China Business Digest: Policymakers Debate Economic-Safeguarding Measures; China Hits Back at New U.S. Securities Regulations

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China’s policymakers are debating whether to follow their global peers with aggressive steps like rate cuts and buying corporate and government debt to safeguard the economy. Meanwhile, Beijing has hit back at new U.S. securities regulations and Washington has blacklisted 33 more Chinese entities.

— By Isabelle Li (liyi@caixin.com)

** TOP STORIES OF THE DAY

China Hits Back At New U.S. Securities Regulations

The China Securities Regulatory Commission (CSRC) said Sunday in a statement (link in Chinese) that it opposes the U.S.’ practice of politicizing securities regulation, in response to a bill the U.S. Senate approved last week that could lead to some Chinese companies being barred from listing on U.S. stock exchanges.

The CSRC said (link in Chinese) that some provisions of the bill are directly pointing at China rather than based on professional considerations of securities regulation, and that the bill harms the interests of both sides and undermine global investors’ confidence in U.S. capital markets and its international status.

Jump in China’s Debt Necessary, Controllable, Economic Planner Says

China’s decision to raise the fiscal deficit to boost demand is “not only feasible, but also safe and necessary,” Cong Liang, general secretary of the National Development and Reform Commission said Sunday (link in Chinese).

The decision to significantly increase debt as part of a policy package to support the economy through greater investment and more tax and fee cuts is “consistent with the needs to develop the economy and prevent debt risks,” Cong said. Many countries are now raising their deficits substantially to combat the pandemic, and the Chinese government will keep debt risks under control, he said.

40 Chinese Coal Plants to Be Consolidated

China’s State-owned Assets Supervision and Administration Commission has required 40 coal plants in five western provinces to be consolidated into the leading power generator in each province, according to a Wednesday notice.

A total of 38 of the plants will be merged by June 30, with the remaining two joining within one year after the other mergers are complete.

The integration will be done mostly by transferring property rights between the companies, with minimal cash transactions. It calls to reduce coal power generation capacity in the region by at least a quarter, and cut overall losses by half.

In Depth: Should China’s Central Bank Buy Treasury Bonds?

China’s policymakers are in a heated debate over whether to follow unprecedented easing measures by central banks in other countries to safeguard the virus-hit economy, including cutting rates and purchasing corporate debt and government bonds.

Advocates argue the pandemic’s massive economic fallout requires such extraordinary moves, while critics say the central bank shouldn’t print money. Read Caixin’s latest in-depth cover story here.

Hong Kong stocks manage small gain after Friday plunge

Stocks in Hong Kong managed a small gain on Monday with the benchmark Hang Seng Index closing up 0.1%. Losses were initially extended by a 1% decline by noon, following a 5% plunge the previous trading day on news that China was preparing a new security law for the city.

China's agricultural buying commitments on track in phase-one deal with U.S.

China has continued making progress on implementing agriculture-related provisions in its phase-one trade deal signed with the U.S. in January, two U.S. government agencies said, even as tensions have escalated between the pair in other areas.

Multiple U.S. agriculture products, including blueberries and other forage-related products, as well as California Hass avocados, can now be exported to China, the U.S. Department of Agriculture and Trade Representative’s office jointly announced. In recent weeks, Beijing has also expanded its lists of U.S. facilities eligible to export beef, pork, poultry, seafood, dairy and infant formula products to China, the statement said.

U.S. blacklists 33 more Chinese entities

Another 33 Chinese entities have been added by Washington to a U.S. economic blacklist over allegations they violated human rights and pose a threat to U.S. national security.

The latest targeted entities are mostly research organizations and companies in surveillance, artificial intelligence and cyber security, including Qihoo 360, a major Chinese cybersecurity firm, and CloudWalk, a Shanghai-based cloud startup.

** ON THE CORONAVIRUS

China’s Inner Mongolia region reports 10 new imported cases

The Chinese mainland reported 11 new Covid-19 infections on Sunday, all imported from other countries. Ten of those were reported in Inner Mongolia, while the other one was in Sichuan province, putting the total confirmed cases currently under medical treatment at 83.

The country also added 40 asymptomatic cases on Sunday. No new deaths or suspected case were reported, according to (link in Chinese) the National Health Commission.

Total Covid-19 infections surpass 5.42 million worldwide

Globally, the number of infections stood at more than 5.42 million as of 6 p.m. Monday Beijing time. The death toll had passed 345,000, according to data from Johns Hopkins University.

 Read more 
Caixin’s coverage of the new coronavirus

** OTHER STORIES MAKING HEADLINES

• Trust companies’ assets are dwindling and some have even had to withdraw all their products from the market as interest rates wind down and firms turn to other methods of raising cash, Caixin has learned (link in Chinese).

• China State Railway Group Co. Ltd. is going to inject 100 billion yuan ($14 billion) into intercity railway projects and coastal high-speed railway projects, according to a 2020 budget report issued by the Ministry of Finance Friday.

• The U.S. now requires all Chinese airlines flying between the two countries to submit their plans at least 30 days in advance of actual flights, a move that one observer said could be aimed at pressuring Beijing to allow American carriers to resume flights to China.

• China’s central bank set its daily yuan reference rate at 7.1209 per dollar on Monday, the weakest level since 2008, after increasing political tensions with the U.S. drove the currency to a seven-month low.

• U.S.-listed Chinese internet company NetEase Inc. aims to list shares in Hong Kong on June 11, while JD.com Inc. is eying a similar listing a week later, Bloomberg reported, citing an anonymous source.

** AND FINALLY

Movie lovers may be happy to hear that work on the sequel to James Cameron’s “Avatar” is finally resuming this week in New Zealand, months after film production worldwide came to a halt.

The 2009 sci-fi blockbuster was the highest grossing movie of all time until “Avengers: Endgame” knocked it into second place last year. “Avatar 2” is scheduled to arrive in cinemas in December 2021.

 Read More 

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