Xi "powerless to revive investors' spirits," US adds 7 more Chinese firms to entity list & UN’s human rights chief under “tremendous pressure” to release Xinjiang report -- China Boss News 8.29.22
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Xi Jinping "powerless to revive investors' spirits,” Bloomberg analyst says
“The muted [investor] reaction to China’s fiscal stimulus plans and a surprise interest-rate cut last week exemplifies a trend that’s been intensifying in recent months,” Bloomberg’s Sofia Horta e Costa said. “Xi Jinping’s government is increasingly powerless when it comes to reviving investor spirits,” she added.
Horta e Costa, Bloomberg:
Hope that dramatic interventions five months ago -- dubbed by some as China’s “Draghi” moment in a comparison to the 2012 European Central Bank president’s promise to save the euro -- has turned into skepticism over whether policymakers will do whatever it takes to bolster financial markets.
… Sentiment toward China’s frayed financial markets looks to be on its last legs with rebounds that don’t last, inflows that don’t stick and vows of more action from Beijing that keep falling flat.
Interventions to stabilize China’s currency last week are likely to increase pessimism further: Reuters reported that the State Administration of the Foreign Exchange (SAFE) “phoned several banks on Wednesday to warn them against aggressively selling the Chinese currency” after “outflows from the bond market and surprise cuts to two key interest rates last week.”
The Peoples’ Bank of China then “set Thursday’s fixing 120 pips stronger than the average estimate,” Bloomberg said, calling it the “the widest gap since February 2020.”
Bloomberg:
The onshore yuan rose 0.1% to 6.8480 per dollar at 3:05 p.m. in Shanghai after falling to the lowest since August 2020 in the previous session. It’s dropped 1.6% versus the dollar this month, on track for its biggest monthly loss since April.
The weakness adds to what is already a precarious balancing act for Beijing, which is seeking ways to prop up its struggling economy without stoking financial instability.
But the main proof that China has lost investor confidence en masse is in the steady-stream of capital outflows, Horta e Costa says. “Foreigners have pulled money from China’s capital markets for six straight months and outflows hit a record in March,” she said.
Bloomberg:
The pessimism mirrors broader concerns about the strength of China’s economy, which threatens to weigh on the recent recovery in global stocks and boost demand for havens like Treasuries.
Risks have become so unquantifiable that some, like Boston-based Zevin Asset Management, are walking away.
“China’s economic dream has more or less come true and now politicians are focusing on all the repercussions that come with that,” said Sonia Kowal, president at ZAM, which recently sold all its Chinese and Hong Kong holdings. “We would consider getting back into China in the future when the country finds itself on a more sustainable path.”
For the rest of Horta e Costa’s Bloomberg analysis, China’s Milestone Moment for Markets Now Just a Distant Memory, click here. For Reuters exclusive report, EXCLUSIVE China regulator warns banks against yuan selling - sources, click here; and for Bloomberg’s update, China Starts Stealth Fightback Against Powell’s Strong Dollar, click here.
Law and International Xi
US Dept of Commerce adds seven more Chinese firms to export control list
The U.S. Department of Commerce added seven new Chinese firms to its entity list, limiting companies who do business with them to those with government approval, Reuters reported. The firms - which were “mostly related to aerospace” - have been placed on the list for “‘acquiring and attempting to acquire U.S.-origin items in support of China’s military modernization efforts.’”
Reuters:
According to a notification posted to the Federal Register, China Aerospace Science and Technology Corporation 9th Academy 771 Research Institute, China Aerospace Science and Technology Corporation 9th Academy 772 Research Institute, China Academy of Space Technology 502 Research Institute, China Academy of Space Technology 513 Research Institute, China Electronics Technology Group Corporation 43 Research Institute, China Electronics Technology Group Corporation 58 Research Institute, and Zhuhai Orbita Control Systems were added to the list, indicating suppliers of U.S. materials or services to these entities will need a license before shipping any goods.
According to a Chinese state media report, Beijing “slammed” the move as “suppression of Chinese companies” that “is unpopular and benefits no one.”
For Reuters’ update, U.S. adds seven China-related entities to export control list, click here.
UN’s human rights chief under “tremendous pressure” to release Xinjiang report
Reuters also reported that outgoing UN human rights chief Michelle Bachelet told journalists at her final press conference that she is under “‘tremendous pressure’ from all sides” over the “release [of] a long-anticipated report on China's treatment of its Uyghur minority in Xinjiang.” “The report has been in the works for three years and promised for months but has not been published for unclear reasons,” Reuters said.
Reuters:
"We are trying very hard to do what I promised," Bachelet said, referring to a pledge to release the report before the end of her term on Aug. 31.
Asked to elaborate on why it has not been released, Bachelet said she needed time to integrate new information from her visit and to review input on the report's contents from China.
For the rest of Reuters report, UN rights chief 'under tremendous pressure' over report on China's Uyghurs, click here.
Geopolitics
Beijing reset status quo in Taiwan Straits, analysts say
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