IFF Newsletter Issue 63

TIME：2023-02-16

From the Editor

China tightens rules on banks’ asset risk classification on Saturday and data from China’s central bank showed the country’s new bank loans hit record in January. China’s CPI rose 2.1% in January while PPI fell 0.8%. The Beijing municipal government will support leading tech companies in building large artificial intelligence (AI) models that match ChatGPT.

Inflation in the US and UK eased in January. Japan named academic economist Kazuo Ueda as the next governor of its central bank. The European Commission said the EU is to narrowly avoid recession this year. And World Bank President David Malpass is to step down by the end of June.

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

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Upcoming IFF Events

The 6th IFF Greater Bay Area Seminar

Theme：Finance and Insurance Serve the High Quality Economic Development of the GBA

Keynote Speaker: ZHOU Yanli, IFF Vice-president and former vice Chairman of the former CIRC

Time: February 24, 2023

To register: https://www.bagevent.com/event/8405985

China’s January CPI up 2.1%, factory prices continue to fall

Theme: One-on-One Global Dialogue on Global Economic Outlook: Challenges and Policy Priorities with IMF

Keynote Speaker: Krishna Srinivasan, Director, Asia and Pacific Department, the IMF

Moderator: Lin Jianhai, Vice President and Chairman of Global Center of the IFF

To register: https://www.bagevent.com/event/8406380

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China News

China’s January CPI up 2.1%, factory prices continue to fall

China’s consumer price index (CPI) in January rose 2.1% year on year in January while factory gate prices extended decline in January, official data from the National Bureau of Statistics (NBS) showed on on Friday.

The producer price index (PPI) fell 0.8% in the twelve months to January, down from December’s drop of 0.7%.

CPI grew 0.8% in January from December, led by prices increases in food, airfares, movie tickets and travel, according to the NBS.

China tightens rules on banks’ asset risk classifications

China tightened risk management requirements on commercial banks on Saturday, asking banks to classify assets beyond the currently required loans.

Starting from July 1, commercial banks are required to classify all financial assets including loans, bonds and off-balance-sheet assets into five categories ranging from normal to loss according to measures published by the People’s Bank of China and the China Banking and Insurance Regulatory Commission (CBIRC).

The rules are to help commercial banks accurately assess their asset risks and truthfully reflect the quality of their financial assets, said the CBIRC.

The new rules were issued as the existing classification rules have turned inadequate and commercial banks’ assets went through quite a lot of structural changes and risk classification faced many a new situation and problem.

The new rules were issued to reflect best practices in and outside of China and under the guidance of problem assets published by the Basel Committee on Banking Supervision in 2017.

China’s new bank loans hit record in January

China added a record 4.9 trillion yuan new bank loans in January, data released by the country’s central bank showed on Friday.

Outstanding yuan loans grew 11.3% from a year earlier to 219.75 trillion yuan.

Broad M2 money supply in January increased 12.6% year on year.

Outstanding total social financing grew 9.4% to 350.93 trillion yuan while corporate and government bond issuance dropped from a year earlier.

China's 2022 gas consumption fell for the first time in decades

China’s gas consumption dropped 1.7% in 2022, the first fall in two decades, Chinese media Caijing reported citing data from the National Development and Reform Commission (NDRC).

Earlier in January, the International Energy Agency (IEA) said that China’s oil and gas consumption fell for the first time in two decades.

According to the agency, China’s oil demand dropped 3% or 390,000 barrels a day, the first drop since 1990 whereas the country’s demand for natural gas fell 0.7% last year.

Compared to the drop in gas consumption, coal production rose 9% from a year earlier to 4.5 billion tonnes, according to data from the NDRC.

China's 2022 steel profits drop 72%

Profits of China’s steelmakers fell 72% in 2022 from a year earlier, data from the China Iron and Steel Association showed on Tuesday.

Revenues of the steel companies dropped 6.35% in 2022.

The China Steel Price Index averaged 122.78 in 2022, down 13.55% from 2021.

Beijing to support building ChatGPT-like AI models

The Beijing municipal government will support leading tech companies in building large artificial intelligence (AI) models that match ChatGPT.

In a white paper on the city’s AI development published on Monday, the city government said it will support key firms for developing “an open-source framework and accelerate the supply of data.

Beijing hosts 1,048 or 29% of the country’s total AI companies as of October last year.

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International News

US inflation eases in January

US inflation eased in January data released by the Bureau of Labour Statistics showed on Tuesday.

The Consumer Price Index (CPI) increased 6.4% in the 12 months to January, down from December’s annual rate of 6.5%.

Prices rose 0.5% on a monthly basis.

Core inflation, which excludes volatile food and energy prices, grew 5.6% over the last 12 months.

The prices for shelter accounted for nearly half of the price increase.

UK inflation drops to 10.1% in January

Britain’s inflation eased to 10.1% in January, down from December’s 10.5%, official data showed on Wednesday.

January’s CPI dip was the third straight fall in a row. The drop was led by a continued drop in petrol and diesel prices as well as fall in restaurants and hotels.

Core CPI, which excludes energy, food, alcohol and tobacco, fell to 5.8% from December’s 6.3%.

EU to avoid recession, European Commission

The European Commission lifted its growth forecast for the EU and the euro area to 0.8% and 0.9% in 2023, according to its Winter interim Forecast published on Monday.

The EU will narrowly avoid recession according to the forecast.

EU economies continue to face strong headwinds including high energy costs and rising inflation.

Inflation in the euro area is projected to fall to 8.5% in January, driven down by by falling energy inflation.

The European Commission publishes two comprehensive forecasts (spring and autumn) and two interim forecasts (winter and summer) each year.

EU discusses new Russian sanctions

Officials from European Union met in Burssels on Wednesday to discuss new sanctions against Russia, which could cost 11 billion euros in lost trade, Reuters reported.

The EU is expected to have new sanctions against Russia to mark the one-year anniversary of the Russia-Ukraine conflict.

World Bank chief Maplass to step down

World Bank President David Malpass said on Wednesday he will step down by the end of June.

His five tenure was due to end in April 2024.

“This is an opportunity for a smooth leadership transition as the Bank Group works to meet increasing global challenges, facilitate private investment, sharpen its focus on global public goods, and maintain strong momentum on operational delivery and portfolio performance for client countries,” said Maplass in press release by the World Bank.

Maplass gave no specific reason for his early departure but has faced calls for his resignation last autumn when he refused to answer whether he believed in the scientific consensus around climate change.

Japan names Ueda as next central bank governor

Japan’s government on Tuesday named Kazuo Ueda, 71, an academic economist as the next governor of its central bank, Nikkei reported.

Ueda, a member of the Bank of Japan(BOJ)’s policy board, will succeed incumbent governor Haruhiko Kuroda on April 8.

The government also named two deputy governors in a document presented to parliament.