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China’s Market News: President Xi Addresses on Reforms

China’s Market News: President Xi Addresses on Reforms

Renee Mu, Currency Analyst

This daily digest focuses on market sentiment, new developments in China’s foreign exchange policy, changes in financial market regulations and Chinese-language economic coverage in order to keep DailyFX readers up-to-date on news typically covered only in Chinese-language sources.

- Chinese President said regulators will firmly push forward supply-side reforms despite of short-term pains.

- SAFE said that China’s capital-outflow pressure was eased in April based on the improved data.

- PBOC injected 290 billion yuan into the market on May 16 through Medium-term Lending Facilities.

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SAFE News: China’s foreign exchange regulator.

- The spokesman of SAFE said that the capital-outflow pressure was further eased in April. The deficit in the foreign exchange settlements and sales by banks narrowed 35% in April to -$23.7 billion on a monthly basis. The deficit in the foreign exchange receipts and payments via non-bank sectors narrowed 66% to -$8.9 billion. A deficit in the above two gauges means that individuals and enterprises exchanged more foreign currencies with the Chinese Yuan than the other way around. Also, the spokesman said that China’s foreign reserves increased for two consecutive months: the reserves increased $10.3 billion in March and $7.1 billion in April.

Sina News: China’s most important online media source, similar to CNN in the US. They also own a Chinese version of Twitter, called Weibo, with around 200 million active usersmonthly.

- China’s President Xi Jinping said on May 16th that “regulators will firmly push forward supply-side reforms. Obstacles, risks or short-term pains will not stop the reforms”. President Xi spoke at the meeting of the Central Leading Group for Financial and Economic Affairs. The Leading Group is considered to be the highest body to coordinate and discuss financial and economic affairs. Members include top officials such as PBOC’s Governor, the Minister of Finance and NDRC’s Chairman.

- China’s Central Bank injected 290 billion yuan on May 16 through Medium-term Lending Facilities (MLFs) with 21 financial institutions. 175 billion yuan of MLFs will mature in 3 months with an interest rate of 2.75%. The rest will mature in 6 months with an interest rate of 2.85%.

China Finance Information: a finance online media administrated by Xinhua Agency.

- In April, Qualified Foreign Institutional Investors (QFIIs) have opened 14 accounts to trade Chinese A-shares. The total number of QFII accounts was 1020. As of April 28, QFII quota approved by the State Administration of Foreign Exchange was $81.0 billion. The QFII indicator measures foreign investors’ confidence in Chinese financial markets. In the first quarter of 2016, QFIIs have become top - 10 shareholders of 220 listed Chinese firms.

- Yinli Solar Co. Ltd, a Chinese green energy company, defaulted on 1.4 billion yuan of medium-term notes on May 12th. Yurun Group Ltd, the largest meat supplier in China, defaulted on 1 billion yuan of bonds on May 13th. Chinese media warned earlier that private-sector bonds were in high risks in May. Over 410 billion yuan of non-government bonds will mature this month while many bond issuers are already facing solvency issues. Thus, more defaults could be seen over the following periods.

Written by Renee Mu, DailyFX Research Team

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.