Dispelling The Mainstream Narrative
(Geopolitics) There is a strong current of change affecting the international political arena. It is the beginning of a revolution brought on by the transition from a unipolar to multipolar world order.
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The RMB is the currency of choice for the BRICS New Development Bank. It is the fifth most used currency in the world [Xinhua]
The People’s Bank of China on Friday said that it encouraged cross-border and overseas use of the renminbi (RMB) currency to settle accounts and boost investment.
It acknowledged that Chinese banks have been looking to trade in offshore RMB and that there was a growing need for foreign-funded companies in China to be able to transfer investment revenue overseas.
“Enterprises may use RMB for cross-border settlement in whatever foreign currency-based trade,” the PBOC said.
The central bank’s announcement comes part and parcel of the Beijing government’s efforts to increase foreign investment in China and facilitate ease of doing business there for domestic and foreign enterprises.
This would also work to support the extensive and increasing Chinese investments abroad.
This has led to the most prominent Chinese banks to expand their business and trade in major world currencies abroad.
Meanwhile, international payments infrastructure company SWIFT reported that the RMB surpassed the Swiss franc and the Canadian dollar as the sixth most used currency in November last year.
The Chinese currency renminbi (RMB, also known as the yuan) “has ascended to the world’s fifth most widely used payment currency,” an HSBC survey in 2016 showed.
The survey, Renminbi Internationalisation Study 2016, found that corporations are more than ever introducing the RMB into their treasury and “integrating it across various business applications each year”.
China’s currency has been gaining popularity and traction in the past few years.
The BRICS Post with inputs from Agencies
Tackling the issue of rising mortgage’s Xi said “houses are for living in, not for speculation”[Xinhua]
The 19th National Congress of the Communist Party of China (CPC) concludes tomorrow following week-long sessions in which President Xi Jinping outlined his priorities for the next five years.
The Communist Party’s 2,000 delegates on Tuesday inserted Xi Jinping “Thought” into its constitution, effectively making the president the most powerful man in China.
Xi Jinping Thought is the president’s principles on the CPC’s contribution in governance and includes issues of development and reform.
The delegates also concluded the composition of top governing entities in the party, including the Central Committee and the Central Commission for Discipline Inspection.
While combating corruption and eradicating poverty remain central themes in his vision, Xi has promised to modernize the economy by principally unloosing restrictions on foreign investors entering Chinese markets.
This he says will strengthen market forces to play a greater role in price evaluation, particularly in the financing industry, and help refocus the economy on high-quality growth.
In effect, he is promising a “wider” open-door policy.
“Living in such a great era, we are all the more confident and proud, and also feel the heavy weight of responsibility upon us,” he said.
China will “clean up rules and practices that hinder a unified market and fair competition, support development of private firms and stimulate vitality of all types of market entities,” Xi said.
The president also stressed that China should take its place center-stage among other nations, implementing “socialism with Chinese characteristics”.
He would like to see China become “a modern socialist prosperous society” in 30 years.
The economy has in the past three quarters grown by 6.8 per cent and this will likely be the overall figure for the year, largely riding a surge in property investments.
Xi’s challenge will be how to curb the skyrocketing housing prices and mortgages, which threaten to increase household debt, without putting a dent in GDP growth which has lately been reliant on these sectors.
During his speech at the CPC National Congress, Xi said: “houses are for living in, not for speculation”.
Economists are worried about the specter of an unforseen drastic drop in asset prices after sustained GDP growth, which would have been largely sparked by debt or currency pressures.
The BRICS Post with inputs from Agencies
The upcoming 19th CPC National Congress will have to find ways to fast-track economic reform if the country is to maintain a health GDP growth rate
Xi has increased the anti-corruption campaign while also focusing on poverty eradication [Xinhua]
Chinese President Xi Jinping has days ahead of the 19th Communist Party (CPC) National Congress called for greater cooperative work to be carried out with non-Communist parties in the country.
Xi, who is also the general secretary of the CPC Central Committee, said such endeavors are necessary for China’s prosperity and rejuvenation.
He said that the CPC Central Committee will carefully study the opinions and concerns of non-Communist parties on major policies and decisions expected to be raised during the Congress on October 18.
“In order to reach the goal, we must make full use of democracy in the drafting process, and improve our investigation and research,” Xi said in a statement released by the CPC.
Xi also reached out to the All China Federation of Industry and Commerce and other political entities with no party affiliation to “developing socialist consultative democracy”.
The 19th National Congress comes at a critical time as emerging markets just begin to pull out of recession and/or stalled economic growth. Fast-tracking economic growth and maintaining a growth rate above 6.5 per cent will be high on the agenda.
The last time the Congress was held – the 18th CPC National Congress was held in November 2012 – China’s economy was growing at a rate of 7.9 per cent. Just a year earlier, GDP growth was at 9.5 per cent.
The CPC National Congress acknowledged at the time that market reforms were crucial and launched an aggressive program in that regard, coupled with fighting corruption on all levels. The Congress also recognized that political reforms were necessary to ensure the success of economic change, with particular emphasis on the growth model.
But in 2013 and 2014, commodity markets slumped and imports from emerging markets also fell. The economic pressures were also exacerbated by the US Federal Reserve’s decision to end its quantitative easing program. China’s GDP growth rate was 7.4 per cent at the end of 2014.
In 2015, the Federal Reserve began to raise interest rates, luring back major investors from emerging market investments.
Exports in China slumped as the economy was soon redirected toward domestic consumption and supply-side structural reform measures took effect.
But in the past year, one of the biggest factors making emerging markets lucrative again is Beijing’s economic policy has not only become adaptive to US market shifts – namely, Fed policy – but is also proactive by drawing up scenarios which include the prospects of US interest rate hikes.
In particular, Chinese investors were encouraged by manufacturing activity data which pointed to the fastest growth in five years this September.
It will be up to the CPC National Congress to ensure that the economy is maintained at a robust level and that confidence in the world’s biggest market is getting an uplift.
The ratio of foreign capital inflows in a wide range of sectors versus outflows has reversed the negative trends of previous years.
In the first two quarters, the net inflows hit $16 billion.
This is a remarkable turnaround when one considers that capital outflows in China reached $725 billion in 2016. Despite record Foreign Direct Investment (FDI) for that year, the net inflows were at a $416 billion deficit.
Although tens of billions of dollars have continued to flow into China since it devalued its yuan in summer 2015, the amount of outflow noticeably increased and created a net deficit.
January 2017 marked the first time that Chinese financial institutions reported an increase in net inflows in different sectors. And the trend would continue.
In its latest August economic outlook on China, the International Monetary Fund said that there will be 6.7 per cent for the year. But it said that “speedy reforms” are needed.
By Firas Al-Atraqchi for The BRICS Post with inputs from Agencies