China’s GDP rose 6.6% to Rmb90tr ($13.27tr) in 2018, according to data from the National Bureau of Statistics on Monday. Growth in the fourth quarter reached 6.4%, in line with market consensus forecasts.
“Investors are most sceptical about China’s growth outlook in the near term,” Chetan Ahya, chief Asia economist at Morgan Stanley, wrote in a Monday note. “In contrast, we expect further easing, which would help bring about a growth improvement from the second quarter of 2019.”
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Germany and China have signed multiple agreements to strengthen coordination in banking and finance in a broad aim to improve mutual capital market access. The agreements came at the close of German finance minister Olaf Scholz’s two-day visit to Beijing last week.
The agreements included a Memorandum of Understanding (MoU) between the two central banks, an agreement to collaborate in securities and futures trading, and a letter of intent to jointly examine banking regulations.
The two countries agreed to support the Belt and Road Initiative (BRI) and its potential use in improving Europe’s infrastructure. China and Germany will also explore joint opportunities in third-party countries.
Both sides vowed to keep building Frankfurt as an offshore renminbi hub and support the development of renminbi clearing banks in Germany. China welcomed German financial institutions to use the RMB Qualified Foreign Institutional Investor (RQFII) scheme to invest in the Chinese market. The two countries will strengthen collaboration and communication in financial technology and green finance.
This second high-level financial dialogue also encouraged the China Europe International Exchange (Ceinex), a joint venture established by the Shanghai Stock Exchange, the Deutsche Börse Group, and the China Financial Futures Exchange, to launch A-Share index derivatives in Frankfurt, invite German companies to issue renminbi bonds and Chinese companies to issue and list bonds and stocks in the CEINEX D-share market, according to a Friday press release.
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Swift is planning to establish a wholly foreign-owned unit in Beijing to relocate the bulk of its China operations from Belgium to mainland China, according to a Wednesday press release by People’s Bank of China (PBoC).
The firm also signed a memorandum of cooperation with the city government of Beijing. After the new unit is established, it will become a member of the Payment and Clearing Association of China and be regulated by the PBoC.
Gottfried Leibbrandt, global chief executive officer of Swift, said the firm will communicate closely with Chinese regulators in the future and help facilitate China’s market reform as well as BRI.
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Chinese banks conducted net foreign currency purchases worth $7.1bn in December, according to data released on Friday.
“Although the Chinese banks continued to net purchase foreign currencies for clients, the capital flow picture improved and is expected to improve further in the coming months as a result of RMB appreciation,” Li Ruofan, economist at OCBC Wing Hang Bank, wrote in a Monday note. “The surplus in the RMB forward market shows China’s administrative measures are taking effect.”