Economy

China Issues Rules to Control Local Debt Risks

Chinas State Council in early October released rules to strengthen the supervision and management of local government debt， the first such directive ever introduced by the Chinese cabinet.

According to the State Council document， local governments will be conferred the right of debt financing within a quota. A standard debt financing mechanism for local governments will also soon be established， covering local debt scale control， budget management， and a strict procedure for debt financing to confine the use of funds， and control and dissolve local government debt risks. The document also requires an efficient supporting system and proper handling of stock debts and followup financing of projects in progress. In light of the document， the liabilities of the government and stateowned enterprises should be specified and separated； the government is not allowed to borrow via stateowned enterprises， and nor should enterprise debts be transferred to the government. For joint operations by local governments and private capital， related parties will bear respective responsibilities as per the laws and agreements between them.

China Starts Direct RMB-Euro Trade

Since September 30， direct trading between the RMB and the euro has been allowed in China， making the euro the sixth foreign currency – after the U.S. dollar， the Japanese yen， the Australian dollar， the New Zealand dollar and the British pound – entitled to be traded directly with the RMB.

Before that， the conversion between the RMB and the euro could only be made through the U.S. dollar as an intermediary， entailing a complicated procedure and high conversion costs. Therefore， insiders hail the move as great progress that will reduce exchange costs and contribute to internationalization of the Chinese currency.

In the past， the central parity rate of the RMB against the euro was based on the central parity rate of the RMB against the U.S. dollar and the exchange rate of the U.S. dollar against the euro. After direct trading the central parity rate of the RMB against the euro would be based on market makers offers in direct trading.

The Peoples Bank of China， Chinas central bank， pointed

Water Rights Trade to Be Promoted Nationwide

Vice Minister of Water Resources Li Guoying revealed in a press conference recently that China would implement across the country water rights trade and a mechanism for the government to repurchase water rights in a bid to help farmers benefit more from water saving drives.

According to Li， quotas for water consumption in agricultural sector will be distributed to different-level authorities and then to individual farmers， with the total quantity under control. After adopting efficient irrigation modes， farmers can transfer their unused water right quotas to others on a trading platform through which they can negotiate prices. Meanwhile， the government will establish a mechanism to repurchase at a slightly higher price water right quotas that farmers have not used or failed to sell， thereby incentivizing them to consciously adopt more efficient water-saving irrigation modes.

Li noted that the mechanism for the local government to repurchase water right quotas had already been in operation in some places， showing good results. Hence， the Ministry of Water Resources is planning to introduce it nationwide.

Card Transactions Exceed RMB 430 Billion in Golden Week

Data from China UnionPay indicates that in the first six days of the countrys weeklong National Day holiday， October 1 to 7， consumption via China Unionpay bank cards reached RMB 430.582 billion， a year-on-year increase of 23.5 percent， with Guangdong， Zhejiang， Jiangsu， Henan and Shenzhen seeing the most card transactions.

Supermarket sales dominated shopping expenditure with a year-on-year increase of 40.11 percent. Whats noteworthy is that petrol consumption rose markedly by 23.9 percent over the same period last year. Outbound travel to increasingly diverse destinations – Southeast Asia remaining a hot spot –chalked up a large part of the sales. South Korea， Germany and UAE saw the biggest increases of Chinese consumption， 111 percent， 102 percent and 88 percent respectively.

“During this years golden week， spending on shopping outside China dropped as consumption was diverted to recreational activities， dining， and accommodation，” observed Ma Ming， vice general manager of the information center of China UnionPay. According to its data， the yearly growth in Chinese overseas consumption in dining and accommodation and leisure are 52.2 percent and 56.6 percent respectively， compared with 30.4 percent for shopping.