Toward the end of June, Chinese RMB money markets seemed like they had weathered the worst of it. One month earlier, in late May, regulators had seized Baoshang Bank Co. sending waves of uncertainty rippling through markets in China and around the world. Authorities were quick to declare “nothing to see here”, blaming the bank’s close relationship with absentee billionaire [...]
Central bankers are not nimble traders. By their very bureaucratic nature, they leave big muddy footprints all over markets. Sometimes that is by design, a show of force to scare some evil speculators into going straight. Other times, it just can’t be helped. The way it works in China, the autocratic structure doesn’t leave much to interpretation – at least [...]
One month ago, on May 24, Chinese regulators stunned the world by announcing the first bank restructuring in modern China’s history. Based in Inner Mongolia, Baoshang Bank was seized because of what the PBOC and China Banking and Insurance Regulatory Commission said was “severe credit risk.” Initial reports attempted to link Baoshang’s struggles to financier Xiao Jianhua who disappeared in [...]
Earlier this month, the People’s Bank of China (PBOC) reduced the percentage of liquid reserves some banks are required to hold. Effective May 15, the Chinese central bank estimated that the policy change would release about RMB 280 billion into the system. This RRR discount, however, was only applied to small and medium-sized banks. The reserve rate for large banks [...]
In a period when weird and unusual are commonplace, it was one of the more noteworthy and interesting outliers. Late in August 2010, a media report attributed to Hong Kong’s Ming Pao news agency suggested Zhou Xiaochuan was on the run. Supposedly, the Governor for the People’s Bank of China, the country’s central bank, was defecting to the United States [...]
A little less than three weeks ago, the overnight unsecured money market rate for Chinese renminbi (RMB), SHIBOR, had fallen sharply to 1.417%. This was among the lowest in history, though it has been happening more frequently since last summer. That sounds like a good thing, only the low rates don’t ever last. Instead, over the next eight market sessions [...]
China’s Passenger Car Association reported last week that retail sales of various vehicles totaled 1.78 million units in March 2019. The total was 12% less than the number of automobiles sold in March 2018. This matches the government’s data, both sets very clear as to when Chinese economic struggles accelerated: May 2018. For decades, there was just one way for [...]
This will serve mostly as an update to what is going on inside the Chinese monetary system. The PBOC’s balance sheet numbers for February 2019 are exactly what we’ve come to expect, ironically confirmed today on the domestic end by the FOMC's dreaded dovishness. Therefore, rather than rewrite the same commentary for why this continues to happen I’ll just link [...]
China’s central bank was given more independence to conduct monetary policies in late 2003. It had been operating under Order No. 46 of the President of the People’s Republic of China issued in March 1995, which led the 3rd Session of the Eighth National People’s Congress (China’s de facto legislature) to create and adopt the Law of the People's Republic [...]
While Western markets breathed a sigh of relief that US GDP didn’t confirm the global slowdown, not yet, what was taking place over in Asia went in the other direction. There has been a sense, a wish perhaps, that if the global economy truly did hit a rough spot it would be limited to just the last three months of [...]
Stay In Touch