china
CE: The peer-to-peer lending market is big enough now to merit being put under scrutiny. This should include improving investors’ awareness of the risks involved. Lack of transparency from online platforms is compounded by some investors’ weak professional judgment. The Yucheng case was a trap that lured investors in with [promises of] high returns from phantom projects that never existed. New business models always come with risks. The key to improving the efficiency of a regulatory framework is better coordination between regulators that are responsible for different areas. It simply does not work to have one department responsible for market growth and another for supervision if both do not consider the broader picture. The mindset that unresolved problems are always someone else’s concern never helps. NC: China’s stock and foreign exchange markets suffered significant volatility last year. One of the lessons from that was how necessary it is to reform the regulatory framework of the financial market. What are your suggestions for this reform? CE: There are legal and institutional restrictions which have made it barely possible to put all banking business under scrutiny. Regulatory agencies are still divided, while the market is increasingly integrated. There is the question of how we should define a particular service that involves two financial areas, and who should regulate it. For example, securities regulators are supposed to distinguish what sectors within a bank are securities-related and put only those under their scrutiny. Standards that are too suffocating could hamper the banks’ growth, while standards that are too loose would make no sense. Given this, sorting out the different functions of every part of the market and the regulatory structure needs to be our first priority. Before reform can happen, we need to understand more clearly how capital would slosh around the financial market and the economy as a whole in the context of either sufficient or insufficient liquidity. In this sense, it is not just a choice between putting all the existing financial regulatory bodies under one umbrella, or having them do their jobs completely independently. NEWSCHINA I May 2016
bynumbers US$6.7bn Drop in outstanding foreign currency loans in China in February compared to January, the seventh consecutive monthly decline . At the end of February, China’s outstanding foreign currency loan balance stood at US$816.8bn, and foreign currency deposits were at US$655.2bn.
Foreign currency deposits and loans by Chinese financial institutions, US$bn 30
Deposits
15 0
Loans
-15 -30 -45 -60
Aug’15
Sept’15
Oct’15
Nov’15
Dec’15
Jan’16
Source: People’s Bank of China
9.6%
#1
Share of total GDP held in 2015 by China’s maritime sector, mainly fisheries, wind power, tourism, port services, and oil and gas, slightly higher than the 9.4 percent recorded in 2014
China became the US’s top trading partner in manufactured goods in 2015, overtaking Canada
Geographical breakdown of China’s maritime sector as a % of maritime output in 2015
Leading US exports to China, 2015, US$bn Civilian aircraft, engines, equipment and parts 15.4 Soybeans 10.5 Passenger cars, new and used 9.1 Semiconductors 6.0
Leading US imports from China, 2015, US$bn
Other 14%
Pearl River Delta 21.3%
Feb’16
Cell phones and other household goods 64.6 Bohai Sea Rim 36.2%
Computers 43.7 Computer accessories 30.4 Toys, games and sporting goods 27.6
Source: US Census Bureau Yangtze River Delta 28.5%
Source: State Oceanic Administration of China
2.9 : 1 China’s current ratio of working people to retirees
79,000 The number of hi-tech enterprises registered by the end of 2015, according to 2008 national standards. New standards were approved by the State Council in early 2016. Sources: Ministry of Science and Technology of China, The State Council Information Office of China
Sources: Ministry of Human Resources and Social Security, The State Council Information Office of China
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