SwedCham China Insights for the Week of April 08 - April 12 , 2024

Top news of the week:

China unveils new measures to streamline foreign exchange business processes

April 8, 2023

The State Administration of Foreign Exchange (SAFE) released a circular recently, announcing the introduction of six measures aimed at optimizing foreign exchange business processes. According to the circular, these newly-introduced measures are designated to further boost trade facilitation and enhance the ability to serve the real economy.

President Xi Jinping meets with Russia’s foreign minister

April 9, 2023

China’s top leader, Xi Jinping, and Russia’s foreign minister, Sergey V. Lavrov, met in Beijing on April 9. During Xi’s meeting with Lavrov, he pledged to strengthen communication with Russia and said Beijing supports Moscow in maintaining social security and stability. Lavrov said the priority of Russia's foreign policy is to consolidate and elevate its ties with China.

China aims to add over 25% investment for industrial equipment upgrades by 2027

April 10, 2023

The Chinese government has published specific goals and measures for industrial equipment upgrades in the latest attempt to expand effective investment and develop new quality productive forces. According to an action plan jointly published by seven government departments, China will increase investment in industrial equipment by more than 25 percent by 2027.

China to lift foreign investment curbs in value-added telecom services

April 11, 2023

On April 10, China’s Industry and Information Technology Ministry said that it will remove restrictions for foreign investment on some value-added telecom services, adding that the move will first be implemented in five pilot areas and then expanded to other cities.

Xi Jinping meets Ma Ying-jeou in Beijing

April 12, 2023

President Xi Jinping met with the former Taiwan leader Ma Ying-jeou and his entourage in Beijing on April 10.

Insight of the week:

Fitch Ratings cut its outlook on China’s sovereign credit rating to negative on April 10, citing risks to public finances as the economy faces increasing uncertainty in its shift to new growth models. The move by Fitch followed a similar outlook downgrade from Moody’s Ratings in December 2023. Fitch has kept its rating on Chinese sovereign bonds at A+.

According to Fitch, “the outlook revision reflects increasing risks to China’s public finance outlook as the country contends with more uncertain economic prospects amid a transition away from property-reliant growth to what the government views as a more sustainable growth model.” “Wide fiscal deficits and rising government debt in recent years have eroded fiscal buffers from a ratings perspective,” it added.

Ministry of Finance expressed “regret” over the revision. “We had a lot of in-depth communication with the Fitch Ratings team in the early stage, and the report partly reflected China’s views,” it said on April 10. It added that the agency’s methodology “fails to effectively and prospectively reflect the positive role of fiscal policy in promoting economic growth.” “In the long run, maintaining a moderate deficit and making good use of precious debt funds will help expand domestic demand, support economic growth, and ultimately help maintain good sovereign credit,” it said.

While it lowered its ratings to negative outlook from “stable”, Fitch affirmed China’s issuer default rating at ‘A+’, its third-highest category. According to Fitch, China’s 'A+' rating is supported by its large and diversified economy, still solid GDP growth prospects relative to peers, integral role in global goods trade, robust external finances, and reserve currency status of the yuan. S&P, the other major global rating agency, also rates China A+, the equivalent of Moody’s current A1 rating.