Reserve Requirement Cut

The People’s Bank of China cut its reserve requirement ratio by 0.5 percentage points on September 16, adding $126 billion to the financial system. As China’s economy continues to experience a slowdown in the second half of 2019, this injection will see some banks having their reserve ratio cut by a full 1 percentage point, in an effort to promote lending to smaller businesses, as well as private enterprises.

PMI Experiences Seventh Contraction

China’s purchasing managers’ index was 49.8 in September, up 0.3 from August’s reading of 49.5. This is the seventh contraction this year, with a figure below 50, as sentiment in this sector continues to experience uncertainty due to trade war disputes.

However, the new orders index expanded in September, for the first time since April, with a figure of 50.5, rebounding 0.8 higher than August’s 49.7.

Key Economic Indicators

China’s consumer price index rose 3 percent year on year in September, 0.2 percentage points higher than August’s 2.8 percent increase. The producer price index fell 1.2 percent in September, following August’s decline of 0.8 percent.

In September, food prices experienced a drastic increase, with pork prices surging 69.3 percent year on year. Overall, food prices rose 11.2 percent year on year in September. In August, pork prices had already seen an increase of 46.7 percent, contributing to the 10 percent overall increase in food prices.

UN General Assembly Session

The 74 Session of the UN General Assembly was held from September 17 to 30, with delegates from all 193 member states in attendance.

An annual event bringing world leaders together to discuss topics ranging from terrorism to climate change, the summit saw strong attendance from African heads of state.

President Muhammadu Buhari of Nigeria, President Paul Kagame of Rwanda, and President Cyril Ramaphosa of South Africa gave speeches at the summit. Tijjani Muhammad-bande of Nigeria served as the president of the 74th session, having previously served as its vice-president at the 71st session in 2016. CA

Booming Internet Service Sector

China’s Internet service and related sectors continued to see fast expansion, with double-digit growth in both revenue and profit in the first eight months, official data showed.

The sectors’ total revenue amounted to about $106.4 billion during the January-august period, up 20.9 percent year on year, according to the Ministry of Industry and Information Technology. Business profit came in at $10 billion, surging 32.7 percent from the same period last year. Meanwhile, the sectors’ spending on research and development reached $4.4 billion, up 21 percent.

Information services were the largest revenue contributor for the sectors, garnering an income of $70.1 billion and accounting for 65.9 percent of the total revenue.

The Internet sector has become a key component of China’s “new economy” as the country undergoes a shift to growth driven more by technology and consumption.

Trading Along B&R

China’s trade with countries along the Belt and Road (B&R) routes posted robust growth in the first three quarters of this year, official data showed.

Trade with B&R participating countries totaled about $940.3 billion during the period, up 9.5 percent year on year, outpacing the country’s total trade growth by 6.7 percentage points, according to the General Administration of Customs (GAC).

Trade with B&R participating countries also registered a higher share of China’s total trade, which stood at 29 percent, up by 1.8 percentage points over one year ago.

The GAC attributed the robust trade growth with B&R participating countries to enhanced customs cooperation. It has signed mutual authorized economic operator agreements with 41 countries and regions to facilitate customs clearance for enterprises, 18 of which are B&R participating countries and regions.

$106.4 billion

Stable Goods Price

Most production goods monitored by the Chinese Government posted lower prices in the first 10 days of October compared with late September, official data showed.

Of the 50 major goods monitored by the government, including seamless steel tubes, gasoline, coal, fertilizer and some chemicals, 22 goods saw their prices decline during the period, with 17 posting higher prices and 11 seeing their prices unchanged, according to the National Bureau of Statistics.

Prices of live pigs, mainly used for processing, went up 16.2 percent while liquefied natural gas gained 1.3 percent.

Engine of Digital Consumption

Young consumers in China’s small towns or lower-tier cities will power the country’s digital consumption growth, according to a report by consultancy Mckinsey&co. The proportion of young Chinese shopping online in lower-tier cities is almost on par with that in first-tier cities such as Beijing and Shanghai, the consultancy said, citing a recent survey. As some luxury brands have not yet opened brick-andmortar stores in small towns and lower-tier cities, consumers in these areas are more likely to buy luxuries online than their counterparts in big cities, the report said. China has a $1.5-trillion e-commerce market, making it one of the most attractive market for global retailers, the report said.

RMB Assets

Overseas institutions bought more in the Chinese bond market in August despite RMB’S slide during the period, the latest data showed, as the lure of the Chinese market prevails.

Transactions by overseas institutional investors totaled $88.05 billion, according to the China Foreign Exchange Trading System and National Interbank Funding Center. The trading volume was up 43 percent from the previous month and climbed 63 percent year on year. By the end of August 2019, a total of 2,114 overseas participants had entered the Chinese interbank bond market, according to the center.

In Q2 2019, foreign institutions, represented by those under China’s qualified foreign institutional investors program, bought a large number of A-share stocks, increasing stakes in many listed companies, recent interim reports of listed companies showed. CA