RMB Internationalization: Onshore/Offshore Links

By Samar Maziad, Joong Shik Kang on May 1, 2012

Among emerging market currencies, the RMB holds the most potential to become widely used internationally, due to China‘s large economic size, diversified trade structure and network, macroeconomic stability, and high growth rates - both current and expected. Yet, foreign access to RMB-denominated assets that could act as global stores of value remains limited due to extensive restrictions on capitals flows. At the same time, the rapid expansion of RMB trade settlement and issuance of RMB-denominated bonds by the Chinese government and corporates in Hong Kong, SAR have created some feedback channels across onshore (CNY) and offshore (CNH) RMB markets. We employed a bivariate GARCH model to understand the inter-linkages between onshore and offshore markets and found that, while developments in the onshore spot market exert an influence on the offshore spot market, offshore forward rates have a predictive impact on onshore forward rates. We also find evidence of volatility spillovers between two markets. Overtime, those spillover channels would be expected to grow as the offshore market further develops.

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Luo Xiaoyuan
Topics: 
Economy
Keywords: 
Renminbi
Exchange Rates
Renminbi Internationalization
Organization: 
International Monetary Fund (IMF)

China’s Impact on World Commodity Markets

By Shaun K. Roache on May 1, 2012

Shocks to aggregate activity in China have a significant and persistent short-run impact on the price of oil and some base metals. In contrast, shocks to apparent commodity-specific consumption (in part reflecting inventory demand) have no effect on commodity prices. China’s impact on world commodity markets is rising but, perhaps surprisingly, remains smaller than that of the United States. This is mainly due to the dynamics of real activity growth shocks in the U.S, which tend to be more persistent and have larger effects on the rest of the world.

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Luo Xiaoyuan
Topics: 
Business
Economy
Keywords: 
Business
Supply and Demand
Organization: 
International Monetary Fund (IMF)

China's Biggest Banks Are Squeezed for Capital

By NEIL GOUGH on April 30, 2012

State-backed banks are also starved for capital, after an aggressive lending spree that was encouraged by the government. In the last year, seven of the biggest Chinese banks tapped the markets for 323.8 billion renminbi ($51.4 billion) in new money, according to Citigroup estimates. Several financial firms are expected to raise another $17.7 billion in the next few months, with China’s fifth-biggest lender, the Bank of Communications, accounting for $9 billion.

In China relatives of Party officials build lucrative businesses on family contacts

By Andrew Higgins on April 30, 2012

When Chinese authorities launched an investigation in 2006 into potential foreign currency violations by Beijing Henderson Properties, the real estate developer called in some curious outside help. It turned to a Chinese investment company with no evident expertise in currency regulations and to a murky Hong Kong foundation with no dis­cern­ible offices and no listed telephone number.

Avatar 2: Made in China?

By G.E. | BEIJING on April 30, 2012

James Cameron’s film “Titanic” shattered box-office records in China, as it did nearly everywhere else in the world. Its impact was especially shocking in a market that was captive to a conservative, state-dominated film industry, with no ability to produce a blockbuster of its own. Mr Cameron’s ballyhooed “Avatar” broke China’s records again in 2009 and 2010, despite more than a decade of development. Now the film bureaucrats in Beijing have a chance to accomplish something that would have been unthinkable until very recently: co-producing Mr Cameron’s “Avatar” sequels.

Bo Xilai's Downfall Tied to Wiretapping

By JONATHAN ANSFIELD and IAN JOHNSON on April 30, 2012

When Hu Jintao, China’s top leader, picked up the telephone last August to talk to a senior anticorruption official visiting Chongqing, special devices detected that he was being wiretapped — by local officials in that southwestern metropolis. The discovery of that and other wiretapping led to an official investigation that helped topple Chongqing’s charismatic leader, Bo Xilai, in a political cataclysm that has yet to reach a conclusion.

In China, Blame for USC Victims

By Mei Fong on April 30, 2012

The malevolence this tragedy generated grows out of deep divisions within China. The chasm between haves and have-nots is growing ever wider, and with it has come resentment that extends to the approximately 160,000 students a year — enough to populate three schools the size of UCLA — who elect to study in the United States.

Beijing Dilemma: Is Chen Guangcheng the Next Fang Lizhi?

By Perry Link on April 30, 2012

The Chinese lawyer Chen Guangcheng, blind since childhood, self-taught in the law, defender of women’s rights to resist forced abortion, thorn in the side of local despots in his home district of Linyi in Shandong province, veteran of a four-year prison sentence on the spurious charge of “organizing a mob to disturb traffic,” and since then victim—along with his wife and daughter—of extra-legal house arrest and occasional beatings, has escaped confinement.

China’s Top Future Leaders to Watch

Biographical Sketches of Possible Members of the Post-2012 Politburo (Part 1)

By Cheng Li on April 30, 2012

The composition of the new Politburo that will take power in late 2012, including generational attributes and individual idiosyncratic characteristics, group dynamics, and the factional balance of power, will have profound implications for China’s economic priorities, social stability, political trajectory, and foreign relations. To a great extent, these leaders’ political position and policy preferences are often shaped or constrained by their personal experience, leadership expertise, factional affiliation, and bureaucratic portfolio. It would be helpful for China-watchers overseas to grasp the biographical features of the top Chinese leaders who will likely govern the country for most of this decade and beyond. This series from China Leadership Monitor provides short biographies for the twenty-five to thirty possible members of the new Politburo.

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He Jianan
Topics: 
Politics
Keywords: 
18th Party Congress
Leadership Transition
Politburo
Chinese Communist Party
Organization: 
China Leadership Monitor