on-year.
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China’s total social financing (TSF) jumped by Rmb3.19tr in May, which was Rmb1.48tr more than the TFS increase recorded during the same period in 2019, according to the PBoC. The outstanding TSF reached nearly Rmb268.4tr by the end of the month after a 12.5% yearly increase.
New renminbi loans in May stood at Rmb1.48tr. This was Rmb298.4bn higher than a year ago but Rmb218bn lower compared to April. Broad M2 money supply grew by 11.1%.
“New TSF came in modestly higher than market expectation, though new loans and M2 growth disappointed,” economists at Bank of America wrote in note. “Looking ahead, it should be necessary for the PBoC to continue its monetary easing to boost demand and [stabilise] growth.”
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Shanghai welcomes more eligible foreign banks and insurance firms to set up and expand their businesses in the city, said Zhou Wenjie, deputy head of the CBIRC’s Shanghai bureau.
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China gave more details on establishing the Hainan Free Trade Port (FTP) in a Monday State Council press conference. Companies can simply register to start operating in the FTP, instead of having to seek approvals from the government, governor of the Hainan province, Shen Xiaoming, said.
Those incorporated in the FTP are encouraged to raise funds from share issuance overseas, added Shen.
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By the end of May, there were 3,868 domestically listed Chinese companies with a total market capitalization of Rmb59.61tr, according to the CSRC vice chairman Yan Qingmin.
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The CSRC will work on the “stable implementation” of a registration-based system for IPOs across the whole market.
The Shanghai Stock Exchange’s Star market has adopted the registration system since its launch a year ago. A CSRC official said on Thursday that by June 5, the share price of the 106 Star-listed companies rose by 159% on average. Shenzhen’s ChiNext board is undergoing a reform to shift to the registration system.
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The PBoC daily open market operations (OMOs) will take place between 9am and 9.20am Beijing time, instead of the previous 9.15am-9.45am, effective this Thursday. Announcements will be made at 9.20am for any OMOs that day, and at 9am if no OMOs were conducted.
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On Friday, the central bank conducted Rmb100bn of seven-day reverse repurchase agreements, once again leaving the interest rate unchanged at 2.2%.
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China’s aviation industry is showing signs of recovery. The number of air passengers in May exceeded 25.83m, according to data from the Civil Aviation Administration of China. While the figure is still 52.6% lower than what was recorded a year ago, the decline moderated by 15.9 percentage points from April.
Air cargo volume stood at 549,000 tonnes after a 12% yearly drop, compared to a 19.5% decline in April.
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China saw a 67.7% drop year-on-year in the number of international flights — both inbound and outbound — in May, according to the General Administration of Customs. The decline was 55.8% for the first five months of 2020.
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Auto sales in China improved last month, surging by 14.5% compared to a year ago and 5.9% up from April, data from the China Association of Automobile Manufacturers showed.
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Foreign institutions increased their holdings of bonds in the China interbank market by Rmb114.6bn in May, according to the PBoC. By the end of last month, they held 2.6% of the total bonds outstanding, worth Rmb2.43tr.
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China’s finance minister Liu Kun and other senior financial officials held a meeting on Monday, where they called for a faster issuance pace of local government bonds. China also said it will strengthen local government debt management, and not brush over risks because of the Covid-19 pandemic.
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The CSRC has launched an official investigation into violation of bond market information disclosure at Kangde Xin Composite Material Group, its controlling shareholder Kangde Group, as well as three members of its senior management including the founder and chairman Zhong Yu, the company said in stock exchange filings.
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Chairman of Luckin Coffee, Lu Zhengyao, has resigned as the chairman and a non-executive director of Hong Kong-listed Car Inc, effective Tuesday, according to a stock exchange filing.
Lu’s departure from Car followed onshore media Caixin’s report that Chinese regulators have obtained evidence of Lu’s alleged involvement in Luckin’s disclosure of fabricated sales.
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The CBIRC has published the official rules for financial leasing companies, having taken feedback for the draft version in January.
Companies are required to cap their non-leasing assets at 40% of their total assets, while their risky assets cannot exceed eight times of their net assets. Financial leasing firms must also make sure their fixed income investment businesses make up no more than 20% of their net assets.