President Xi backs stronger property rights, entrepreneur protection

Chinese President Xi Jinping reacts as attendees applaud during an event to commemorate the 40th anniversary of the establishment of the Shenzhen Special Economic Zone in Shenzhen in southern China's Guangdong Province, Wednesday, Oct. 14, 2020. (AP)
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Updated 15 October 2020

President Xi backs stronger property rights, entrepreneur protection

  • Xi alluded to “turbulence” in the global economy from rising protectionism and unilateralism

SHENZHEN: Shenzhen will strengthen property rights and protection of entrepreneurs, China’s President Xi Jinping said on Wednesday while marking the establishment of the country’s first economic zone in the southern city four decades earlier.

In his speech, Xi praised the city for “achieving miracles” and said it “must carry out development with the courage to break the ground and to strive to be the first.”

A testing ground for the reforms that have spurred China’s high-paced growth over the past four decades, Xi touted Shenzhen as symbolic of China’s emergence as a global economic power. 

The Shenzhen government will get more leeway to pursue reforms and become a “model city for a strong socialist country,” Xi said.

On Sunday, the government published plans to increase foreign investment in the city, encourage foreign talent and reduce red tape in sectors including energy and telecoms. Xi also alluded to “turbulence” in the global economy from rising protectionism and unilateralism, and emphasised that China would pursue a “dual circulation” model that relies more on domestic consumption, while attracting foreign investment.

The speech in Shenzhen followed visits to nearby cities Chaozhou and Shantou, where Xi emphasised industrial upgrades and innovation. Carrie Lam, the leader of the adjacent territory of Hong Kong, attended the speech, after announcing on Monday that she was postponing an annual policy address scheduled for that day, as did Ho Iat Seng, the chief executive of Macau.

Xi’s speech took place in the Qianhai district, which is positioning itself as a hub for cross-border services for the Greater Bay Area, a region that includes Hong Kong, Macau, and nine cities in China’s Guangdong province, including Shenzhen.


Turkey holds rates in surprise that sends lira to new low

Updated 59 min 4 sec ago

Turkey holds rates in surprise that sends lira to new low

ISTANBUL: Turkey’s central bank bucked expectations for a big interest rate hike on Thursday and sent the lira plunging to a record low by holding its policy rate at 10.25% and saying it had already made progress in containing inflation.
The bank, which also surprised last month when it hiked rates, said it would continue with liquidity measures to tighten money supply. It raised the uppermost rate in its corridor, the late liquidity window (LLW), to 14.75% from 13.25%. A Reuters poll of 17 economists had expected the bank to raise its key one-week repo rate by 175 basis points to address Turkey’s weak currency and double-digit inflation. Forecasts ranged from hikes of 100 to 300 bps.
The decision to leave the rate unchanged sent the lira down more than 2% to near 8 versus the dollar and prompted economists to question the central bank’s commitment to lowering inflation and its independence from the government.
“The (bank) is now back to a more unpredictable and opaque monetary policy framework. It appears as a severe miscalculation,” Per Hammarlund, chief emerging markets strategist at Swedish bank SEB.
The key policy rate remains below annual consumer price inflation, which stood at 11.75% in September, leaving real rates negative for lira depositors.
Turkey’s central bankers had surprised markets with a 200 basis point rate hike in September, the first monetary tightening in two years as it sought to rein in inflation.
Its so-called backdoor measures to rein in credit have raised the average cost of funding to 12.52% from a low of 7.34% in July. The LLW adjustment gives the bank more scope to raise funding costs.
“A significant tightening in financial conditions has been achieved, following the monetary policy and liquidity management steps taken to contain ... risks to the inflation outlook,” the bank’s monetary policy committee (MPC) said.
It said liquidity measures will carry on “until the inflation outlook displays a significant improvement.”
The lira touched a record low of 7.9845 against the dollar.
It is down 25% this year in a selloff prompted by concerns about high inflation and the central bank’s badly depleted FX reserves, and geopolitical worries including the prospect of trickier US ties under a possible Joe Biden White House.
Last month’s hike in the policy rate reversed a nearly year-long easing cycle in which it fell rapidly from 24%, where it was set in the face of a 2018 currency crisis.
“Last month the central bank took an important step to restore credibility and today’s decision seems like a step back. All this positive impact has been reversed significantly,” said Piotr Matys, senior EM FX Strategist at Rabobank.
Turkey’s economy contracted 10% in the second quarter because of the coronavirus pandemic and measures to combat it. Tensions in the Eastern Mediterranean and in the Nagorno-Karabakh conflict are also clouding the outlook.