Everything You Need to Know About China's Economy on Thursday (Sept. 5)
Your Daily & Trustworthy Updates on the Chinese Economy
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Good Thursday! This is TIAN in Beijing.
Welcome to monitor the pulse of China’s economy together with me.
DRIVING THE DAY, Chinese President Xi Jinping on Thursday delivered a keynote address at the opening ceremony of the 2024 Summit of the Forum on China-Africa Cooperation (FOCAC).
Here are some key takeawsys of Xi’s announcements on the economic cooperation between China and Africa:
Chinese government will provide RMB360 billion yuan of financial support through the next three years. This breaks down into RMB210 billion yuan of credit line, RMB80 billion yuan of assistance in various forms, and at least RMB70 billion yuan of investment in Africa by Chinese companies. In addition, China will encourage and support Africa in issuing panda bonds in China to enhance our results-oriented cooperation in all areas.
China has decided to give all LDCs having diplomatic relations with China, including 33 countries in Africa, zero-tariff treatment for 100 percent tariff lines. This has made China the first major developing country and the first major economy to take such a step.
China will expand market access for African agricultural products, deepen cooperation with Africa in e-commerce and other areas, and launch a "China-Africa quality enhancement program."
China will foster industry cooperation growth clusters with Africa, push forward the Pilot Zone for In-depth China-Africa Economic and Trade Cooperation, and launch an "African SMEs empowerment program."
China will build with Africa a digital technology cooperation center and initiate 20 digital demonstration projects so as to embrace together the latest round of technological revolution and industrial transformation.
China is prepared to carry out 30 infrastructure connectivity projects in Africa, promote together high-quality Belt and Road cooperation, and put in place a China-Africa network featuring land-sea links and coordinated development.
China is ready to release the Joint Statement on Deepening Cooperation within the Framework of the Global Development Initiative with Africa, and implement 1,000 "small and beautiful" livelihood projects. We will replenish the China-World Bank Group Partnership Facility to boost Africa's development.
China will provide Africa with RMB1 billion yuan in emergency food assistance, build 100,000 mu (about 6,670 hectares) of standardized agriculture demonstration areas in Africa, send 500 agricultural experts, and establish a China-Africa agricultural science and technology innovation alliance. We will implement 500 programs in Africa to promote community welfare.
ALSO ON THURSDAY, China's central bank will continue to keep its monetary policy accommodative to better support the country's high-quality economic development, said the bank's deputy governor on Thursday.
The central bank will use a combination of monetary policy tools to maintain reasonable and sufficient liquidity, guide banks to seek more stable and sustainable loan growth, and keep the scale of social financing and money supply in line with the expected targets for economic growth and price levels, Lu Lei, deputy governor of the People's Bank of China (PBOC) told a press conference.
The central bank will give full play to the role of the recently lowered policy interest rates and loan prime rates in promoting a steady decline in corporate financing and household credit costs, said Lu.
Efforts will be made to improve the efficient use of funds and increase quality financial services for major strategies, key areas and weak links, Lu said.
MEANWHILE, Germany's leading luxury automaker Mercedes-Benz announced that, along with its Chinese partners, it would invest an additional 14 billion yuan (1.97 billion U.S. dollars) into the Chinese market, increasing its product portfolio in the country.
The German automaker has plans to release an array of new models onto the Chinese market, some of which will make their debut as early as 2025, the company said in a press release.
The new models include the all-new long-wheelbase electric CLA, a long-wheelbase version of the GLE SUV, as well as a luxury electric van model based on the Van Electric Architecture.
Mercedes states that it is planning long-term investments in the Chinese market and is committed to transforming China's automotive sector.
ICYMI: China's digital yuan transactions amounted to 7 trillion yuan (about 986.07 billion U.S. dollars) by the end of June this year, said the central bank's deputy governor on Thursday.
China has preliminarily verified the feasibility and reliability of digital yuan in theory, business and technology, while the operation structure has been formed and various systems have been continuously improved, Lu Lei, deputy governor of the People's Bank of China, told a press conference.
He noted that the digital yuan had been piloted in 17 provincial-level regions in sectors such as wholesale and retail, catering, cultural activities, tourism, education and medical care. A number of online and offline application schemes that can be replicated and promoted have taken shape.
IN TODAY'S FINANCIAL MARKET,
Shanghai Composite Index Rose 0.14% on Thursday
China’s benchmark Shanghai Composite Index (000001.SH) gained 0.14% on Thursday, while the Shenzhen Component Index (399001.SZ) rose 0.28%.
Shanghai’s tech-heavy STAR 50 Index (000688.SH) lost 0.15% for the day, while Shenzhen’s similar ChiNext Index (399006.SZ) rose 0.65%.
Chinese yuan strengthens to 7.0989 against USD Thursday
The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 159 pips to 7.0989 against the U.S. dollar Thursday, according to the China Foreign Exchange Trade System.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
China's benchmark interbank gold prices lower Thursday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 567.26 yuan (about 79.91 U.S. dollars) per gram, 2.54 yuan lower than the previous trading day.
The price for gold that is 99.99 percent pure or above went down 3.95 yuan from the previous trading day to 567.53 yuan.
Hong Kong Hang Seng Index closes 0.07 pct lower
Hong Kong's stock market ended lower Thursday with the benchmark Hang Seng Index down 0.07 percent to close at 17,444.30 points.
The Hang Seng China Enterprises Index fell 0.46 percent to end at 6,105.54 points, and the Hang Seng Tech Index rose 0.14 percent to end at 3,487.80 points.
China's central bank conducts reverse repos Thursday
China's central bank conducted 63.3 billion yuan (about 8.92 billion U.S. dollars) of seven-day reverse repos at an interest rate of 1.7 percent Thursday.
The move aims to keep liquidity reasonable and ample in the banking system, the People's Bank of China said in a statement.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
Cotton futures closed lower Thursday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for January 2025 delivery lost 55 yuan (about 7.75 U.S. dollars) to close at 13,675 yuan per tonne.
On Thursday, the total trading volume for six listed cotton futures contracts on the ZCE was 503,803 lots with a turnover of 34.47 billion yuan.
Sugar futures closed higher Thursday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for January 2025 delivery gained 13 yuan (about 1.83 U.S. dollars) to close at 5,609 yuan per tonne.
On Thursday, the total trading volume for six listed sugar futures contracts on the ZCE was 345,777 lots with a turnover of 19.34 billion yuan.
Iron ore futures closed lower on Thursday in daytime trading at the Dalian Commodity Exchange.
The most active iron ore contract for January 2025 delivery dipped 18 yuan (about 2.54 U.S. dollars) to close at 678.5 yuan per tonne.
On Thursday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 720,139 lots, with a turnover of about 49.29 billion yuan.
No.1 soybean futures closed higher on Thursday in daytime trading at the Dalian Commodity Exchange.
The most active No.1 soybean contract for January 2025 delivery gained 38 yuan (about 5.35 U.S. dollars) to close at 4,341 yuan per tonne.
On Thursday, the total trading volume of five listed No.1 soybean futures contracts on the exchange was 119,881 lots, with a turnover of about 5.19 billion yuan.
About the Newsletter:
Ran by TIAN Dongdong, this newsletter features daily, trustworthy content on China's economy and regularly updates the insights of Chinese youth on Sino-US relations. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.
While the outcome of the FOCAC is encouraging, I would hope the CPC would allow African countries to put tariffs on Chinese goods at some point to develop their own higher level industries