Chinese economy and global trends

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Although Chinese government authorities are conducting open market manipulation, there are risks during the economic upturn. Meanwhile, global economies such as Australia continue to progress today in line with their own situation.

◎China economy is now

  • Open market manipulation this August

The central bank, People's Bank of China, has recently provided liquidity to the market through open market manipulation. In addition, on August 19, the People's Bank of the People's Bank released 150 billion yuan (25.5 trillion won) of funds on the market by operating a 7-day reverse RP (repurchase conditional bond), which is a short-term liquidity control means, and the bidding rate is 2.20%, the same as before. I set it up. As a result, reverse RP for 3 consecutive trading days

The scale of funding through the company reaches 300 billion yuan (51 trillion won). Prior to this, on August 17th, liquidity of 700 billion yuan (119 trillion won) was supplied to the market through the Medium-Term Liquidity Support Center (MLF), and the related interest rate was frozen at 2.95%, the same as before. This MLF operation is a measure to extend the funding of the MLF (total of 550 billion yuan = 93.5 trillion won), which is due in August.

  • Risk factors for the rise of the Chinese economy

S&P, an international credit rating agency based in the United States, evaluates a rise in real interest rates in China as a risk factor for an economic upturn. It points out that the cost of debt repayment is rising as the imbalance recovery, weak private demand, and excessive market optimism have pushed up real interest rates after the coronavirus. Therefore, if the real interest rate rises accelerating, the Chinese economy is evaluated as inevitable to deviate from the recovery trajectory.

  • Expansion of purchase of US crude oil

According to an oil market analyst, 14 million barrels of US crude oil have been moved to China, and China is expanding its purchase of US-made crude oil ahead of the review of the first-stage trade agreement concluded in January this year. This is more than twice the amount scheduled for August, and the background is that the Chinese economy has escaped from the spread of the novel Corona 19 and the utilization rate of refineries is rising.

  • Anti-dumping investigation in Australia

The Chinese government (Ministry of Commerce) is launching an anti-dumping investigation of Australian wines. This is observed as a countermeasure against Australia's political stance, which kept pace with the US in the Hong Kong issue. The investigation period for the item is until August 2021 (next year) and will be extended by 6 months unless there are special circumstances.

◎Global economies are now

  • Australia and Taiwan

Australia strengthens M&A (Merger and Acquisition) regulations for foreign capital mainly targeting companies that have an influence on security such as infrastructure. In the meantime, even in the case of an approved agenda, if the risk of national security is highlighted, a sale is ordered. This will be implemented from 2021 (next year). Meanwhile, in the minutes of the monetary policy of the central bank of Australia,

Seo believes that most of the existing policy responses are working positively on the economy. Accordingly, it is pointed out that additional mitigation measures are not necessary at this time. If the economic situation is continuously investigated and the justification of policy use is secured, the current policy can be adjusted. And the pro-American-oriented Taiwan

The current government (Ministry of Economy) will take the lead in strengthening investment regulations of mainland Chinese enterprises from October. Currently, companies with Chinese capital exceeding 30% are regarded as Chinese mainland companies, and many restrictions are imposed, but in the future, companies with less than 30% Chinese capital are expected to curb bypass investment. Thailand's growth rate in the second quarter of 2020 (from the same period last year) was −12.2%, which is significantly lower than the previous first quarter (−2.0%) and higher than the forecast (−13.3%).

  • Chile/Thailand/India/Singapore

Chile, South America, recorded the lowest GDP growth rate in the second quarter of this year at -14.1% compared to the same period last year. This is because the entire industry, excluding the mining industry, which depends on exports, fell below the previous year's performance. The most serious is the household consumption sector, a 22.4% decrease from the same period last year. Meanwhile, the growth rate of Thailand in the second quarter of this year was −12.2% compared to the same period last year.

This is significantly lower than the previous first quarter (−2.0%) but higher than the forecast (−13.3%). And in India, crypto (virtual) currency transactions are rapidly expanding, centering on domestic and foreign companies. This is because the Supreme Court ruled unconstitutional that the central bank prohibits the transaction of crypto (virtual) currency assets of financial companies. Singapore government in China

It is observed that the negative aftermath of Corona 19 will be prolonged, and the salary subsidy will be extended until March 2021 (next year). In addition, the government announced an additional economic plan of 8 billion Singapore dollars (6.9 trillion won, 1 Singapore dollar = 868 won) and plans to take measures to prevent excessive increase in financial burden by reducing the subsidy ratio along with the extension of the salary subsidy period.

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