IFF Newsletter Issue 68

TIME：2023-03-23

From the Editor

More Chinese cities reported rising home prices in February. And China’s fiscal revenues fell 1.2% in the first two months of 2023. To boost economic recovery, China will cut the amount of cash that banks must hold as reserves for the first time this year starting on March 27.

UN’s latest IPCC report urged swift and drastic action to avert irrevocable damage. And the IMF executive board approved a 3 billion bailout plan for Sri Lanka. Global banking sector continues to be under strain after Swiss largest bank agreed to buy troubled rival Credit Suisse and 11 US banks agreed to deposit $30 billion into First Republic.

The IFF continues to bring you the latest China news and global development.

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Latest from the IFF

IFF to organise high-level seminar during IMF Spring Meetings

At the invitation of the International Monetary Fund, the International Finance Forum, together with the Bretton Woods Committee and Paulson Institute, will organise a high-level seminar on global economy on April 10, as part of the 2023 Spring Meetings of the World Bank and the IMF in Washington DC.

Under the theme “Scaling Up Resilience and Sustainability Financing”, the seminar will be moderated by John Lipsky, Vice-Chair of the Bretton Woods Committee. Speakers at the seminar include Deputy Managing Director of the IMF Bo Li and Deborah Lehr, Vice Chairperson of the Paulson Institute.

Managing Director of the IMF Kristalina Georgieva will give opening remarks.

Date: Monday, April 10, 2023

Time: 4:00-5:15pm (EDT)

Venue: IMF HQ2 Conference Hall 2

For inquiries, please contact [email protected]

Scan the code to register:

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China News

China's central bank cut reserve ratio to boost recovery

China is to cut the amount of cash that banks must hold as reserves for the first time this year to boost economic recovery.

The People’s Bank of China (PBOC) announced on Friday that it would cut the reserve requirement ration (RRR) by 0.25% for financial institutions from March 27 to keep liquidity ample.

Meanwhile the PBOC announced on Monday that benchmark lending rates will be unchanged for March.

The weighted average RRR for lenders, except those have implemented 5% ratio, will drop to around 7.6%.

China's new home prices rise in February

More Chinese cities reported rising home prices in February according to official data.

Of the 70 large and medium-sized cities surveyed by the National Bureau of Statistics, 55 reported monthly increases in new home prices, up by 19 from January.

New home prices in China’s four first-tier cities edged up 0.2% in February on a monthly basis while new home prices in second and third-tier cities rose 0.4% and 0.3% respectively from January.

China Jan-Feb fiscal renevue drops

China’s fiscal revenues fell 1.2% in January and February from the same period last year, data from the Ministry of Finance showed on Friday.

Fiscal revenues of the central government fell 4.5% while local government revenues rose 2%.

Tax revenues dropped 3.4% and revenues from land sales fell 29%.

Fiscal expenditure grew 7% to 4.09 trillion yuan in the first two months of the year, official data showed.

China's foreign trade in goods record $25.6 bln surplus

China’s foreign trade in goods recorded a surplus of $25.9 billion in February, on par with the same period last year according to the country’s forex regulator.

China’s service trade deficit dropped slightly to $4.3 billion last month, data from the State Administration of Foreign Exchange showed.

China's February rail passenger trips, cargo volume rise

China’s railway passenger trips jumped 43.3% in the twelve months to February to 272.97 million trips, data from the National Railway Administration showed on Tuesday.

Rail freight volume rose 6.8% in February from a year ago to 396.79 million tonnes.

Nearly 809.9 million tonnes of cargo were transported via the railways during the Jan.-Feb. period, up 2.7 percent from the same period last year.

China's science and technology ministry sign deal with HK to boost cooperation

The Ministry of Science and Technology and the Hong Kong Special Administrative Region signed an agreement to enhance cooperation.

The deal will allow Hong Kong scientists and engineers to participate in more national-level projects and promote the flow of talent, China Daily reported.

Wang Zhigang, minister of science and technology, said Hong Kong plays an irreplaceable role in the nation’s science and technology sector and the new agreement will push the science and technology collaboration between the mainland and Hong Kong to a new stage.

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International News

UN climate report urges immediate action

World’s leading climate scientists delivered a warning on the climate crisis and urged swift and drastic action to avert irrevocable damage.

The Intergovernmental Panel on Climate Change (IPCC) released its final installment of its sixth assessment report, which was finalised during the Panel’s 58th Session in Interlaken, Switzerland last week. The report urged the world to slash carbon pollution by nearly two-thirds to limit the global temperature rises to 1.5C.

“Mainstreaming effective and equitable climate action will not only reduce losses and damages for nature and people, it will also provide wider benefits,” said IPCC Chair Hoesung Lee. “This Synthesis Report underscores the urgency of taking more ambitious action and shows that, if we act now, we can still secure a liveable sustainable future for all.”

US banks inject $30 bln to rescue First Republic

A group of US banks have agreed to deposit $30 billion into First Republic Bank last week after the collapse of two other US lenders.

Eleven US banks including JP Morgan, Goldman Sachs, Morgan Stanley and Bank of America will inject the money.

“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” the group said in a statement.

IMF approves a $3 bln bailout plan for Sri Lanka

The International Monetary Fund’s (IMF) executive board approved a $3 billion bailout plan for Sri Lanka on Monday to help alleviate the country's economic and humanitarian crisis.

The country had received the first tranche of $330 million of the bailout from the IMF on Wednesday, said the country’s President Ranil Wickremesinghe.

This was the 17th IMF bailout for Sri Lanka and the third since its decades-long civil war ended in 2009, according to Reuters.

OECD raises growth outlook, warns fragile recovery

The Organisation for Economic Cooperation and Development (OECD) raised its global growth forecasts on Friday, citing improved business and consumer confidence, declining prices and China’s reopening.

The global economy is to expand 2.6%, up from its November forecast of 2.2%, the OECD said in its interim economic outlook.

In 2024, the world economy will grow 2.9% in 2024, up from its November projection of 2.7%, according the organisation.

Inflation in the Group of 20 major economies would fall to 5.9% this year, down from last year’s 8.1%.

UBS agrees to buy Credit Suisse

Switzerland’s largest bank, UBS, agreed to buy its troubled rival Credit Suisse for 3 billion Swiss francs in stock in a deal brokered by the Swiss government.

The Swiss government is providing a loss guarantee of a maximum of 9 billion Swiss francs for a clearly defined part of the portfolio.

Swiss authorities pushed for the deal after a plan for Credit Suisse to borrow up to 50 billion Swiss francs failed to calm investors and the bank’s customers.

Credit Suisse is among the 30 financial institutions known as globally systemically important banks.

ECB raises interest rates by 0.5%

The European Central Bank raised interest rates across the euro area by 0.5% “to ensure the timely return of inflation to the 2% medium-term target”, said the bank in a statement last Thursday.

The raise brings main interest rate to 3.5% and deposit rate to 3%.

In a statement, the bank said it is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area.