Trade Payment Rules Eased (Update1)
December 24, 2008
Companies in China previously allowed to collect %10 of prepayments on exports in foreign currency. Starting from today, now State Administration of Foreign Exchange increased prepayments to %25 on exports in foreign currency.Here is the news from Bloomberg by Li Yanping:
Dec. 23 (Bloomberg) — China will loosen regulations on the prepayments companies can receive when exporting goods to help their cashflow as the global financial crisis hits overseas sales, the State Administration of Foreign Exchange said today.
Companies will be allowed to collect 25 percent of prepayments on exports in foreign currency, up from 10 percent, starting from today, the regulator said on its Web site. The rules are being changed to “tackle the negative impact of the global financial crisis and to promote stable and relatively fast economic growth,” the statement said.
Expansion in the world’s fourth-largest economy is slowing as recessions in the U.S. and Europe stem demand for goods from the Asian nation. China’s exports fell for the first time in seven years in November and imports plunged. Two thirds of the country’s smaller toymakers closed in the first nine months on faltering demand, according to customs bureau data.
Importers will be allowed to make delayed foreign-exchange payments on shipments amounting to 25 percent of the value of the goods, up from 10 percent, today’s statement said.
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Will Yuan Depreciate against USD?
December 19, 2008
As the Chinese currency yuan or renminbi appreciated all over 2 years and those buying from China directly felt the rising costs of purchases since the stronger Yuan made the Chinese exports more expensive.
Nearly, for the last 6 months, the currency rate is stabilized at 6.80′s level. However, as the global crisis hit the Chinese economy, there is now the possibility for Yuan’s depreciation. But it is actually very hard because as the rest of the world have deep problems, a China making exports cheaper could or would give way to protectionist reactions against Chinese imports, especially in USA and EU.
Here is Shanghai Daily news about the debate over the depreciation:
ECONOMISTS are divided on the yuan’s movement next year.
Liao Qun, CITIC Ka Wah Bank chief economist, said yesterday he expects the yuan to appreciate 2 percent to 4 percent next year, a “moderate appreciation.” “From a mid and long-term view, the trend of yuan appreciation is irreversible as China continues to integrate with the global economy,” Liao said.
The currency has appreciated 6 percent this year against the United States dollar in the first half with its momentum on hold in the second half after a moderate depreciation in recent weeks.
The People’s Bank of China has said that it will stabilize the local currency and doesn’t rule out depreciation of the yuan.
Liao said he expected the foreign currency to re-emerge as a hot issue when President-elect Barack Obama takes office in January.
“A weaker yuan can help Chinese exporters. However, the question is that when the external demand is shrinking, a relatively cheaper price won’t make big difference,” Liao said. “Only if the yuan depreciated by 20 percent, which is unlikely, can there be a big help for exports. If not, a mild depreciation of the yuan won’t give actual significant help to exporters.”
Lu Zhengwei, Industrial Bank chief economist, had a different view and said depreciation of 10 percent next year would help exports.
“It may be the best timing for the yuan to depreciate since 2002 against the backdrop of the current financial crisis,” said Lu. “Why should China continue to keep its currency up when currencies of other emerging markets are depreciating?”
A depreciated yuan, together with tax rebates, would help exports a lot, he said. “Depreciation is part of a more flexible foreign currency control,” Lu said.
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Yuan set to climb against US dollar this week
December 15, 2008
Chinese currency yuan or renminbi was pegged to USD until 2005. Since then, the currency is allowed to appreciate unfavorably to those importing from China and to factories in China making exports because it makes the Chinese exports expensive as USD lose its previous value. So, for those importing from China is better to closely follow the currency movements as it directly affects the purchasing costs. Here is the latest situation of renminbi as of 14th Dec:
THE yuan is likely to continue its appreciation against the United States dollar this week.
The Chinese currency edged up to finish at 6.8451 against the US dollar last Friday, according to the China Foreign Exchange Trade System. The yuan closed at 6.8482 by the end of the previous week.
Fan Gang, a central bank monetary policy committee member, noted the modest depreciation of the yuan in the previous week was normal amid short-term volatility, according to a report by Shanghai Securities News.
Meanwhile, the US last Friday said retail sales in the nation fell 1.8 percent last month for a fifth consecutive month amid weak consumer sentiment and tight credit in a deepening recession.
Source: Shanghai Daily
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December 14, 2008
Producer price index is properly called as “factory gate index” because it is a gauge for the prices of producers. So those who make trade with China is better to give an eye on the PPI to forecast the behavior of short-term prices of producers. PPI is also reflects the direction of production costs level because the cost is a major of input of prices.Here is the news about the recent data about PPI:
CHINA’S producer inflation will fall markedly in December, increasing the possibility of deflation.
The producer price index (PPI) fell to 2 percent in November, down from 6.6 percent in October, reaching the slowest pace since May 2006, as prices in fuel and commodities declined.
“The PPI drops more sharply than consumer inflation during an economic slowdown and this will mercilessly drag down consumer prices.
Many major world economies have entered into a recession and this had a big impact on China.
“It’s a fairytale to think China will remain immune from what’s happening in the rest of the world.”
Emerging economies face bigger challenges, including faltering external demand and outflow of capital.
Lenders should extend more loans to energy-saving and environmentally friendly sectors and help industries upgrade while improving risk control.
The CBRC targets a lower non-performing loan ratio next year, but it will “scientifically tolerate” any increases in the stockpiles of bad loans.
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Advanced Mobile Phone Parking Solution
December 13, 2008
Basingstoke & Deane Council is launching Parkmobile’s advanced mobile phone parking solution to provide the motorists with an alternative method of paying for their parking charges in their pay & display car parks.
Whilst the traditional ‘pay and display’ parking still applies, motorists who park in the council’s pay & display car parks in Basingstoke could also pay for their parking using their mobile phone from 1st September 2008.
Parkmobile’s cashless parking by mobile phone offers motorists the luxury of parking without searching for coins, or predict how long they are going to park for. It only takes a short call to start and stop parking transactions from the comfort of a car.
The motorists can use their mobile phone to register and use the system instantly on arrival at a parking space. The enforcement is carried out using a GPRS enabled mobile phone to check the validity of the parking. The parking attendant enters the vehicle registration number on the device and reads the status of the parking transaction on the display.
Surveys show that the majority of the people who have used this service were impressed by its convenience and user-friendliness in addition to the system’s financial benefits of not overpay for parking or receiving penalty charge notices because they could not get back to their car quickly enough to top-up a pay and display machine.
Source: http://www.parkmobile.com
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