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Media Report
February 14 , 2017
  • Reuters：China's credit growth poses challenge, but tightening seen gradual
    Reuters reports: "Chinese banks kept up a strong pace of lending at the start of the year, even with signs of tightening by the central bank, highlighting the challenge Beijing faces as it tries to deflate asset bubbles without risking a blow to economic activity. January's new yuan loans were the second-highest on record as banks stepped up lending, indicating policymakers' efforts to rein in risks have not reduced bank credit being extended to China's highly-indebted corporate sector. A spike in off-balance sheet lending also showed demand for credit remained strong, while inflation picked up to multi-year highs, though analysts expect any tightening to be gradual as China's economic recovery is fragile. 'This is not across the board or broad tightening that we normally see...we think the recovery momentum is driven by the recovery in prices, especially PPI, rather than any real return of real demand,' said Betty Wang, senior China economist at ANZ in Hong Kong. 'We do not think the economy is solid enough to counter broad-based or aggressive tightening.' Much of the increase in consumer prices in January was due to a seasonal rise in food and travel costs ahead of the Lunar New Year holiday, while producer price gains slowed by half on-month. Analysts say the People's Bank of China (PBOC) is raising rates on some primary money rates to signal to markets that it is keeping an eye on financial risks, but will keep liquidity ample, which includes continued expansion of credit."
  • The Wall Street Journal：U.S. Eyes New Tactic to Press China
    The Wall Street Journal reports: "The White House is exploring a new tactic to discourage China from undervaluing its currency to boost exports, part of an evolving Trump administration strategy to challenge the practices of the U.S.'s largest trading partner while stepping back from direct confrontation. Under the plan, the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country, instead of singling out China, said people briefed on or involved in formulating the policy. U.S. companies would then be in a position to bring antisubsidy actions themselves to the U.S. Commerce Department against China or other countries...But the currency move, if put into effect, is bound to be controversial because it may violate World Trade Organization rules. Other countries are also sure to take similar measures against U.S. exports and could argue that Federal Reserve policies that weaken the dollar qualify as subsidies. The Obama administration, concerned about such consequences, decided against naming currency practices as a subsidy. The individuals who have been briefed on the White House thinking stress that the currency plan and other changes need to be reviewed by cabinet officials including Steven Mnuchin who was confirmed as Treasury secretary late Monday and Commerce Department nominee Wilbur Ross Jr. who is awaiting confirmation...'The American business community in China welcomes a pushback because China has overreached,' said Mr. McGregor, the APCO official. 'But it has to be smart and well thought-out and focus on real issues between the two countries, such as techno-nationalism and the step-by-step closing of market access for foreign companies in China.' "
  • The National interest：No, Donald Trump Did Not Back Down From China
    The National Interest comments: "We should be clear: In fact, Trump did not 'change tack,' as said in a report by Reuters, or back down to Beijing, as judged by the New York Times, implying that the new administration made some major concession to China in acknowledging the reality that is the One China policy. What Trump did was simple and quite expected -- he followed a standard line of thinking that dates back to the Nixon administration. Clearly no ground was ceded. Indeed, let's recall for a moment what most in Washington consider the One China policy to be, setting aside Beijing's fantasy version of it. From the Shanghai Communique, the foundation of the U.S.-China relations: 'The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China…' To me that is no game-changer. It's just admitting the obvious. No knockout punch here...Unfortunately, the future looks quite bleak. Step back for a second and take the 30,000-foot view of where U.S.-China relations are today. The scope and sheer amount of problems both nations have between them is nothing short of historic. In fact, Washington and Beijing face four possible pathways towards a major crisis: territorial tension in the East and South China Seas, Taiwan, and now a growing squabble over trillions of dollars in bilateral trade. Any of these could lead to a major showdown between the world's two biggest economic and military giants."
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