Nov 30

China Business News: People’s Bank Embraces Digital Renminbi

Editorial Staff
Sep 9, 2022
China business

Image: Phuong Uyen Vo Hoang via Unsplash

Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.

This week’s highlights:

  • The People’s Bank of China has committed to building a new digital renminbi (RMB) that meets public needs and supports digital economy development. But China’s payment system encountered problems due to the lack of uniformity in the WeChat Pay and Alipay QR code systems: each one uses its own set of codes, and this has hindered the popularity of the digital RMB. This problem is finally expected to be solved. Earlier this week, Fan Yifei, deputy governor of the People’s Bank, called for interconnection between the digital RMB system and traditional electronic payment tools so that consumers can “sweep one code for all”, in his speech at the Second China Digital Finance Forum 2022. (Caixin)
  • Amid the “depreciation wave” of Asian currencies, the more stable RMB has dropped rapidly against the USD, approaching the “broken 7” mark. The latest figures this week showed that China’s trade surplus in August accounted for US$ 79.39 billion, much less than in July (US $100 billion). Analysts say that with the euro, won, yen and pound so weak, it’s normal for the yuan to depreciate against the dollar, and there’s no need to intervene. “Breaking 7” is also no longer a psychological hurdle. In August 2018, the yuan broke “7” against the dollar and hit its lowest level in 11 years, which was seen as a tacit move by China’s central bank to go along with the trend after giving up on “keeping 7.” (First Financial)
  • China’s export growth slowed more than expected in August as global demand continued to weaken and the Covid-19 epidemic disrupted production, while imports also remained subdued due to weak domestic demand. China’s exports to the US contracted by 3.8% in August, reversing the 11% growth seen in July and reaching their lowest level since April 2020. There are multiple factors behind the significant drop in export growth, but Chinese economists attribute it mainly to the decline in external demand for China’s products. The exchange rate and exports are interdependent. Export growth is expected to continue its downward trend in the future. (United Morning Post)
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