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South China Morning Post
8 hours ago
- Business
- South China Morning Post
China's property loans rise to a 2-year high on policy support
China's outstanding property loans rose to a two-year high in June, central bank data showed on Tuesday, following a series of policy measures aimed at stabilising the sector. Advertisement China's outstanding property loans stood at 53.33 trillion yuan (US$7.43 trillion) at the end of June, up 0.4 per cent from a year earlier, the People's Bank of China said in a statement. Growth accelerated from 0.04 per cent in March, reaching the highest level since June 2023, according to central bank data. But growth remained modest, dwarfed by the double-digit increases seen before 2021. Outstanding individual mortgage loans came in at 37.74 trillion yuan, down 0.1 per cent from a year earlier, while outstanding property development loans rose 0.3 per cent to 13.81 trillion yuan, the central bank said. Advertisement Beijing has rolled out a number of rounds of policy measures in recent years to support the property sector, including allowing debt-laden developers to sell housing inventories and undeveloped land to local governments.
The Star
11 hours ago
- Business
- The Star
Enhancing economic resilience crucial in trying times
How should China strengthen the resilience of its economy? In April, the Trump administration announced a surge in global tariffs, triggering strong responses from governments around the world and causing sharp turbulence in financial markets. Within three days of the announcement, global stock markets lost over $9.5 trillion in market capitalization, and volatility intensified significantly across bond, foreign exchange and commodity markets. In the United States, stocks, bonds and the dollar all fell simultaneously. The yield on 10-year US Treasury bonds also posted its biggest weekly gain since the Sept 11, 2001 attacks. The shockwaves from the tariff moves continue to ripple across the world, with escalating confrontations on all sides. Faced with the Trump administration's high tariffs and erratic behavior, China must resolutely implement countermeasures. Any concession would only lead to further pressure from the other side. Only through firm resistance can space for negotiation and cooperation be created. On April 25, a high-level meeting for the first time proposed coordinating domestic economic work and international economic and trade struggles, aiming to use the certainty of high-quality development to cope with the uncertainty of dramatic changes in the external environment. On May 7, the People's Bank of China, the China Securities Regulatory Commission and other government authorities jointly introduced a package of incremental policies to stabilize market confidence. On May 12, China and the US released a joint statement after economic and trade talks in Geneva, in which the US agreed to remove some additional tariffs, and China reciprocated accordingly, temporarily easing tariff pressures. However, over the medium-to-long term, challenges in Sino-US economic and trade relations persist. It is worth noting that tariffs may not be the Trump administration's ultimate goal, but rather a bargaining tactic aimed at achieving the dual objectives of reducing the US trade deficit and maintaining the dominance of the greenback. In fact, since the onset of the trade conflict in 2018, the US government has been exerting significant pressure and imposing extreme restrictions on China in both trade and technology sectors. We must be fully aware of the worsening international economic and trade environment in the foreseeable future and recognize that China and the US will continue their strategic contest for a long time. So, against this backdrop, how should China enhance the resilience of its economy? We believe the most important approach is to focus on doing our own job well, remain self-reliant and persist in expanding domestic demand. At the same time, we must unswervingly expand high-level opening-up. Expanding domestic demand is the top priority for 2025. Following the directives from the Central Economic Work Conference in December 2024, expanding domestic demand became the top priority of economic work this year. This is because insufficient domestic demand is currently the main stumbling block in China's economy. In 2024, total retail sales of consumer goods grew by only 3.3 percent year-on-year, significantly lower than the 9.7 percent average between 2015 and 2019. From the perspective of the three engines of GDP — consumption, investment and exports — final consumption in 2024 contributed an average of only 2.3 percentage points per quarter to GDP growth, much lower than the 4.2-percentage point average between 2015 and 2019. Breaking down the three factors influencing household consumption — changes in income, wealth and expectations — we find that in the short term, the main constraint on consumption growth is the sharp slowdown in household income growth since the COVID-19 pandemic. In 2024, cumulative year-on-year growth in per capita disposable income was 4.6 percent in urban areas and 6.6 percent in rural areas, well below the 7.9 percent and 9.6 percent levels of 2019. Over the long term, two main factors constrain consumption: first, weak expectations and confidence about future employment and income; second, evident imbalances in income distribution across households, the government and enterprises, as well as within the household sector itself. Rising risk aversion among residents has led to an increase in precautionary savings, reflected in the sharp rise in new deposits and continued decline in new loans since 2022. In terms of income distribution, profits generated by enterprises have not been sufficiently transferred to households, and the income distribution within the household sector also needs improvement. Beyond the income gap between urban and rural residents, an even more important issue is the much wider gap in property and social security entitlements. To sum up, we believe that to stimulate consumption, macroeconomic policy stimulus is needed in the short term, while structural reform should be accelerated in the medium term. Based on the logic of moving from short-term stimulus to long-term reform, the following policy recommendations are proposed. First, a more proactive fiscal policy and a moderately accommodative monetary policy are keys to driving a rebound in China's nominal GDP growth. The main issue facing the Chinese economy is insufficient aggregate demand and a negative output gap. In the short term, to address the lack of domestic demand, central government finances should increase borrowing and spending to drive a rebound in consumption and investment. In addition to promptly implementing the expansionary policies outlined in the Government Work Report, additional stimulus measures should be planned for the second half, especially through greater issuance of special treasury bonds. To make full and effective use of proactive fiscal policy, we recommend accelerating the issuance of the remaining quota of local government special bonds and special treasury bonds in the second quarter, and issuing an additional 2 to 3 trillion yuan ($411.6 billion) in special treasury bonds for the year. Second, increasing short-term incomes for low and middle-income households through fiscal subsidies is advised. We recommend issuing universal consumption vouchers to encourage spending, especially among low and middle-income earners. To maximize the multiplier effect of consumption vouchers, they should be issued without being tied to specific products or services. Third, lifting asset prices from the bottom can also help restore consumer confidence. On real estate policy, housing prices in core areas of the largest cities should be stabilized promptly, and support should be given to leading well-managed private developers. All purchase and loan restrictions should be lifted to unleash demand from first-time and upgrading buyers. Special-purpose bonds should be issued to provide low-cost, long-term financing for high-quality developers. The government can also purchase idle commercial housing in second and third-tier cities and convert it into rental-based public housing. In the stock market, efforts should be made to cultivate a long bull market. In addition, with an aging population and slowing investment-driven growth, China's potential economic growth rate is trending downward. To reverse this trend and restore confidence among microeconomic actors, bold structural reforms are needed. These include reforms in income redistribution, education, healthcare, pensions, housing, development of a unified domestic market and support for private enterprises. The writer is deputy director of the Institute of Finance and Banking of the Chinese Academy of Social Sciences. The views do not necessarily reflect those of China Daily. - China Daily/ANN
The Diplomat
13 hours ago
- Business
- The Diplomat
Who Will Rule Crypto? The China-US Battle for Global Financial Leadership
The digital currency race between the U.S. and China is more than a technological arms race. It represents the reordering of global monetary governance. In 2025, China and the United States are deepening their rivalry in a new arena: digital currency infrastructure. In May, Hong Kong passed landmark legislation to regulate fiat-referenced stablecoins, underscoring its ambition to become a digital finance hub and align with Beijing's broader strategy to promote the digital yuan (e-CNY) as an alternative to the U.S. dollar. Meanwhile, U.S. policymakers and fintech firms are ramping up efforts to expand the reach of dollar-backed stablecoins, reflecting a growing competition over who sets the rules of the emerging digital monetary order. China's Push for a Multipolar Currency System China has been actively promoting the e-CNY, with the People's Bank of China (PBOC) announcing plans to establish an international operation center for the digital yuan in Shanghai. This initiative aims to enhance the global presence of the e-CNY and reduce reliance on the U.S. dollar in international trade. The PBOC aims to integrate the e-CNY into supply chain financing and cross-border payments – particularly between mainland China and Hong Kong – where projected usage is expected to reach $8 billion in 2025. Yet, analysts at J.P. Morgan maintain that the e-CNY is unlikely to erode the U.S. dollar's dominance in global transactions, and the data tells a clear story. In 2022, the U.S. dollar accounted for 88 percent of global FX transactions, 70 percent of foreign currency debt issuance, and 48 percent of cross-border liabilities, while the Chinese yuan made up just 7 percent of FX turnover. However, the e-CNY's role in facilitating trade within the BRICS bloc and other emerging markets could gradually erode the dollar's influence in specific regions. At the 2025 BRICS summit in Rio de Janeiro, leaders reaffirmed their commitment to de-dollarization, calling for alternative payment systems and criticizing unilateral dollar-based trade measures. The bloc has condemned unilateral tariffs, viewing them as harmful to global economic stability. BRICS is actively exploring alternative payment systems, a strategy reflected in several concrete mechanisms. The New Development Bank has issued more than $2.1 billion in local currency loans to finance infrastructure and sustainable projects, reducing reliance on dollar funding, while the $100 billion Contingent Reserve Arrangement provides member countries with liquidity support in currencies other than the dollar, enhancing financial resilience. Complementing this shift, China's Cross-Border Interbank Payment System (CIPS) has expanded significantly, facilitating yuan-denominated trade settlements and interoperating with Russia's SPFS system, thereby enabling some nations to circumvent the dollar-based SWIFT network. Trade data reinforces this trend: in 2024, China-Russia bilateral trade reached $218 billion, with a growing share settled in yuan and rubles, while India-Russia trade totaled $66 billion, much of it bypassing the dollar through local currency arrangements. U.S. Stablecoins: Regulatory Clarity and Global Reach In response to the rising importance of digital currencies, the U.S. Senate passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) on June 17, by a bipartisan vote of 68-30, marking the first federal legal framework for payment stablecoins. This landmark legislation mandates that issuers fully back stablecoins with liquid assets, register with regulators, and meet transparency and audit requirements. Its passage is widely seen as solidifying the U.S. dollar's dominance in the digital payments domain by ensuring regulated access to dollar-pegged stablecoins. Meanwhile, Circle – the issuer of USDC, a stablecoin pegged to the U.S. dollar – is expanding globally. According to its 2025 State of the USDC Economy report, USDC circulation surged 78 percent year-over-year, surpassing $60 billion in active supply by early 2025, while total lifetime transactions exceeded $20 trillion, with a record $1 trillion in monthly volume in November 2024. USDC is now accessible to over 500 million users through more than 180 countries, supported by a growing network of global banking partnerships and cross-chain transfer protocols that facilitated over $20 billion in transfers across blockchains. In a notable move, Ant International, the overseas arm of Jack Ma-backed Ant Group, is preparing to integrate USDC into its AntChain platform once the token meets U.S. regulatory standards under the GENIUS Act. That integration would connect USDC to Alipay's massive 1 billion-plus user base and unlock new cross-border transaction capacity for regulated digital dollars. This rapid growth – with regulatory clarity following the GENIUS Act – positions USDC as a powerful means of reinforcing the U.S. dollar's digital supremacy across borders and industries. Its rising adoption among institutions and interoperability with platforms like Alipay and AntChain signal a convergence of U.S. stablecoin infrastructure with Chinese fintech reach, underpinning the dollar's competitive edge in the emerging digital economy. Implications for Global Finance The escalating digital currency rivalry between the United States and China underscores a strategic contest for influence over the future of global finance. While China's promotion of the e-CNY aims to establish a multipolar currency system, the U.S. is leveraging stablecoins to reinforce the dollar's dominance in digital transactions. This competition contributes to a fragmented global monetary landscape, where multiple digital currencies coexist, each backed by different geopolitical blocs. Such fragmentation may increase transaction costs and complicate international trade; however, it also reflects the evolving nature of global economic power structures. Recent data illustrates this shifting landscape. The U.S. dollar's share of global foreign exchange reserves declined from over 70 percent in the early 2000s to approximately 59 percent by the end of 2021, according to IMF COFER data, as countries – particularly within the BRICS bloc – pursue reserve diversification strategies. For example, central banks in emerging markets purchased over 244 metric tons of gold in the first quarter of 2025 alone, the highest quarterly volume in recent years, signaling a concerted effort to hedge against dollar dependence and enhance resilience against geopolitical and monetary shocks. These reserve shifts point to deeper structural changes in global finance. Institutions like the IMF have cautioned that the payment efficiency gains of digital money may be 'offset by financial safety-net challenges under stress,' especially in a world of diverging digital currency regimes. As the IMF warned in a 2024 policy note, 'a shift to a multipolar reserve configuration may require global reserve issuers to expand liquidity backstops' – underscoring how digital fragmentation could undermine the very stability such technologies aim to enhance. S. Yash Kalash from the Center for International Governance Innovation similarly warned that diverging digital financial infrastructures could foster 'fragmentation, capital flow volatility, and regulatory disjunctures,' particularly as countries build alliances around competing monetary technologies. Empirical research supports this trend. A 2025 study by Antonis Ballis found that rising exposure to sanctions and declining trust in Western payment networks are accelerating adoption of systems like CIPS and bilateral central bank digital currency rails, reinforcing 'digital fragmentation along geopolitical lines.' The study highlights that such networks are increasingly used not just for efficiency, but as hedges against dollar-denominated risk. Echoing this, economist Kenneth Rogoff, Harvard professor and former chief economist of the IMF, sees today as the most significant inflection point in the global currency system since the end of the gold standard. He emphasized that, while the U.S. dollar is likely to lose market share – primarily to the yuan and to a lesser extent the euro – cryptocurrencies are already chipping away at the dollar's underground economy dominance. This shift has been unfolding for over a decade due to the yuan's increased flexibility and China's development of alternative settlement systems. These trends have been accelerated by the Trump administration's policies. Rogoff suggested in an interview with Financial Times that the dollar will likely remain dominant in the short term but will face increasing challenges as the global monetary order evolves. This transition is not without cost. For financial institutions, rising fragmentation may increase settlement frictions, heighten currency risk, and complicate regulatory compliance across jurisdictions. For emerging markets, it presents a dual-edged dynamic: the opportunity to bypass dollar-dominated chokepoints, but also the risk of entrenching new dependencies – this time on regional digital infrastructure and dominant tech-finance platforms. Global financial governance institutions such as the IMF have consistently warned that the uncoordinated proliferation of digital currencies could exacerbate liquidity mismatches and undermine systemic stability during times of geopolitical stress. Ultimately, the digital currency race between the U.S. and China is more than a technological arms race – it represents the reordering of global monetary governance. As competing infrastructures harden into geopolitical blocs, the future of cross-border finance will likely be shaped not just by efficiency or innovation, but by which networks the world's economies choose to trust. In this emerging era, the politics of interoperability, access, and sovereignty will define the contours of global finance more than ever before.
Saba Yemen
a day ago
- Business
- Saba Yemen
Asian stocks at start of week mix
Bangkok – Saba: Asian stock markets showed a mixed performance on Monday, beginning the new week after Wall Street posted its third consecutive weekly gain last week. In Japan, the stock market was closed for a public holiday. The closure came a day after the ruling coalition lost its majority in both the House of Representatives and the Senate for the first time since 1955. The defeat in Sunday's elections follows the earlier loss of its majority in the lower house last October. Despite the electoral setback, Prime Minister Shigeru Ishiba vowed to remain in office, saying the results reflect growing voter frustration with rising prices and ongoing political instability. In China, the Shanghai Composite Index rose 0.4% to 3,549.89 points, while Hong Kong's Hang Seng Index edged up 0.3% to 24,895.20 points. The gains came after the People's Bank of China (PBOC) decided to keep key interest rates for one-year and five-year loans unchanged. Recent strong economic data from China helped ease pressure on policymakers to loosen credit conditions further. Meanwhile, the administration of U.S. President Donald Trump softened its rhetoric toward Beijing, contributing to progress in trade talks and helping the two sides avoid significant tariff hikes on Chinese exports to the U.S. In South Korea, the Kospi rose 0.5% to 3,205.71 points, supported by a slight improvement in export figures reported for the previous month. In contrast, Australia's S&P/ASX 200 index fell 1.1% to 8,659.50 points. Elsewhere, Taiwan's TAIEX slipped 0.3%, India's Sensex (SENEX) rose 0.2%, and Thailand's SET index declined. Whatsapp Telegram Email Print more of (International)
Business Recorder
a day ago
- Business
- Business Recorder
Yuan eases in tight trade as China holds key lending rates steady
SHANGHAI: The yuan eased slightly against the U.S. dollar on Monday, trading in tight ranges, after China kept key lending rates unchanged and as markets awaited further cues on Sino-U.S. trade developments. China kept benchmark lending rates steady on Monday, as expected, after it reported slightly better-than-expected second-quarter economic data. The spot yuan opened at 7.1771 per dollar and was last trading at 7.179 as of 0311 GMT, 32 pips lower than the previous late session close and 0.37% weaker than the midpoint. 'We believe the current domestic and external environment continues to support the yuan, which may remain stable with mild fluctuations in the absence of external shocks,' CICC analysts said in a note. China's economy grew at a slightly faster pace than expected in the second quarter, showing resilience in the face of U.S tariffs. As August approaches, markets are likely to focus more on shifts in tariff expectations and developments in U.S. Federal Reserve appointments, CICC analysts said. China wants to bring its trade ties with the U.S. back to a stable footing, its commerce minister said last week, adding that recent talks in Europe showed there was no need for a tariff war while urging the U.S. to act in a manner befitting of a superpower. The onshore yuan was trading in narrow ranges in the morning session, with intraday volatility less than 30 pips. Prior to the market opening, the People's Bank of China set the midpoint rate at 7.1522 per dollar, 262 pips firmer than a Reuters' estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. Market risk sentiment was lifted after China announced the start of construction on what will be the world's largest hydropower dam, located on the eastern rim of the Tibetan plateau and estimated to cost around $170 billion. China's long-dated treasury futures dropped to their lowest level in five weeks on Monday, while bond yields broadly rose across tenors. The offshore yuan traded at 7.1824 yuan per dollar, down about 0.01% in Asian trade. Investors are also eyeing an upcoming Politburo meeting, expected later this month. UBS economists said the government is likely to maintain a supportive macro policy tone, but see limited urgency or likelihood for major new stimulus, citing stronger-than-expected second-quarter GDP growth.
