1. PBoC inspects online loans
On Tuesday, domestic financial media reported that the central bank (PBoC) has ordered banks to hand over key data regarding online consumer loans.
Some context: Online consumer loans have been growing rapidly in China in recent years. Big fintech companies, such as Ant Group and WeBank, do the nitty gritty work in issuing and managing these loans while commercial banks put up the money.
The growth has gotten regulators worried (Caixin):
- “The People’s Bank of China sent the survey notice to commercial banks asking them to submit online consumer lending data as of December 2018, June 2019, December 2019 and the first six months of 2020.”
- “Banks are required to report the total amount, interest rate and non-performing ratio of such loans.”
Get smart: Commercial banks have little oversight over these online consumer loans because the big fintech companies are the ones who assess credit risks and own the distribution.
- Regulators now want more insight into the system.
Go Deeper: If there is acrackdown in this space, one particular fintech firm will be in the regulatory crosshairs. For more, check out today’s China Markets Daily.
Caixin:Banks Told to Report Data on Consumer Lending Via Ant’s Platforms
21st Century Biz:
2. You down with AIIB? (Yeah, you know Xi)
On Tuesday, Xi Jinping addressed the fifth annual meeting of the Asian Infrastructure Investment Bank (AIIB) via video-link
Xi said he wanted the AIIB to be four things (Xinhua 1):
- “A new type of multilateral development bank that promotes development across the world.”
- “A new type of development platform progressing with the times.”
- “A new type of high-performance institution for international cooperation.”
- “A new paradigm of multilateral cooperation.”
The big guy did his darndest to position China as a staunch champion of the multilateral order:
- “China always supports and adheres to multilateralism, and pursues development…in the spirit of openness and mutually-beneficial cooperation.”
Xi also put a topical spin on his speech, citing the global response to COVID-19:
- “Mutual support and cooperation in solidarity are the only way for mankind to overcome crises.”
- “He called on countries to pursue more inclusive global governance…and more robust regional cooperation to address issues emerging in the course of economic globalization.”
Get smart: As the US retreats from multilateralism, Xiis trying to depict China as the globally-minded adult in the room.
Get smarter: His message is undercut by Beijing’s increasingly strident nationalism and the recent terrible press that China has received on a range of issues.
3. EU and China talking trade
Yesterday, the 8th EU-China High-level Trade and Economic Dialogue kicked-off via videoconference in Beijing and Brussels.
The meeting discussed the joint response to coronavirus, global economic governance, bilateral trade and investment, and cooperation on financial services and taxation.
But the meatiest item on the menu was the EU-China Comprehensive Agreement on Investment (CAI).
Some context: China and the EU had originally hoped to sign the CAI in September, but given recent events, there’s no way that will happen.
Still, China’s top economic officialVice Premier Liu He made some grand proclamations (Reuters):
- “China and the European Union will accelerate negotiations in order to conclude a China-EU investment agreement by the end of this year.”
The Europeans sounded less enthused.European Commission vice-president Valdis Dombrovskis said (EC):
- “The current crisis gives us no other option but to work hand in hand with our global partners, including China.”
- “However, we also need to address sticking points such as reciprocity in the way our companies are treated.”
Get smart: After years of complaining about investment restrictions to no avail, European companies and governments are pretty fed up,and are feeling less than cooperative.
Our take: We don’t see the CAI getting inked this year.
4. Talk smack, clap back
On Tuesday, Foreign Minister Wang Yi talked about the trainwreck that is US-China relations during a call with his French counterpart, Jean-Yves Le Drian.
Wang yelled his assessment of the bilateral relationship into Le Drian’s ear (MoFA 2):
- “[A] certain political faction in the US, driven by the need to lift [presidential] campaign prospects and maintain unipolar hegemony, are going all out to negate the history of China-US relations, suppress China on every front, provoke China on its core interests, attack the social system chosen by the Chinese people, and vilify the ruling party.”
According to Wang, China will deal with the US with like-for-like countermeasures, but is eager to see the situation stabilize:
- “China will take firm countermeasures against the egregious behaviors that undermine China’s legitimate rights and interests.
- “China doesn’t stir up troubles and always exercises maximum restraint.”
- “We…strive to maintain the stability of China-US relations through equal communication and exchanges with the US side.”
Wang also asked other countries not to jump on the US-led anti-China bandwagon.
Get smart: Beijing may be hopping mad…but it’s not looking to escalate the conflict with the US.
Get smarter: Unfortunately for Wang and friends, Washington has not even begun to needle.
5. NDRC outlines cost cutting plan
Yesterday, the National Development and Reform Commission (NDRC), along with three other ministries, released plans to cut business costs for 2020.
Some context: The cost-cutting plan is animplementation document related to thekey objectives outlined in the government work report released back in May.
The plan (once again) focuses on helping small businesses.
To get it done, the four ministries will:
- Extend preferential tax policies to 2021
- Lower telecommunication fees by 15%
- Extend loan repayments to March 2021
- Relax market entry restrictions
The ministries were also looking to promote fair market competition, calling for:
- Removing implicit rules that undermine fair competition
- Avoiding one-size-fits-all approaches when conducting market supervision
Get smart: Helping out small businesses is still the key theme for 2020. In many ways, these businesses are the backbone of China’s economy.
6. Nothing to worry about…yet
On Wednesday morning, the National Health Commission (NHC) dropped the latest COVID-19 numbers.
On Tuesday, China reported 101 newly confirmed cases – up from 68 on Monday (NHC):
- Only three of these were imported from abroad.
- The other 98 were all domestically transmitted.
Some context: The last time the daily domestic confirmed case number hit 98 was back on April 12 – 107 days ago.
Of the 98 domestically transmitted cases (NHC):
- 89 were in Urumqi, Xinjiang – up from 57 on Monday.
- Eight were in Dalian, Liaoning – up from six on Monday.
- One was in Beijing –no change from Monday.
- Of the 89 domestically transmitted cases in Urumqi, 43were confirmed yesterday after some asymptomatic carriers who were in quarantine becamesymptomatic.
- The new Beijing case is connected to the outbreak in Dalian.
What that means: Infections are not spreading as wide – or as fast – as the headline numbers suggest.
In addition (NHC):
- China reported 27 new asymptomatic cases on Tuesday – eight of which were imported from abroad.
Get smart: Despite the seemingly large number of new cases, new infections have been geographically contained.
Get smarter: Authorities will do everything in their power to prevent a widespread second wave that could derail economic resumption.