Oct 03

China Watch Blog has learnt that the People’s Bank of China (PBOC), China’s central bank, recently released new rules to enhance supervision of operations of overseas institutions’ RMB settlement accounts in China, chinanews.com.cn reported Thursday.

According to the regulations that the PBOC released on Wednesday, overseas institutions’ application to set up RMB settlement accounts should be approved by branches of the central bank, and those who meet the requirements will get permission certificates issued by the PBOC.

The new rules ask banks to manage overseas institutions’ accounts of local currency and foreign currencies separately. The accounts of domestic institutions and overseas institutions should also be separately managed, the document says, as a way to supervise the money flows of overseas institutions’ accounts and curb money laundering.

The new rules will be implemented on Oct 1.

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Oct 03

China Watch Blog has learnt that Zhou Xiaonan is increasingly stressed, counting the shrinking profits of his company’s exports as the Chinese currency, the Renminbi (RMB) of yuan, rises.

“The profit loss was 5 US cents per garment at first, then it widened to 10 cents,” said Zhou, deputy general manager of Huamei Thread Company Limited, a Sino-US joint venture based in Ningbo city, East China’s Zhejiang province.

“This is the toughest year for me since I began in the export business a long time ago, even tougher than last year when the world economy was at its bottom during the global financial crisis,” Zhou said.

After racking his brains to deal with rising labor and raw materials costs, Zhou has a new challenge — the rising yuan.

The Chinese currency has strengthened by about 2 percent against the US dollar since the People’s Bank of China (PBOC)’s pledge on June 19 to increase exchange rate flexibility.

Zhou said prior to the yuan’s appreciation, his company had raised its export prices several times this year to pay for the rising costs, with some products’ prices set 20 percent higher than a year ago.

“It is very difficult for us to take new orders because our foreign buyers are unlikely to accept more price hikes because of the exchange rate,” he said.

Like other Chinese exporters, Zhou fears the yuan’s appreciation will incur losses in foreign exchange settlements with foreign buyers.

A Xinhua survey in the provinces of Guangdong, Zhejiang, Jiangsu and Shandong, China’s leading exporting areas, in September found that a sharp increase in the yuan’s value could send many Chinese exporters to the wall.

Liang Yaowen, director of the Foreign Trade and Economic Cooperation Department of the Guangdong Provincial government, told Xinhua China’s exporters were still far from recovering from the global economic downturn.

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Oct 03

China Watch Blog has learnt that the trade between China and African countries will rebound from a year ago and exceed US$100 billion again this year.

Xinhua reported a forecast by the Ministry of Commerce (MOC) as saying that its data showed trade between China and Africa jumped sharply by 65% year on year to US$61.2 billion in the first half of this year.

Due to the global economic downturn last year, China-Africa trade fell 14.7% from the previous year to US$91.06 billion in 2009, compared with US$106.8 billion in 2008.

The Chinese government supports reputable Chinese enterprises to invest in Africa on the principle of equality, mutual benefit and common development, the MOC said, adding that over 1,600 Chinese enterprises are now investing in Africa in the fields of agriculture, mining, processing and manufacturing, infrastructure facilities and commerce.

The MOC announced in July this year that China would cease levying tariffs on 60% of imports from 26 least developed African nations as of July 1 this year.

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