In today’s talking points: Easing of regulations for foreign holdings and partner choice for securities ventures on the horizon for China; Vulnerabilities in the Chinese financial sector?; ABS adjustments impacts interest rates and inflation; China’s service industry increases by 8.8 per cent year-on-year
Easing of regulations for foreign holdings and partner choice for securities ventures on the horizon for China
China plans to allow global banks to take a stake of up to 51 per cent in their onshore securities ventures for the first time and tie up with local non-financial firms, sources reported. The move forms a key part of China’s pledge to ease foreign ownership restrictions and would allow banks including Credit Suisse, Goldman Sachs, JPMorgan and UBS to bolster their presence in securities business – from playing second fiddle to local companies to take charge. Till now, foreign banks can only own up to 49 per cent of their Chinese securities joint ventures. That lack of control and limited contribution to revenue have long been a source of frustration.
Read more at: Reuters
Vulnerabilities in the Chinese financial sector?
China’s financial system is becoming more vulnerable due to high levels of leverage, or borrowing, the central bank governor Zhou Xiaochuan has claimed. Writing in an article published on the People’s Bank of China’s website, Mr Zhou cautioned about the prospect of potential financial issues facing China. The central bank governor released his strategy to avoid a financial crisis by calling for equity funding and to eliminate “zombie” companies. Risks of damage to the financial markets in China are “hidden, complex, sudden, contagious and hazardous,” according to Mr Zhou.
Read more at: Express
ABS adjustments impacts interest rates and inflation
The Australian Bureau of Statistics announced on Monday changes to the way the consumer price index will be calculated. The change will likely result in inflation dropping significantly lower and interest rates will unlikely rise before the end of 2019. The new method of calculating the consumer price index involves paying more attention to how much weight rent and utilities cost and less attention to food and non-alcoholic beverages. With a new era of Australians spending a greater percentage of their household income towards housing and services such as child care and education, this new update in six years is driven by the need to accurately calculate how Australians are spending their money.
Read more at: Sydney Morning Herald
China’s service industry increases by 8.8 per cent year-on-year
The Chinese trade in services increased by 8.8 per cent year-on-year to RMB 3.4 trillion, between January and September. The largest changes in the market included: the trade of telecommunications, computers and informational services which increased by 25.2 per cent from last year, the trade of culture and entertainment services which improved by 19.7 per cent year-on-year, and maintenance services by 19.4 percent. Over the past few years, China’s government has been refocusing its attention in trying to shift its economy toward a service and innovative industry. Last year, the service sector contributed to more than half the Chinese economy.
Read more at: China Daily