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Qatar Tribune
07-07-2025
- Business
- Qatar Tribune
China urged to take bolder steps to tackle price wars, deflation
Agencies Beijing's latest push to curb price wars may help ease deflationary pressures, but analysts warn the current measures fall short of addressing deeper structural problems facing the world's second-largest economy. China's GDP deflator – a broad measure of prices across goods and services – has been negative since the second quarter of 2023, while consumer prices have fallen for four straight months year-on-year. To stop the deflationary spiral, Chinese authorities should address the cause: weak domestic demand, analysts said. 'So far, attempts to revive inflation by trimming supply and reducing overcapacity have shown limited results,' Miao Yanliang, chief strategist at Beijing-based investment bank China International Capital Corporation (CICC), wrote in a research note. 'Weak demand remains the underlying problem.' Despite policymakers flagging cutthroat competition as a concern at the tone-setting Central Economic Work Conference last December, there are few signs of a rebound in prices, said Miao, who previously worked as a senior economist at the State Administration of Foreign Exchange for a decade. Miao attributed the current deflationary spiral to downturns in the financial and property sectors as well as diminishing income expectations among Chinese households. The warning came as the Chinese economy grapples with persistent structural challenges. Excess capacity across multiple sectors has suppressed both producer and consumer prices, while job insecurity and a prolonged property slump have made households reluctant to spend. China's consumer price index (CPI), a key gauge of inflation, declined for a fourth straight month in May – falling 0.1 per cent year on year, according to the National Bureau of Statistics. The producer price index (PPI) has continued to contract since October 2022. June price data is scheduled for release on week, China's top leadership addressed 'disorderly low-price competition' during a meeting of the Central Financial and Economic Affairs Commission, the Communist Party's highest economic policymaking body. It pledged to cut production capacity in an 'orderly' fashion, though without naming specific industries or targets. Compared to supply-side adjustments, analysts said demand-side stimulus remains the most effective lever for tackling deflation. To break the cycle, the CICC note recommended repairing 'corporate balance sheets' through capital injections, interest subsidies and corporate restructuring. This would help revive investment sentiment and employment, paving the way for a recovery in household income and assets, it added. Miao also called for raising household incomes by stabilising employment, increasing cash flow and strengthening the social safety net to ease consumer concerns and unlock spending potential. Chinese authorities have doubled down on subsidies, including a 300 billion yuan central government trade-in programme this year, to stimulate domestic consumption amid external headwinds. But there are fears the impact could be limited. 'When it comes to boosting consumption, there are few policy tools available to generate substantial traction on the demand side,' Mao Zhenhua, co-director of Renmin University's Institute of Economic Research, told a forum in Hong Kong on risks have been exacerbated by falling investment returns and mounting pressure on income and employment, with external headwinds also weighing on prices, he warned. The trade war with the United States would have 'a lasting impact on China's medium- to long-term economic fundamentals' and could further intensify the country's 'involutionary' dynamics, Mao added – a term used by officials to describe intense and self-defeating domestic competition.
Nikkei Asia
04-07-2025
- Business
- Nikkei Asia
Chinese rural bank gets state rescue as it warns of up to $265m losses
The logo of Jilin Jiutai Rural Commercial Bank. The institution, hit hard by China's property crisis, says fee reductions and concessions for borrowers under directives to support the economy have been taking a toll. (Photo by Yuki Kohara) LORRETTA CHEN HONG KONG -- Chinese state enterprises have come to the rescue of a troubled rural commercial bank in the nation's northeastern Jilin province, after it warned of losses to the tune of 1.7 billion yuan to 1.9 billion yuan ($237 million to $265 million). China International Capital Corporation Hong Kong, an overseas unit of China's largest investment bank, and state-owned Jilin Financial Holding Group have offered to acquire for cash all of the Hong Kong-listed and domestic shares of Jilin Jiutai Rural Commercial Bank, respectively, according to an exchange filing Thursday evening. The lender, often simply referred to as Jiutai Bank, will also apply for delisting in Hong Kong upon shareholder approval of the acquisition.
South China Morning Post
28-06-2025
- Business
- South China Morning Post
WeChat and Alipay are China's ‘comparative advantage' in stablecoin race: top economist
China already has de facto stablecoins in the form of WeChat Pay and Alipay, a top economist at the country's leading investment bank has argued – amid growing calls for Beijing to quickly adapt to the global rise of digital assets. Advertisement 'From an economic perspective, money based on third-party payment platforms functions much like stablecoins – and China holds a comparative advantage in this area, having already built a relatively mature regulatory framework,' said Peng Wensheng, chief economist at China International Capital Corporation, in a research note published on Friday. Stablecoins are digital currencies pegged to fiat currencies like the US dollar or Hong Kong dollar, or to reserve assets such as gold. Unlike highly volatile cryptocurrencies such as bitcoin, they combine the speed and efficiency of crypto with the stability of traditional money. According to Peng, platform-based digital money is an extension of legal tender, with safeguards in place to maintain a 1:1 peg with fiat currency. 'Its stability is underpinned by stricter safeguards – customer funds are backed by central bank base money, and regulatory oversight imposes tighter limits on its financial expansion,' he said. Advertisement As stablecoins move to the forefront of global economic and financial debate, Chinese state media has urged policymakers to stay ahead of the curve.
Business Recorder
23-06-2025
- Business
- Business Recorder
Hong Kong stocks edge down as investors eye funding conditions
SHANGHAI: Hong Kong shares were slightly down on Monday, as investors assessed the potential for tighter cash supplies and monitored tensions in the Middle East for a likely hit to sentiment. China stocks were mixed. China's blue-chip CSI300 Index was down 0.2% by the lunch break, while the Shanghai Composite Index gained 0.2%. Hong Kong benchmark Hang Seng was down 0.1%. The Hong Kong dollar slipped to 7.85 per US dollar on Monday, hitting the weak end of its trading band for the second time since May 2023. The move may prompt the Hong Kong Monetary Authority to drain liquidity from the banking system to support the currency. Hong Kong market liquidity is unlikely to ease further and may even tighten as Hong Kong Interbank Offered Rates (HIBOR) have likely bottomed out and southbound inflows have slowed, said Kevin Liu, strategist at China International Capital Corporation (CICC). The overnight HIBOR, a key barometer of liquidity, hovered near a record low at 0.01777%. 'Short-term liquidity tightening, uncertainties surrounding tariff negotiations, weakening economic data, and delays in policy support could all contribute to increased market volatility,' Liu said. Risk sentiment was further limited as global investors waited to see if Iran would retaliate against US attacks on its nuclear sites, with resulting risks to global activity and inflation. China's Coal Index rose 1.3%. Maritime shipping and port shares broadly rose, with Nangjing Port up to 10%.
New Straits Times
23-06-2025
- Business
- New Straits Times
Hong Kong stocks edge down as investors eye funding conditions
SHANGHAI: Hong Kong shares were slightly down on Monday, as investors assessed the potential for tighter cash supplies and monitored tensions in the Middle East for a likely hit to sentiment. China stocks were mixed. China's blue-chip CSI300 Index was down 0.20 per cent by the lunch break, while the Shanghai Composite Index gained 0.20 per cent. Hong Kong benchmark Hang Seng was down 0.10 per cent. The Hong Kong dollar slipped to 7.85 per US dollar on Monday, hitting the weak end of its trading band for the second time since May 2023. The move may prompt the Hong Kong Monetary Authority to drain liquidity from the banking system to support the currency. Hong Kong market liquidity is unlikely to ease further and may even tighten as Hong Kong Interbank Offered Rates (HIBOR) have likely bottomed out and southbound inflows have slowed, said Kevin Liu, strategist at China International Capital Corporation (CICC). The overnight HIBOR, a key barometer of liquidity, hovered near a record low at 0.01777 per cent. "Short-term liquidity tightening, uncertainties surrounding tariff negotiations, weakening economic data, and delays in policy support could all contribute to increased market volatility," Liu said. Risk sentiment was further limited as global investors waited to see if Iran would retaliate against US attacks on its nuclear sites, with resulting risks to global activity and inflation. China's Coal Index rose 1.30 per cent. Maritime shipping and port shares broadly rose, with Nanjing Port up to 10 per cent. Hua Hong Semi listed in Hong Kong jumped 7 per cent, after media reported that the US government weighs additional restrictions on China, including revoking waivers that allow global chip makers to access American technology in China.
