China's central bank urges lending for ‘real economy’ key to boost growth

China should encourage its banks to support smaller, private firms in the real economy, a central bank official was quoted as saying. (AFP)
Updated 16 February 2019
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China's central bank urges lending for ‘real economy’ key to boost growth

  • ‘The central bank doesn’t wish to use administrative methods to require banks (to lend)’
  • Quantitative easing is neither necessary nor possible at the moment

SHANGHAI: China should encourage its banks to support smaller, private firms in the real economy, rather than forced lending or policies such as quantitative easing, a state newspaper quoted a central bank official as saying on Saturday.
“The central bank doesn’t wish to use administrative methods to require banks (to lend),” Sun Guofeng, head of the monetary policy department at the People’s Bank of China (PBOC), told the Financial News, a bank publication.
“It wants to establish positive encouragement mechanisms though monetary policy tools to encourage banks to actively increase their support for the real economy, especially toward smaller and privately-owned firms,” Sun said.
The comments come a month after Sun wrote a commentary in which he argued that problems with timely capital replenishment, bank liquidity gaps and poor rate “transmission” are three major constraints on banks’ supply of credit.
In the interview with the Financial News, Sun said monetary policy transmission had “noticeably improved,” showing that steps to enhance transmission mechanisms had been effective.
He said the central bank would increase the strength of innovation in monetary policy tools.
Perpetual bond issuance “is only one breakthrough” in reducing capital constraints on banks, Sun said, adding that “other methods” could be used in the future.
He said that quantitative easing was neither necessary nor possible at the moment, noting that under China’s financial system the significance of the central bank buying Chinese treasury bonds on the secondary market is limited, and that the PBOC is barred from buying the instruments on the primary market.
China’s banks made the most new loans on record in January following a series of moves to boost lending as authorities try to prevent a sharp slowdown in the world’s second-largest economy. (Reporting by Andrew Galbraith; editing by Darren Schuettler)


EU fines Nike $14 million for blocking cross-border sales of football merchandise

Updated 25 March 2019
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EU fines Nike $14 million for blocking cross-border sales of football merchandise

  • The European Commission said Nike’s illegal practices occurred between 2004 to 2017
  • Sales restrictions relate to licensed merchandise for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation

BRUSSELS: US sportswear maker Nike was hit with a $14.14 million (€12.5 million) fine on Monday for blocking cross-border sales of football merchandise of some of Europe’s best-known clubs, the latest EU sanction against such restrictions.
The European Commission said Nike’s illegal practices occurred between 2004 to 2017 and related to licensed merchandise for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation.
The European Union case focused on Nike’s role as a licensor for making and distributing licensed merchandise featuring a football club’s brands and not its own trademarks.
The sanction came after a two-year investigation triggered by a sector inquiry into e-commerce in the 28-country bloc. The EU wants to boost online trade and economic growth.
European Competition Commissioner Margrethe Vestager said Nike’s actions deprived football fans in other countries of the opportunity to buy their clubs’ merchandise such as mugs, bags, bed sheets, stationery and toys.
“Nike prevented many of its licensees from selling these branded products in a different country leading to less choice and higher prices for consumers,” she said in a statement.
Nike’s practices included clauses in contracts prohibiting out-of-territory sales by licensees and threats to end agreements if licensees ignored the clauses. Its fine was cut by 40 percent after it cooperated with the EU enforcer.