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Monthly Archives: October 2020

In Pictures: 1953 Aston Martin DB2 Drophead Coupé

Source : Bring A Trailer

China’s Factory Activity Growth Slows Slightly in October

Gabriel Crossley wrote . . . . . . . . .

The official manufacturing Purchasing Manager’s Index (PMI) fell to 51.4 in October from 51.5 in September, data from the National Bureau of Statistics showed on Saturday, remaining above the 50-point mark that separates growth from contraction.

Analysts had expected it to slip slightly to 51.3 but said a broader recovery still appeared to be solidly on track.

The data, particularly new export orders, indicates October’s trade figures should stay strong, Zhou Maohua, an analyst at China Everbright Bank, said in a note. However, the epidemic’s spread overseas could increase uncertainties for China’s exports over the next few months, said Zhou.

China’s vast industrial sector is steadily returning to the levels seen before the pandemic paralysed huge swathes of the economy.

Pent-up demand, stimulus-driven infrastructure expansion and surprisingly resilient exports are propelling the rebound, though the global outlook is dimming as many Western countries battle renewed surges in the virus that causes COVID-19, with some going back into virus lockdowns.

The official PMI, which largely focuses on big and state-owned firms, showed overall new orders remained steady at 52.8, while new export orders rose to 51.0, improving from 50.8 a month earlier.

But smaller firms continued to struggle. A sub-index for those companies stood at 49.4 in October, slipping back into contraction from September’s 50.1.

Companies also shed jobs for a sixth month in a row, and at a faster pace. A sub-index for employment fell to 49.3 from September’s 49.6.

“The manufacturing industry overall continues to pick up,” said NBS official Zhao Qinghe, while noting that small companies face weak market demand.

Some companies reported that the resurgence of the epidemic overseas had lengthened procurement periods for imports of raw materials and increased transport costs, Zhao said in a statement released with the data.

China’s economy grew a weaker-than-expected 4.9% in the third quarter year-on-year. It is expected to expand around 2% for the full year – the weakest in over three decades but still much stronger than other major economies.

The pandemic has been largely controlled in China, with daily life in much of the country returning to normal, although an outbreak emerged recently in the western region of Xinjiang.

A sister survey on the services sector showed activity expanded for the eighth straight month, hitting the highest level since October 2013, as the removal of restrictions on public gatherings and movement bolstered consumer demand.

Source : Reuters

The Top Struggles of Remote Workers

751 thousand Americans filed for Unemployment Benefits Last Week

Source : Trading Economics

The 200-year History of U.S. Interest Rates

See large image . . . . . .

Source : Visual Capitalist

Hong Kong Economy Grew 3% in Q3

Source : Trading Economics

Infographic: 十九届五中全会这样安排“十四五”

Source : 新华网

Zhou Xiaochuan: China’s Digital Yuan Aims to Halt US ‘Dollarisation’, Boost Retail Payments

Frank Tang wrote . . . . . . . . .

China’s sovereign digital currency is designed primarily to grow retail payments at home and prevent the dominance of the US dollar, rather than address threats raised by cryptocurrencies or stablecoins, a former central bank governor says.

Zhou Xiaochuan, who led the People’s Bank of China from 2002-18, said China was working hard to establish its digital currency and electronic payment (DCEP) system, but its focus differed from the Group of 7 (G7) principals.

“What they are concerned about is mainly to deal with the challenges raised by Libra, bitcoin and similar digital encrypted currencies,” Zhou said during a video conference on Tuesday at the Eurasia Forum, an event hosted by the Hungarian central bank.

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In a report released in October, the G7 said stablecoins – digital currencies like Facebook’s Libra that are linked to a pool of assets – need to be appropriately supervised to prevent threats to global financial stability and ensure they were not used to fund illicit activities or tax avoidance.

What is China’s sovereign digital currency?

Zhou said China believed digital currencies must “respect exchange regimes and currency sovereignty”. But he added a major factor in Beijing’s digital currency plan was to avoid “dollarisation”, where the US dollar is used in parallel or instead of the local currency.

China’s central bank is inching closer to the launch of its sovereign digital currency, publishing a draft law on Friday that would give legal status to the DCEP system, and including the digital yuan as part of the country’s sovereign fiat currency.

Zhou is a key backer of China’s digital currency plan and it was under his watch the central bank launched a special institution in 2014 to develop the digital yuan.

China, which has cracked down on cryptocurrencies, has begun trails of the digital currency in Shenzhen, Suzhou, Xiong’an and Chengdu, and will test it during the upcoming Winter Olympics.

The central government has made it clear that the goals of the DCEP include replacing cash, maintaining government control over the currency and creating as many small retail application scenarios as possible.

The digital yuan will be distributed through China’s central bank to authorised second-tier providers, including large state-owned banks, state-controlled telecom operators and online payment providers Ant Group and Tencent, Zhou said.

“The relationship between institutions at the two tiers is not like that between traditional wholesale and retail businesses,” he said.

China’s central bank will guarantee the value of the digital yuan with oversight measures including reserve and capital ratio requirements.

Our mandate is to build up a solid base of retail payments domestically, and [as for cross-border payment] we should focus on the current account payments, such as tourist sectors

“If there’s a default or failure of one scheme of the DCEP, the second tier institution is responsible for the purchasing power,” Zhou said. “If there is a bank run, it’s a run for the second tier institution, rather than the central bank.”

The second tier institutions will also be responsible for maintaining users’ privacy, although payment data will be backed up solely by the central bank.

“Our mandate is to build up a solid base of retail payments domestically, and [as for cross-border payment] we should focus on the current account payments, such as tourist sectors,” he said.

Mu Changchun, who leads digital currency research at the Chinese central bank, said in a subsequent panel discussion that introducing a digital fiat currency would help safeguard the monetary sovereignty of the central bank.

“At the same time, because of the popularity of private tokens or private crypto assets, you have to guarantee the public wider access to central bank money,” he said.

Source : Yahoo!

Read also at Reuters:

China’s $1.5 million digital currency giveaway impressed analysts. Shoppers, not so much . . . . .

U.S. GDP Up by a Record 33.1% in Q3

Source : Bloomberg and Calculated Risk

U.S. Pending Home Sales Down in September

Source : Bloomberg