Chinese Economic Weekly Review - Jun.8~Jun.14
The must-see weekly hotspots of China's economy, all here for you!
China's Response to Blinken's Upcoming Visit: Both Sides Maintain Communication on Visit Arrangements
Regarding the upcoming visit of US Secretary of State Antony Blinken to China, Chinese Foreign Ministry spokesperson Wang Wenbin responded during a routine press conference on the 15th, stating that both sides are maintaining communication on visit arrangements.
Wang Wenbin stated, "As agreed by China and the United States, US Secretary of State Antony Blinken will visit China from June 18th to 19th. Both sides are maintaining communication on visit arrangements. We will release further information in a timely manner."
Another journalist raised a question about Palau, a Pacific island nation, requesting increased patrols by the United States in its exclusive economic zone after recent incidents of Chinese vessels entering the area. The President of Palau welcomed the expansion of US military presence in Palau, in addition to the existing Coast Guard and civilian action groups, by stationing additional troops. What is the Ministry of Foreign Affairs' comment on this?
Wang Wenbin stated that, according to relevant departments' information, the Chinese vessels in question sought shelter in the relevant waters and did not conduct any maritime survey or investigation activities. China has already notified the concerned country regarding this matter.
MJ Comment: Following the high-profile visits of Cook and Musk, Blinken is also coming to China. However, based on the official response, China has expressed a relatively firm stance on political exchanges at this time. For more analysis, please refer to this article:
The Federal Reserve Pauses Interest Rate Hikes, Maintains Tightening Expectations for the Second Half of the Year
On June 14th, local time, the Federal Reserve concluded its two-day monetary policy meeting and announced that it would keep the target range for the federal funds rate unchanged at 5% to 5.25%. This marks the first pause in interest rate hikes by the Federal Reserve after 10 consecutive increases since March 2022. At the same time, Federal Reserve officials raised the median projection for the federal funds rate for this year from 5.1% in March to 5.6%, indicating that there could still be further rate hikes this year.
In its statement released on the same day, the Federal Reserve stated that recent indicators show that economic activity in the United States continues to expand moderately, with strong job growth in recent months and a low unemployment rate. However, inflation remains elevated. In order to support the achievement of maximum employment and the 2% long-term inflation goal, the Federal Reserve decided to maintain the target range for the federal funds rate, allowing the Federal Open Market Committee to assess more information and its impact on monetary policy.
MJ Comment: Americans are also struggling with inflation... This action to some extent benefits the flexibility of China's macro policies, such as easing exchange rate pressures and creating room for monetary loosening. However, the Federal Reserve has indicated the possibility of further rate hikes in the future. In the short term, I believe China will remain in a wait-and-see mode, except for minor adjustments in interest rates.
Chinese smartphone manufacturer Xiaomi responds to the seizure of 4.8 billion yuan by Indian law enforcement agencies
On June 9th, the Enforcement Directorate (ED) of India issued a notice to Xiaomi Technology India Private Limited, its executives, and three banks under the Foreign Exchange Management Act, citing complaints from Indian authorities regarding unauthorized remittances of 5,551.27 crore rupees (equivalent to approximately 480 million yuan).
Previously, the Indian Ministry of Finance had already frozen 5,551.27 crore rupees in the bank accounts of Xiaomi Technology India Private Limited, citing unauthorized overseas remittances under the guise of royalty payments.
In response to the situation, Xiaomi stated to China News Finance that their position remains unchanged and clarified that it was not a confiscation but a freeze. Xiaomi's Indian subsidiary had previously issued a statement stating, "We are studying the matter and awaiting a written ruling. We would like to reiterate that our operations in India comply with relevant Indian laws and regulations."
MJ Comment: Yesterday, India even made a new requirement that Chinese smartphone manufacturers must hire local executives for their operations in India. To put it bluntly, India is almost like a nightmare for foreign investment. I strongly advise everyone not to engage in business in India.
Bill Gates Arrives in Beijing for His First Visit to China in Over 3 Years
On the evening of June 14th, Beijing time, Bill Gates announced through his official Weibo account that he had arrived in Beijing, notifying his followers on the Chinese social media platform.
In his post, Gates mentioned that the Gates Foundation has been collaborating with Chinese partners to address global health and development challenges for over 15 years. He expressed his great pleasure to meet with his partners in China. He also highlighted the need for innovation to tackle issues such as climate change, health inequities, and food security. From malaria drug development to climate adaptation investments, China has accumulated a wealth of experience, and Gates emphasized the importance of helping more people around the world achieve such development.
MJ Comment: Bill Gates is one of the few American entrepreneurs who have maintained close and far-reaching relations with the Chinese government. He has been actively involved in promoting Windows in China since 1994. In addition to the health and charity issues mentioned in the reports, I believe that during this visit, he will also engage in dialogue with high-level Chinese government officials.
Several Chinese Banks Announce Deposit Rate Cuts
Following the announcement of deposit rate cuts by six major banks last Thursday, several nationwide joint-stock commercial banks, including China Merchants Bank, Shanghai Pudong Development Bank, China Everbright Bank, CITIC Bank, and China Minsheng Bank, have also announced reductions in certain RMB deposit rates. The rate cuts range from 5 to 15 basis points, with 1 basis point equaling 0.01%.
This is the second round of deposit rate cuts by these banks since the adjustments made in September last year.
MJ Comment: In the current economic situation in China, the substantive impact of interest rate cuts is not significant. For further analysis, please stay tuned for the article I will be publishing tomorrow. Thank you!