Canada to open first renminbi trading hub in the Americas

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Ontario is launching the Americas’ first trading hub for the Chinese currency renminbi (RMB), which will enable businesses across Canada to convert Canadian dollars directly into Chinese currency.

The new hub is meant to reduce costs for businesses and boost trade with China, according to Ontario’s Ministry of Economic Development, Employment and Infrastructure.

The hub will lower overall business costs for Canadian businesses by removing the need for an intermediate conversion to US dollars, while supporting increased trade between Canada and China, it said.

“The Ontario government is proud to have played an important role in establishing the new RMB trading hub in Canada,” said Charles Sousa, minister of Finance.

“The innovative hub will enable Canadian businesses to save money and improve their productivity, stimulating economic growth and job creation in Ontario and across Canada.”

The RMB trading hub reinforces Toronto’s stature as North America’s second-largest financial center, which helps to increase the province’s competitiveness on a global scale, he said.

Toronto is the headquarters of Canada’s financial services industry, while much of Canada-China trade passes through Vancouver due to BC’s close ties to the Asia Pacific market.

It also ranks sixth on Banker magazine’s list of best financial centers in the world.

The Canadian RMB trading hub joins an elite group of trading hubs around the world for the Chinese currency, also known as the yuan, the world’s second-most used currency in global finance.

With this hub, Ontario becomes a gateway for the flow of RMB through the Americas. Operated through existing financial institutions and infrastructure in Canada, the RMB trading hub will allow Canadian banks and other agents to develop RMB financial currency and exchange services across Canada, and elsewhere in the Americas.

Ontario and British Columbia worked collaboratively in a supportive role to assist the federal government in its negotiations with China to establish an RMB trading hub in Canada.

Recently, Ontario Premier Kathleen Wynne led a trade mission to China that attracted $966 million in new investment by Chinese companies for Ontario. These projects will create 1,800 jobs in communities across the province.

So far, London, Frankfurt, Luxembourg, Hong Kong, Singapore, Taiwan and Sydney all host RMB trading hubs.

 

 

Source : China Daily | March 25, 2015

Thomas D’Innocenzi

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Aerospace industry in for big business in Malaysia

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The aerospace industry is big business – within the next 15 years, the Government is projecting the industry, which includes aircraft maintenance, repair and overhaul (MRO) services as well as manufacturing of high-tech components, to generate total revenue of 55.2 billion ringgit (US$14.87 billion).

It will also create 32,000 high skilled jobs by 2030.

Malaysian Investment Development Authority (Mida) deputy chief executive office Phang Ah Thong told StarBiz that this objective, as laid out in the new Malaysian Aerospace Industry Blueprint 2015-2030, was achievable.

Last year, the local aerospace industry generated 19 billion ringgit in revenue and 4.2 billion ringgit in investments, with 19,500 jobs created. The blueprint was launched by prime minister Najib Tun Razak at the Langkawi International Maritime and Aerospace Exhibition 2015.

By 2034, it is estimated that there will be 36,000 aircraft worldwide. Asia will require 13,000 aircraft to meet demand.

“For this reason, both Airbus and Boeing are lining up business plans to increase their supply chain in Asia to more than 20 per cent from less than 5 per cent presently to meet the production needs of single-aisle planes,” Phang said.

He said local manufacturing companies with the capabilities to support aerospace industry with parts and components should get international certifications from regulatory bodies such as the Civil Aviation Authority (CAA), the Federal Aviation Administration (FAA) and the European Aviation Safety Agency (EASA).

“These certifications will enable the local companies to work with Tier-1 and Tier-2 aerospace manufacturing companies,” he said.

Phang said 41 investment projects worth 5.3 billion ringgit were approved from 2009 to 2014 for the aerospace sector.

Of the 41, he said 19 were MRO projects while in 2014, there were seven investments for 682 million ringgit, of which 27 per cent was from foreign investments.

According to the blueprint, the Malaysian aerospace industry is positioning itself to be the top aerospace training and education as well as the top aerospace manufacturing centre in South-East Asia by 2020 and 2025 respectively.

The local aerospace industry aimed to capture 5 per cent market share in the MRO sector by 2030. It also aimed for the engineering and design services sector to obtain a 3.5 per cent global market share by 2030.

The blueprint emphasised the need for government procurements to give opportunities to local players by becoming smart buyers.

It also indicated that a change in attitude was necessary to drive investments into research and technology.

The blueprint stressed the need to increase Malaysian-made components in aircraft and participate in international aircraft development programmes, reduce the dependency on designs for military aircraft upgrades and give priority to local design and engineering solutions.

The blueprint also spelled out some of the guidelines that will be implemented to achieve the goals in 2030.

The guidelines include enhancing those institutions with direct influence on the aerospace industry’s growth, provide incentives and matching funding for the targeted aerospace investments, capture new market and strengthen the local supply chain.

 

 

Source : The Jakarta Post | March 23, 2015

Thomas D’Innocenzi

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‘It’s time to free up the yuan’

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The reform aims to meet the International Monetary Fund’s requirements before its evaluation on whether the yuan could be a part of Special Drawing Rights.

This means the yuan would join the US dollar, euro, pounds sterling and Japanese yen as part of the supplementary foreign exchange reserve maintained by the IMF.

“By the end of 2015, the last year of the 12th Five-Year Plan (2011-15), China plans to make the renminbi capital account convertible,” said PBOC Governor Zhou Xiaochuan when he met chief executive officers from the world’s top business groups at the China Development Forum in Beijing on Sunday.

Zhou said: “It is time to change the current policy that restrains Chinese individual residents from buying equity and financial products in overseas markets. Also the Qualified Foreign Institutional Investors plan is not flexible enough to satisfy foreign residents’ investment needs on the mainland.

“A set of pilot policies and regulations will be released this year, to basically achieve the requirements for a currency that can be used more easily.”

Asked whether the speculation that he may retire soon was true, Zhou answered: “I have no further information and view on this question, and we need to wait and see.”

The IMF will make a regular review of the renminbi in the SDR basket later this year. The selection of currencies for that is based on two main criteria: the size of a country’s exports and whether its currency is freely usable.

For personal use, residents in the mainland can at most convert renminbi for $50,000 or other currencies equal to that every year. More regulations come into play when they intend to invest into overseas equity markets.

Zhou said: “The government is working on a draft to modify current foreign exchange regulations.”

IMF Managing Director Christine Lagarde told the meeting: “The IMF welcomes progress and achievement in the Chinese economy and financial market reforms.”

She agreed that the measures outlined by Zhou could lead to the internationalization of the renminbi and liberalization of the capital account.

“The IMF will work constructively with China, and consider accepting the renminbi into the SDR basket if it can fulfill the conditions,” she added.

But she also warned: “Emerging economies should prepare for unexpected cross-border capital flows when the main economies change their monetary policy.

“The central banks need to react quickly when the global policy environment changes suddenly, by increasing market liquidity and strengthening intervention on the foreign exchange rate to curb capital flights.”

Yu Yongding, an academic at the Chinese Academy of Social Sciences, said that more discussion is needed to decide whether joining the SDR is a good or bad thing for the renminbi.

“I would prefer to open the capital account at a slower pace as we need to do more to improve the financial system first,” Yu said.

 

Source : China Daily | March 23, 2015

Thomas D’Innocenzi

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China remains top foreign investment destination

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Foreign investment appetite remains but more certainty from clearer rules and regulations will help businesses invest in opportunities arising from China’s economic transition, said Dennis Nally, chairman of professional services group PriceWaterhouseCoopers International Ltd.

“When there are unclear issues out there, whether it is regulation, taxes or rule of law, businesses and investments will move to where there is more certainty,” Nally said.

“The sooner the government can provide that kind of certainty and clarity to facilitate the transition to the “New Normal”, the sooner businesses will gain the confidence to make those kinds of necessary investments,” he said.

Despite concerns over the slowdown, Nally said there is still significant global interest to invest in China because the attributes that gave rise to foreign direct investment in the last several years, such as an emerging middle class, have not changed.

That sentiment is backed up by a PwC report released earlier this year.

Although China lost its spot as CEOs’ most important overseas growth market to a resurgent US economy, the country remained second.

For PwC, China’s transition, particularly towards more outbound activities, provides a lot of optimism for the firm’s future growth.

“As companies transform themselves, they will look for our help and advice, whether it is in challenges such as international acquisitions or developing their businesses abroad, which are all opportunities for us,” said Nally.

China’s nonfinancial outward direct investment totaled $102.9 billion in 2014, up 14.1 percent from a year earlier.

Nally said that the government’s long track record of managing the economy gives a lot of people confidence that China will continue to grow at a healthy rate, which is crucial to the global economy.

The Chinese economy’s target growth of seven percent for 2015 will contribute to around one percent of total global GDP growth this year, according to PwC estimates.

 

 

Source : China Daily | March 21, 2015

Thomas D’Innocenzi

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China to deepen ties with Germany

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China and Germany will deepen cooperation in the financial sector, senior officials from both countries said during their first high-level financial dialogue on Tuesday in Berlin.

Chinese Vice-premier Ma Kai and German Finance Minister Wolfgang Schaeuble said the two sides agreed to strengthen macroeconomic policy coordination, develop policy dialogue and pursue fiscal and financial cooperation.

Germany has been China’s largest trading partner in Europe since 2002. In 2013, bilateral trade reached $161.6 billion.

The dialogue was arranged during President Xi Jinping’s visit to Germany last year. Its primary task is to implement agreements reached by leaders of the two countries, who signed a wide-ranging document calling for more than 100 cooperation agreements over the next five to 10 years.

Ma said that in the face of a “complex and fragile global economic situation”, the two economies should deepen cooperation, especially in the financial sector.

According to China’s official data, Germany is one of the largest investors in China. As of 2013, China had approved 8,193 German projects with investment of $21.8 billion. By that time, China’s investment in Germany had reached $3.9 billion.

According to a joint statement issued after Tuesday’s dialogue, Germany will support China in hosting the G20 summit in 2016, and it supports China’s goal of adding the yuan to the special drawing rights currency basket of the International Monetary Fund.

At present, the basket is composed of the US dollar, the euro, the British pound and the yen. The basket is reviewed every five years, and the most recent review was in November 2010.

Germany also announced at the dialogue that it intended to join the Asia Infrastructure Investment Bank as a prospective founding member, and China welcomed this intention.

 

 

Source : China Daily | March 19, 2015

Thomas D’Innocenzi

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China calls countries interested in AIIB to join by Mar 31

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China has called on all countries interested in joining the Asian Infrastructure Investment Bank (AIIB) to make their decisions before the deadline on March 31.

“March 31 is the deadline for countries to apply to join the bank as founding members, but the door will always be open for interested countries,” Foreign Ministry spokesman Hong Lei told a daily news briefing on Wednesday.

The China-proposed AIIB, with an expected initial subscribed capital of $50 billion, will be an international financial institution to fund infrastructure projects in Asia. It is expected to be formally established by the end of 2015.

Twenty-one countries including China, India and Singapore signed a Memorandum of Understanding last October in Beijing on creating the bank. China’s Finance Minister Lou Jiwei said on March 6 that 27 countries had applied to join as founding members.

Germany, France and Italy on Tuesday confirmed their respective intentions to join the AIIB, in the wake of Britain’s application last week to be a founding member.

The bank has drawn concern from the United States that the new institution should incorporate the high standards of the World Bank while Japan and the Republic of Korea (ROK) have yet to express interest in joining.

“China, Japan and the ROK will surely exchange views on issues of mutual interest during the three-way foreign ministers’ meeting on March 21, with the possibility of discussing (AIIB) related issue,” Hong said.

He reiterated that the bank would benefit developing Asian countries that lack infrastructure funds and would adopt the best practices of other multilateral development banks.

“China upholds an open and inclusive attitude in the building and operation of the bank. We’re confident that the AIIB will become a sound platform for Asian economic development,” he said.

 

 

 

Source : China Daily | March 19, 2015

Thomas D’Innocenzi

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Southeast Asia attracts more foreign direct investment than China for second year

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Southeast Asia’s major economies drew more foreign direct investment combined than China for the second straight year in 2014, as growth in their giant neighbour cooled.

But by country, inflows into the region were uneven, swayed by political change and the varying costs of doing business.

Overall FDI into Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam rose to a record $128 billion in 2014, estimates compiled by Thomson Reuters show. That surpassed the $119.56 billion that flowed into China. FDI into the Philippines grew the fastest, at 66 percent, while in Thailand, where the military seized power last year, inflows fell. FDI into Indonesia, the region’s biggest economy, rose around 10 percent even though it was an election year.

As China’s troubled manufacturing sector loses momentum, Chinese businesses will be venturing abroad to cut operating costs and to search for new markets, economists say. Manufacturing powerhouses in Southeast Asia should pay heed.

“Rising wages in China are leading low-end manufacturers to look for other low-cost locations for their factories, with countries like Vietnam and the Philippines looking like attractive alternatives,” said Dan Martin, Asia Economist at Capital Economics. “ASEAN is also a large market in its own right, and one with good long-term growth prospects. Given the general slowdown in other emerging market regions in recent years, it is starting to stand out.”

The Philippines, the second-fastest growing major economy in Asia, attracts investors with its strong economic fundamentals. But one concern is the continuity of economic policies following the 2016 general elections. That means some investment decisions might be postponed.

Slumping commodity prices could pinch on FDI inflows into resource-rich Indonesia and, to a lesser extent, Malaysia. Indonesian President Joko Widodo, who took office in October, is seeking more foreign investment in manufacturing to counter the volatile resources sector. But Indonesia has many improvements to make, particularly in its business infrastructure, to successfully challenge the region’s manufacturing leader – Thailand.

 

 

Source : Thanh Nien Daily | March 16, 2015

Thomas D’Innocenzi

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