China
Economists React: PBOC Lifts Interest Rates
China’s central bank raised benchmark interest rates Tuesday, a national holiday, lifting one-year yuan lending rate and the one-year yuan deposit rate by 0.25 percentage point each as the country continues to battle inflation. Analysts weigh in: The timing of today’s interest rate hike in China is something of a surprise given more dovish comments in recent days from senior officials, but the rate move is not entirely unexpected. The announcement may cause jitters about the impact tightening will have on Chinese growth. However these should not be overplayed. The latest increases of 25 basis points for one-year deposits and loans are in line with the gradual policy tightening that has been underway over the last few months and will not do much to slow the economy. The benchmark one-year lending rate now stands at 6.31%, still low relative to the pace of economic growth. The constraint on credit growth is the amount that banks can lend rather than the rates they charge. – Mark Williams, Capital Economics This rate hike suggests that the March CPI that is to be released early next week may have surprised to the upside. Our current CPI forecast is 5.2% year-on-year for March. It also suggests that Chinese authorities are confident in the sustainability of underlying growth momentum… This rate hike underscores once again the front-loaded monetary tightening, which, together with the rather substantial slowdown in money and credit growth so far this year, bodes well for peaking of the headline inflation rate by mid-year, in our view. – Qing Wang, Morgan Stanley We believe the magnitude of the overall policy tightening package since the start of the year has been large enough to cool down aggregate demand growth sufficiently to lower underlying inflationary pressures… Given the nature of the most of the tightening measures tend to be administratively and quantitatively based, price-based tools which include interest rate hikes and currency appreciation should be welcomed as we believe they tend to be more efficient in resource allocation. Having said that, we believe the 25-basis point hike is more a signaling tool than anything else because of its small magnitude… Going forward, we expect the government to broadly maintain its tightening policy stance in the first half of 2011 given the expected elevated year-on-year CPI, though there might be some subtle adjustments as underlying inflationary pressures come off. – Helen Qiao and Yu Song, Goldman Sachs Today’s rate hike suggests three things to us. First, together with one reserve requirement ratio hike on 18 March, today’s move signals China’s tightening path is less affected by Japan’s…nuclear crisis. Second, headline inflation is likely to be above 5% in March. Third, China’s monetary policy may lean towards front loaded tightening in the first half of the year… Thanks to the strong growth momentum, we expect China’s growth to remain strong in the first quarter at 9.7%. However the growth pace is likely to slow gradually in the next few quarters as a result of tightening measures. Therefore, it may make more sense for China to tighten sooner rather than later to fight inflation when the growth rate is still high. – Tommy Xie, OCBC –compiled by Josh Chin. Follow him on Twitter @joshchin .
China’s central bank raised benchmark interest rates Tuesday, a national holiday, lifting one-year yuan lending rate and the one-year yuan deposit rate by 0.25 percentage point each as the country continues to battle inflation. Analysts weigh in: The timing of today’s interest rate hike in China is something of a surprise given more dovish comments in recent days from senior officials, but the rate move is not entirely unexpected. The announcement may cause jitters about the impact tightening will have on Chinese growth. However these should not be overplayed. The latest increases of 25 basis points for one-year deposits and loans are in line with the gradual policy tightening that has been underway over the last few months and will not do much to slow the economy. The benchmark one-year lending rate now stands at 6.31%, still low relative to the pace of economic growth. The constraint on credit growth is the amount that banks can lend rather than the rates they charge. – Mark Williams, Capital Economics This rate hike suggests that the March CPI that is to be released early next week may have surprised to the upside. Our current CPI forecast is 5.2% year-on-year for March. It also suggests that Chinese authorities are confident in the sustainability of underlying growth momentum… This rate hike underscores once again the front-loaded monetary tightening, which, together with the rather substantial slowdown in money and credit growth so far this year, bodes well for peaking of the headline inflation rate by mid-year, in our view. – Qing Wang, Morgan Stanley We believe the magnitude of the overall policy tightening package since the start of the year has been large enough to cool down aggregate demand growth sufficiently to lower underlying inflationary pressures… Given the nature of the most of the tightening measures tend to be administratively and quantitatively based, price-based tools which include interest rate hikes and currency appreciation should be welcomed as we believe they tend to be more efficient in resource allocation. Having said that, we believe the 25-basis point hike is more a signaling tool than anything else because of its small magnitude… Going forward, we expect the government to broadly maintain its tightening policy stance in the first half of 2011 given the expected elevated year-on-year CPI, though there might be some subtle adjustments as underlying inflationary pressures come off. – Helen Qiao and Yu Song, Goldman Sachs Today’s rate hike suggests three things to us. First, together with one reserve requirement ratio hike on 18 March, today’s move signals China’s tightening path is less affected by Japan’s…nuclear crisis. Second, headline inflation is likely to be above 5% in March. Third, China’s monetary policy may lean towards front loaded tightening in the first half of the year… Thanks to the strong growth momentum, we expect China’s growth to remain strong in the first quarter at 9.7%. However the growth pace is likely to slow gradually in the next few quarters as a result of tightening measures. Therefore, it may make more sense for China to tighten sooner rather than later to fight inflation when the growth rate is still high. – Tommy Xie, OCBC –compiled by Josh Chin. Follow him on Twitter @joshchin .
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Economists React: PBOC Lifts Interest Rates
Business
Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
Gordonstoun school severed ties with Hampton Group over espionage allegations against chairman Yang Tengbo. He denies involvement and claims to be a victim of political tensions between the UK and China.
Allegations Lead to School’s Decision
Gordonstoun School in Moray has cut ties with Hampton Group International after serious allegations surfaced regarding its chairman, Yang Tengbo, who is accused of being a spy for the Chinese government. Known by the alias "H6," Mr. Tengbo was involved in a deal that aimed to establish five new schools in China affiliated with Gordonstoun. However, the recent allegations compelled the school to terminate their agreement.
Public Denial and Legal Action
In response to the spying claims, Mr. Tengbo publicly revealed his identity, asserting that he has committed no wrongdoing. A close associate of Prince Andrew and a former Gordonstoun student himself, Mr. Tengbo has strenuously denied the accusations, stating that he is a target of the escalating tensions between the UK and China. He has claimed that his mistreatment is politically motivated.
Immigration Challenges and Legal Responses
Yang Tengbo, also known as Chris Yang, has faced additional challenges regarding his immigration status in the UK. After losing an appeal against a ban enacted last year, he reiterated his innocence, condemning media speculation while emphasizing his commitment to clear his name. Gordonstoun, on its part, stated its inability to divulge further details due to legal constraints.
Source : Gordonstoun cuts ties with business chaired by man accused of spying for China
Business
China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
The Chinese government demolished the Rebiya Kadeer Trade Center in Xinjiang, affecting Uyghur culture and commerce, prompting criticism from activists amid concerns over cultural erasure and human rights violations.
Demolition of a Cultural Landmark
The Chinese government recently demolished the Rebiya Kadeer Trade Center in Urumqi, Xinjiang, a vital hub for Uyghur culture and commerce, as reported by VOA. This center, once inhabited by more than 800 predominantly Uyghur-owned businesses, has been deserted since 2009. Authorities forcibly ordered local business owners to vacate the premises before proceeding with the demolition, which took place without any public notice.
Condemnation from Activists
Uyghur rights activists have condemned this demolition, perceiving it as part of China’s broader strategy to undermine Uyghur identity and heritage. The event has sparked heightened international concern regarding China’s policies in Xinjiang, which have been characterized by allegations of mass detentions and cultural suppression, prompting claims of crimes against humanity.
Rebiya Kadeer’s Response
Rebiya Kadeer, the center’s namesake and a notable Uyghur rights advocate, criticized the demolition as a deliberate attempt to erase her legacy. Kadeer, who has been living in exile in the U.S. since her release from imprisonment in 2005, continues to advocate for Uyghur rights. She has expressed that her family members have suffered persecution due to her activism, while the Chinese government has yet to comment on the legal ramifications of the demolition.
Source : China Demolishes Uyghur Business Landmark in Xinjiang – Shia Waves
China
China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
China’s private pension scheme, previously piloted in 36 cities, will roll out nationwide on December 15, 2024, enabling workers to open tax-deferred accounts. The initiative aims to enhance retirement savings, address aging population challenges, and stimulate financial sector growth.
After a two-year pilot program, China has officially expanded its private pension scheme nationwide. Starting December 15, 2024, workers covered by urban employee basic pension insurance or urban-rural resident basic pension insurance across the country can participate in this supplementary pension scheme. This nationwide rollout represents a significant milestone in China’s efforts to build a comprehensive pension system, addressing the challenges of a rapidly aging population.
On December 12, 2024, the Ministry of Human Resources and Social Security, together with four other departments including the Ministry of Finance, the State Taxation Administration, the Financial Regulatory Administration, and the China Securities Regulatory Commission, announced the nationwide implementation of China’s private pension scheme effective December 15, 2024. The initiative extends eligibility to all workers enrolled in urban employee basic pension insurance or urban-rural resident basic pension insurance.
A notable development is the expansion of tax incentives for private pensions, previously limited to pilot cities, to a national scale. Participants can now enjoy these benefits across China, with government agencies collaborating to ensure seamless implementation and to encourage broad participation through these enhanced incentives.
China first introduced its private pension scheme in November 2022 as a pilot program covering 36 cities and regions, including major hubs like Beijing, Shanghai, Guangzhou, Xi’an, and Chengdu. Under the program, individuals were allowed to open tax-deferred private pension accounts, contributing up to RMB 12,000 (approximately $1,654) annually to invest in a range of retirement products such as bank deposits, mutual funds, commercial pension insurance, and wealth management products.
Read more about China’s private pension pilot program launched two years ago: China Officially Launches New Private Pension Scheme – Who Can Take Part?
The nationwide implementation underscores the Chinese government’s commitment to addressing demographic challenges and promoting economic resilience. By providing tax advantages and expanding access, the scheme aims to incentivize long-term savings and foster greater participation in personal retirement planning.
The reform is expected to catalyze growth in China’s financial and insurance sectors while offering individuals a reliable mechanism to enhance their retirement security.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the rest of the original article.
- Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
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