Archives of “State Council of the People’s Republic of China” tag

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China says the US bill to delist Chinese companies is “directly targeting China”

  
Analysis, Politics
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Comments regarding the US’ Holding Foreign Companies Act from the China Securities Regulatory Commission (CSRC) weekend statement

  • the US bill that aims to delist Chinese companies from the US stock exchange is “directly targeting China”
  • is grounded in political rather than professional motives
  • would force Chinese companies to adhere to US securities law and could potentially delist Chinese companies if passed, while some of its content explicitly targets China.
Another indication of rising US/China strains. As these increase they tend to be a negative input for financial market risk assets (and FX) and supportive of safe haven alternatives. Add it the growing list:
  • coronavirus origin and spread
  • trade
  • tension over new rules from Beijing to be imposed on Hong Kong
  • Taiwan

China is closing gap with United States on research spending

  
  Analysis
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China’s central bank said it will inject 1.2 trillion yuan ($173.8 billion) worth of liquidity into the markets via reverse repo operations on Monday, as the country prepares to reopen its stock markets amid a new coronavirus outbreak.

China’s authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support companies affected by the virus epidemic, which has so far claimed 305 lives, all but one in China.

The People’s Bank of China made the announcement in a statement published on its website on Sunday, adding the total liquidity in the banking system will be 900 billion yuan higher than the same period in 2019 after the injection.

According to Reuters calculations based on official central bank data, 1.05 trillion yuan worth of reverse repos are set to mature on Monday, meaning that 150 billion yuan in net cash will be injected.

Investors are bracing for a volatile session in Chinese markets when onshore trades resume on Monday after a break for the Lunar New Year which was extended by the government.

China’s stock, currency and bond markets have all been closed since Jan. 23 and had been due to reopen last Friday. (more…)

China greasing economy with $55bn in tax breaks

  
Analysis, Education
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China’s State Council on Wednesday approved 380 billion yuan ($55.1 billion) in tax relief that will mainly favor farmers and small businesses in a move that is seen as both economic and political.

The second large-scale tax cut to follow last year’s comes as China’s economy is forecast to slow down in the latter half of 2017, during which the Communist Party will convene its 19th National Congress and reshuffle top leadership.

China will modify its value-added tax this July by removing the 13% bracket while retaining the 6%, 11% and 17% tiers. The 13% rate currently applies to farm products and natural gas, but they will move to the 11% category. Farmers as well as households that purchase rice and vegetables will likely benefit from this change.

For smaller companies, those that pay 300,000 yuan or less in annual taxable revenue qualify for preferential tax treatment. The ceiling will be lifted to 500,000 yuan. Furthermore, small businesses and startups will be allowed to deduct 75% of research and development costs, up from 50%. These tax breaks will remain in effect until the end of 2019.

The Chinese government enacted about 500 billion yuan worth of corporate tax cuts in 2016. Helped also by a surge in infrastructure spending, the real economy grew 6.9% during the January-March period this year, marking the second quarter of economic acceleration. However, the People’s Bank of China, the country’s central bank, has been gradually raising market interest rates in order to rein in the real estate bubble. (more…)

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