Nov 06, 2019 09:48 AM

CX Daily: China Makes First Cut in Key Lending Rate Since 2016

The People's Bank of China. Photo: VCG
The People's Bank of China. Photo: VCG

Monetary policy /

China makes first cut in key lending rate since 2016

China’s central bank took another step to lower borrowing costs Tuesday to encourage lending amid growing downward pressure on the economy, implementing a small cut in the interest rate on the medium-term lending facility (MLF), a key reference used by banks to price loans.

The PBOC reduced the interest rate on the one-year MLF by 5 basis points to 3.25%, the first cut since the interbank market instrument was introduced in 2016, it said on its website. A basis point is a hundredth of a percentage point. The central bank simultaneously said it handed out 400 billion yuan ($57 billion) to banks in one-year MLF loans, the first use of the facility since Oct. 16, to roll over 403 billion yuan of maturing debt.



A McDonald's employee in Xiamen, Fujian province, on Sept. 10. Photo: VCG

Economy /

Services sector grows at slowest pace in eight months: Caixin PMI

China’s services activity expanded at the slowest pace in eight months in October amid a soft market, a Caixin-sponsored survey showed Tuesday.

The Caixin China General Services Business Activity Index dipped further to 51.1 in October from 51.3 in September, marking the lowest reading since February. Despite the drop, a strong increase in the Caixin China General Manufacturing Purchasing Managers’ Index pushed the Caixin China Composite Output Index to a six-month high of 52. The composite index covers both manufacturers and service providers. Readings above 50 signal expansion.

Economy / India

India rejects RECP regional trade pact as 15 other countries look ready to sign

India chose not to join the Regional Comprehensive Economic Partnership (RCEP) as the 15 other countries involved in negotiations for the mega trade pact said they are ready to sign the deal next year.

A statement released at the end of the RCEP Summit Monday noted that 15 countries “have concluded text-based negotiations for all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020.” It noted that India had “significant outstanding issues, which remain unresolved.”

Real estate /

Across China, buying an apartment just became a whole lot easier

At least 30 cities in China have made it easier for workers to obtain highly sought-after residency permits since September in a sign authorities are keen not to let the nation’s real estate sector slow further.

In an extreme example, in Hainan almost all nonlocal residents working in the island province were allowed to obtain a "hukou" residence permit. While Hainan’s goal is to accelerate population growth ahead of becoming a free-trade port by 2020, its home market will inevitably be warmed up first, analysts say. Although combating property speculation has been one of President Xi's signature policies, the slowest economic growth in 30 years is prompting some city governments to loosen the screws.

Meat /

China approves Brazilian swine-offal imports as pig fever rages

China, which is boosting meat imports to fill a supply gap after the hog disease devastated its herd, just approved shipments of swine offal from seven plants in Brazil, the country's Agriculture Minister Tereza Cristina said Monday. Shipments can begin immediately. Offal generally includes pig hearts, lungs, brains, livers, cheeks and tongues.

Brazil didn’t previously have access to China’s swine-offal market, according to Ricardo Santin, a director at the exporter group ABPA. Shipments to mainland China could pay at least double compared with exports to Hong Kong, he said. Hong Kong has been the No. 1 destination for supplies from Brazil, according to government figures.

Trade /

China's Canton fair attracts more ASEAN buyers

Fewer buyers came and the volume of deals declined at this year’s fall Canton Fair, China’s biggest twice-yearly trade, but things started looking up as China and the U.S. moved closer to ending their 18-month trade war. The fall event concluded Monday.

The China Import and Export Fair, held every spring and fall in the southern city Guangzhou, is widely seen as a barometer of China’s foreign trade event. The number of buyers attending the fall fair fell 2% from a year earlier to 186,000, and export orders booked at the fair also dropped 1.9% to 207.09 billion yuan ($29.3 billion), according to the fair organizer.

Attendance was the lowest since 2017, but the decline was less than the 3.9% year-over-year drop at the spring fair in May, when prospects for ending the trade war between China and the U.S. were gloomier.

Quick hits /

10 Years of Caixin: Exposing fugitive tycoon Guo Wengui

Former People’s Bank online payments executive falls under probe

ICBC to launch new fintech research arm

Caixin Explains: China’s blockchain dreams

Selloff of bonds throws spotlight on China’s top universities

Editorial: Separating gold from sand amid ‘blockchain fever’

Opinion: China should keep the door open to competing trade pacts



5G / New Zealand

New 5G pilot project raises questions about New Zealand’s Huawei ban

Despite being blocked a year ago from deploying Huawei gear in its 5G networks — a move widely interpreted as the country barring the Chinese tech giant — mobile carrier Spark New Zealand announced Saturday that is providing a Huawei-powered 5G offering.

The move calls into question the extent to which the Chinese tech giant is blocked from supplying the country’s next-generation mobile networks. The new network is an extension of Spark’s 5G lab in Auckland, New Zealand’s most populous city. The lab uses equipment from suppliers including Huawei and test spectrum on loan from the country’s Ministry of Business, Innovation and Employment.

Gaming /

China-owned gaming group Playtika eyes IPO after sale plan collapses

Playtika Ltd., the Israeli online gaming company that was bought by a Chinese group three years ago, is seeking to list overseas after a plan to transfer the company to a Shenzhen-listed company failed repeatedly, according to an announcement by the Shenzhen-listed company.

Shenzhen-listed Giant Network Group Co. Ltd. said it was abandoning a plan under which it would have purchased Playtika from its current owner, an entity called Alpha Frontier Ltd., which is backed by a number of Chinese private equity investors. Giant cited Playtika’s plan to seek its own IPO in an unspecified overseas market, according to the Monday filing.

Apps /

Under-fire TikTok’s new functions aim to strengthen bonds with U.S. developers

TikTok, the music-video-sharing mobile app owned by China’s ByteDance, unveiled new tools to let third-party developers integrate their content onto its platform, seeking to deepen ties in the U.S. even as it faces growing scrutiny from lawmakers over data security.

The new features will let TikTok users edit videos in other apps, such as Adobe’s Premiere Rush, and publish them directly on TikTok, helping users create new original content. In addition to Adobe, TikTok is also teaming up with augmented-reality company, photo- and video-editing program PicsArt, image-animating app Plotaverse and other outside app developers.

M&A /

China’s Huazhu buys German luxury hotel group for $783 million

Chinese hotel operator Huazhu Group Ltd. is continuing its overseas expansion even as other Chinese companies retreat abroad following the government’s crackdown on highly leveraged buyers of foreign assets.

Huazhu Group agreed to acquire the German hotel company Deutsche Hospitality for 700 million euros ($783 million) in cash, the company said Monday. Huazhu didn’t disclose how it plans to fund the acquisition. It had 4.1 billion yuan of cash as of June 30 and 9.2 billion yuan of outstanding debt. It also had 3.2 billion yuan of untapped credit facility.

Quick hits /

Samsung mulling China overhaul in pivot toward 5G

Ant Financial unveils international version of Alipay to woo overseas tourists

China begins crackdown on apps’ violations of user privacy

Xiaomi to enter Japan next year

Embattled Tesla wannabe Nio reports increase in deliveries

Sohu posts strong third-quarter revenues

Alibaba sued by home appliance maker over e-commerce marketing

Huawei forecasts smartphone growth despite Trump blacklisting

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