HONG KONG (Reuters Breakingviews) - A trade truce gives China room to loosen up. Beijing has left its benchmark interest rate untouched since 2015. But officials at the People’s Bank of China, eager to foster growth, have other monetary policy levers they can pull, like interbank rates or the amount lenders must hold in reserve. A period of diplomatic calm gives them the space to do just that.
HONG KONG (Reuters Breakingviews) - Huawei has now firmly settled into the eye of a geopolitical storm. Canadian officials arrested Meng Wanzhou, the Chinese telecom equipment maker’s chief financial officer, for allegedly violating U.S. sanctions. The case arises just as more countries put the squeeze on Huawei. Suppliers will be rattled, too. It may be a microcosm of a broader containment effort.
HONG KONG (Reuters Breakingviews) - President Xi Jinping has proven himself adept at the art of buying time. The Chinese leader secured a welcome trade war ceasefire with the United States at the G20 summit in Buenos Aires. Now for the hard part: structural change. Over the coming weeks, he has opportunities to offer a little more: that will test the minimum required to please Washington hardliners.
HONG KONG (Reuters Breakingviews) - Brazil’s Jair Bolsonaro threatens to short-circuit China’s energy plans. Beijing-backed energy companies hope to invest tens of billions of dollars in Brazilian power, but the president-elect has warned of Chinese intentions. Firms like State Grid would bring a lot of cash and expertise – and Brazil could use both. But populist suspicion might overrule commercial logic.
HONG KONG (Reuters Breakingviews) - China’s technology hub warrants an upgrade. Nearly four decades after the southern market town of Shenzhen was transformed into a buzzing metropolis with a roughly $320 billion economy, it makes sense to designate the area as something like a province.
HONG KONG (Reuters Breakingviews) - China’s gummed-up credit system is threatening growth. The economy expanded 6.5 percent in the third quarter, missing expectations, as other indicators cooled too. The campaign to quash financial risk has squeezed private companies, and exhorting banks to lend more to small firms won’t cut it in the long run. Officials have little choice but to let shadow lenders find their place in the sun.
HONG KONG (Reuters Breakingviews) - China’s winks at punters hint at intervention. Top officials have been trotted out over recent days to reassure investors fretting over a near-25 percent stock slump this year. A thaw is not far away, they say; an aggressive deleveraging campaign is on hold too. That’s all in Beijing’s playbook. If markets keep falling, more active policy support comes next.
HONG KONG (Reuters Breakingviews) - China’s pledged stocks cast a long shadow. Shares have been used as collateral for some $220 billion of loans in the People’s Republic, a practice which threatens to exacerbate a nearly $2 trillion selloff this year. Beijing will step in to contain the immediate risk, but higher lending costs and moral hazard will hurt for longer.
HONG KONG (Reuters Breakingviews) - Fan Bingbing is starring in a Chinese coming-of-age tax tale. Beijing authorities charged the popular actress a whopping $129 million in fines and overdue taxes for concealing past dues. Her months-long disappearance has been a gripping saga, but also feeds into a bigger story.
HONG KONG (Reuters Breakingviews) - The U.S. Federal Reserve is helping Hong Kong’s homebuyers. The city’s banks are pushing up their benchmark rates, the first hike in more than a decade. As tighter U.S. monetary policy feeds into Hong Kong mortgages, flat values look set to fall. That may open a door for younger residents, many of who have been priced out of world’s bubbliest property market, but it could also tax economic activity.