China rules out competitive currency devaluations

An office building is reflected on a new 100 Yuan note on display outside a bank in Beijing, in this Jan. 11, 2016 file photo. (AP)
Updated 07 May 2017

China rules out competitive currency devaluations

BEIJING: China has no intention and no need to carry out competitive currency devaluations, the head of the country’s foreign exchange regulator said.
In a weekend piece in the Chinese magazine Modern Bankers, Pan Gongsheng said the People’s Bank of China’s (PBoC) supplying of liquidity to the market was to prevent excessive fluctuations in the exchange rate and prevent a “herd effect,” to maintain market stability.
“China has no intention of raising competitiveness via currency devaluation. It does not have this wish, and it also does not have this need,” Pan, who runs China’s State Administration of Foreign Exchange (SAFE), wrote.
China was working hard to raise the exchange rate’s flexibility and to maintain its stability, he added.
This was good for the international community and would avoid negative spillover effects from a disorderly exchange rate adjustment or competitive devaluations by other currencies, Pan wrote.
Pan is also a vice governor of the PBoC.
China’s yuan is up just around 0.6 percent so far this year, having lost nearly 7 percent in 2016. In November, the yuan hit an eight-year low following Donald Trump’s shock election as US president.
In a Reuters poll last week, the yuan was forecast to weaken to 7.07 per dollar in a year.
Despite harsh rhetoric about China on the campaign trail, Trump has recently had warm words for his Chinese counterpart Xi Jinping, praising him for trying to rein in nuclear-armed North Korea.
Trump has also backtracked on his pledges as a candidate to label China a “currency manipulator” and impose steep tariffs on Chinese imports.
Speaking at a forum on Sunday organized by Hong Kong-based Phoenix Television, Chinese Vice Finance Minister Zhu Guangyao said that trade disputes between China and the US should be resolved via “cooperative methods.”
China and the US need to strengthen fiscal and monetary policy coordination, he added, according to a report on the broadcaster’s website.
China will also pay close attention to Trump’s tax cut plan, Zhu said, without elaborating.
Last month, Trump unveiled a one-page plan proposing deep US tax cuts that would make the federal deficit balloon if enacted.

China flags up UAE as Silk Road mega-hub with $300m port deal

Updated 1 min 19 sec ago

China flags up UAE as Silk Road mega-hub with $300m port deal

  • Cosco has invested an initial $300 million in the CSP Abu Dhabi Terminal
  • The expansion plan foresees a capacity of 9.1 million TEU by 2023

ABU DHABI: China, the world largest trading nation, has thrown its weight behind Abu Dhabi as the Middle East hub for its Belt and Road Initiative (BRI) in an alliance with the UAE capital’s Khalifa Port.

Cosco, the Shanghai-based, state-owned group that ranks among the biggest shipping companies in the world, has invested an initial $300 million in the CSP Abu Dhabi Terminal, the first step in an investment program that could help make it one of the biggest ports in the Arabian Gulf over the next five years. Additional investment is pledged.

The expansion plan foresees a capacity of 9.1 million TEU (20-foot equivalent units, the standard measurement in the global container industry) by 2023. Jebel Ali, just 50 km away in Dubai, is currently by far the biggest port in the region with capacity of 22.1 million TEU.

China’s BRI is a state-sponsored strategy to enhance land and sea trading infrastructure in Asia, the Middle East and Africa via multibillion-dollar investments in trading hubs across the eastern hemisphere.

The Cosco-Abu Dhabi deal was unveiled at a ceremony at the port attended by prominent UAE and Chinese leaders.

Sheikh Hamed bin Zayed Al-Nahyan, chief of the Abu Dhabi Crown Prince Court, said: “China and the UAE share a strong and long-standing bond across a variety of ties, including economic, cultural, and trade and investment, and a common vision of a stable and prosperous future for our peoples and the world.”

He Jianzhong, China’s deputy minister of transport, said: “(The) terminal is the latest major achievement from China and the UAE’s joint efforts to implement ‘the 21st-century Maritime Silk Road’ in the ports and shipping industry.”

The deepwater, semi-automated container terminal includes the largest container freight station in the Middle East, covering 275,000 square meters.

“The state-of-the-art facility offers facilities for full and partial bonded container shipments, the full range of container packing services, short-term warehousing for deconsolidated cargo, as well as easy connectivity with container terminals in Khalifa Port,” a joint statement said.

The terminal has a design capacity of 2.5 million TEU and will begin with a handling capacity of 1.5 million TEU, with 1,200 meters of quayside. The water depth of the terminal is 16.5 meters, allowing it to accommodate mega-vessels typically carrying in excess of 20,000 TEU.

Ning Jizhe, deputy director of China’s National Development and Reform Commission, a state planning organization, said: “This inauguration ceremony is not only a milestone in the cooperation of China’s ‘Belt and Road Initiative,’ but also a good start for China and the UAE’s pragmatic cooperation in other key areas.”

Trade ties have been growing between China and the UAE since a visit by Abu Dhabi Crown Prince Mohammed Bin Zayed Al-Nahyan to Beijing three years ago. Chinese President Xi Jinping visited the UAE last summer.

The deal with Cosco is aimed at attracting foreign investment into the UAE via the Khalifa Industrial Zone of Abu Dhabi (KIZAD), the huge logistics and manufacturing zone that borders the port.

China’s BRI is one of the most ambitious infrastructure projects in history, but has been criticized by some observers for leaving the partners of Chinese companies in debt.