Chinese central bank to pump $173bn to economy in virus boost

The bank said they would launch the reverse repurchase operation on Monday to maintain reasonable and abundant liquidity. (File/AFP)
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Updated 02 February 2020

Chinese central bank to pump $173bn to economy in virus boost

  • Overall liquidity of the banking system would be $129 billion more than in the same period last year
  • The move will kick in on the day that China’s financial markets reopen, following an extended Spring Festival break

BEIJING: China’s central bank said Sunday it would pump $173 bn into the economy as it ramps up support for a nationwide fight against a deadly virus that is expected to hit growth.

The People’s Bank of China (PBOC) said in a statement it would launch a $173 bn reverse repurchase operation on Monday to maintain “reasonable and abundant liquidity” in the banking system, as well as a stable currency market, during the epidemic.

It added that the overall liquidity of the banking system would be $129 billion more than in the same period last year.

The move will kick in on the day that China’s financial markets reopen, following an extended Spring Festival break.

The SARS-like virus which originated from the central Chinese city of Wuhan, has now infected over 14,000 people in the country and claimed more than 300 lives.

The PBOC also announced measures Saturday to step up monetary and credit support for enterprises which are helping in its fight against the virus, such as medical companies.

China’s central bank urged financial institutions to provide “sufficient credit resources” to hospitals and medical research units, among other measures.

Authorities also relaxed tariffs on goods imported for use in the virus fight — including those from the United States, with which it has been engaged in a bruising trade war for around two years.

The move to inject liquidity into its financial system comes as authorities work to shore up confidence in an already slowing economy.

The China Securities Regulatory Commission said Sunday that “the epidemic’s impact on the market is short-term, and will not affect the longer-term trend,” reported the state-run People’s Daily.

But China’s travel and tourism sectors have already taken a hit over an unusually quiet Spring Festival break this year, with large-scale events canceled, public attractions closed and people urged to stay home to help contain the outbreak.

China has advised its citizens to postpone trips abroad and canceled both overseas and domestic group tours.

Cinemas were made to close during what would otherwise have been a prime time for blockbuster releases.

Other countries have told their nationals to avoid travel to the country as well, with various airlines trimming their schedules.

Manufacturing has also been halted Taiwanese tech giant Foxconn is keeping its factories in China closed until mid-February, allowing more local employees to delay their return after the new year break.

Toyota, IKEA, Starbucks, Tesla, McDonald’s and Volkswagen are among corporate giants temporarily halting production or shuttering outlets in China.

Tech giant Tencent was among companies telling staff to work at home until February 10.

China saw economic growth of 6.1 percent last year, the slowest in around three decades.

Analysts warn that this could weaken further if the spread of the mysterious pathogen goes on for an extended period.

Analysts at S&P said consumption contributed about 3.5 percentage points of China’s growth rate in 2019.

Even a 10 percent drop in consumption would knock about 1.2 percentage points off GDP, they warned.

UAE dives into Lake Manzala project

Updated 21 September 2020

UAE dives into Lake Manzala project

  • Egyptian campaign aims to return the lake to its previous state and revive local fishing industry

CAIRO: The UAE National Marine Dredging Company (NMDC) has announced that it won the rights to the expansion project of Lake Manzala in Egypt, valued at 600 million UAE dirhams ($163 million).

The company’s announcement of the new project came following a disclosure published on the Abu Dhabi Securities Exchange website. It ensures compliance with the principle of disclosure and transparency in force in the UAE.

Lake Manzala is one of Egypt’s largest natural lakes. It is known for its potential fishing opportunities, as it has the basis for high fish stocks due to natural nutrients and a moderate climate throughout the year. It produces about half of the natural fish production in lakes.

The lake has witnessed neglect in recent years, losing much of its importance and wealth. In May 2017 Egyptian President Abdel Fattah El-Sisi launched a national project to develop Egyptian lakes, with a key focus on Lake Manzala.

NMDC said in a statement that winning the project came through its partnership with the Egyptian-Emirati Challenge Company. It said that it will take about two years to implement the project.

NMDC is one of the leading companies in the field of dredging, land reclamation and civil and marine construction in the Middle East. The Lake Manzala development project aims to improve the quality of water to restore free fishing and return the lake to its previous state, which will boost the local market and export output.

President El-Sisi said that Lake Manzala will contribute to enhancing Egypt’s fishing industry, and export operations will be activated after its full development. He directed the border governorates, in coordination with the Ministry of Interior and the Armed Forces, to remove all encroachments and criminal outposts on the lake.

Several days ago, Dakahlia governorate completed a difficult operation to remove encroachments on the lake. A large campaign that used Armed Forces Engineering Authority equipment removed 301 houses in the Abdo El-Salhy area in El-Matareya city, known as the “fishermen’s land,” which was built on areas that were filled in from the lake. The operation occurred after local fishermen were persuaded to obtain compensation for vacating their houses.

Magdy Zaher, executive director of Manzala Lake, said that the engineering authority used 320 excavators and 20 imported suction dredgers to work in the lake.

The authority dredged the upper islands isolated from the water with the help of an Emirati bulldozing company to increase the efficiency and purification of Lake Manzala.

Zaher said the lake project will require several steps.

The most important is the removal of encroachments on the water surface and doubling its area to 250,000 feddans, he said. Dredging and deepening the lake, opening the gates and extending the radial channels to allow Mediterranean waters to enter the lake will follow, he added.

A safety belt will come in the form of a road 80 km long and 30 meters wide, which will surround the lake and prevent future encroachments. It will also divert the course of the Bahr El-Baqar water treatment plant, which pours 12 million cubic meters of sanitary, industrial and agricultural drainage into the lake, Zaher said.