OTHER MARKETS IN CHINA
1. Interbank (interbank money market turnover exceeded US$1Bn in 2001 with trading dominated by trading in 7-day paper)
2. Repo market - Two trading instruments - 1-Govt. T-Bonds and 2-Policy Financial bonds
3. Bills market - 1-Commercial Paper (Commercial paper market is down due to need for PBOC approval before issuance and high issuance cost.) 2- Bankers Acceptances the re-discount rate of these have become the 2nd main choice for the PBOC to implement its monetary policy
4. Negotiable Certificates of Deposit (all but disappeared by end of 1990s)
In Interbank market, after reform changes allowed insurance cos., securities firms and fund mgmt. entities in market, # of traders went from 55 to 683.
Since 1995, China has allowed the establishment of foreign holding companies through which foreign companies can own an interest in a number of foreign invested enterprises. Finance companies (who must maintain PBOC specified financial ratios and are subject to Central Bank supervision) may provide deposit and lending services in RMB and foreign exchange to group companies.
Foreign exchange market (FOREX)
|
Stat |
U.S. Dollar | HK Dollar | Japanese Yen | Euro |
| Year Low | 8.2675 | 1.0603 | 6.1331 | 7.1244 |
| Year High | 8.2775 | 1.0612 | 7.1410 | 8.6787 |
| Weighted Avg. | 8.2770 (4bps over 2001) | 1.0609 | 6.9719 ( 2001- 6.3012) | 8.5100 |
| Remarks | What Stability | More Stability | Fairly wide trading and appreciated 670 bps over 2001) | Debuted
- 4/1/02
Limited trading, #s can't mean much yet |
2002 GDP Growth Rates - 1Q - 7.6%, 2Q - 8.0%, 3Q - 8.1%, 4Q - ~8.0%
Total Exports and Imports - US$620.8Bn (21.8% over 2001)
Trade Surplus - $30.4Bn (48.5% over 2001)
China's FOREX Reserve - US$286.4Bn
Foreign Investment in China - Contracted FDI $82.8Bn (+19.5% over 2001)
Utilized FDI $52.8Bn (+12.5% over 2001)
As U.S. dollar depreciated sharply versus other currencies in 2002, China's ability to maintain rate helped China's exports.
Renminbi is receiving appreciation pressure, but exchange rate stability was maintained by strict capital regulation and the Central Bank's intervention in the Forex Market.
BOND MARKET
With outstanding debt at 20% of loans, and debt issuance levels at 10% of equities, the debt market hardly appears on the radar screen of capital market reformers and regulators.
Obscure
regulations, poor corporate governance and an imperfect credit system given a
lack of corporate credit continue to hamper growth in the corporate bond
market.
2002
Despite the above, Bonds issued on the bond market hit a record high of US$115Bn in 2002
| Issuer | Ministry of Finance | China Development Bank | China Import-Export Bank | Corporations |
| Issued | 16 book-entry Treasury Bonds, 4 visible Treasury Certificates | 20 Financial Bond issues | 7 Financial Bond issues | Various (including China Int'l Trust & Inv. Corp. |
| Total | $US 73.3 Bn | $US 30.2 Bn | $US 7 Bn | $US 4.5 Bn |
About 33% of China's outstanding domestic debt are from China's policy banks (which issue Financial bonds or F-Bonds and are generally considered quasi-govt. paper) who are:
China Development Bank (use capital to support infrastructure projects, develop strategic industries, and help local economic structures), which accounts for 95% of this category's activity and
Export-Import Bank of China
China's domestic bond market is segregated into three distinct markets; 1- Public (Stock Exchange); 2- Professional (Interbank) and the OTC Market (which is now inactive)