China

Chinese regulators have taken steps to ensure bitcoin is not used to facilitate capital flight, even as investors in the cryptocurrency say they doubt it is being used to transfer large amounts of cash out of China, the Financial Times reported. The apparent correlation between a depreciating renminbi and bitcoin’s price surge in recent months has prompted suspicion that the virtual asset is contributing to outflows. Bitcoin’s Chinese price rose 145 per cent in 2016, as the renminbi suffered its worst year on record, weakening 6.5 per cent.

Global markets spent most of 2016 adjusting to the reality of a slow but steady weakening of China’s currency, the International New York Times DealBook blog reported. Now, Beijing appears uncomfortable with that state of affairs. Financial regulators in recent days have introduced new rules to curb the amount of capital flowing out of the country, helping to slow the pace of the renminbi’s decline. They issued stricter rules on the movement of renminbi offshore for conversion into dollars.

When China’s stock market and currency both plunged last January, many global investors assumed the end was near. After years of debt-fuelled stimulus used to fund investment in housing, infrastructure and excess manufacturing capacity, many believed the bubble was finally bursting, the Financial Times reported. It didn’t. China’s economy is expected to have met the government’s target of at least 6.5 per cent growth of gross domestic product for 2016. The stock market has stabilised and is up 19 per cent since its low point in late January 2016.

Soaring price growth in China’s top cities has slowed almost to a standstill, as government measures to cool the overheated property market take hold, the Financial Times reported. Price growth of newly built homes in China’s “first tier” cities of Beijing, Shenzhen, Shanghai and Guangzhou slowed to 0.1 per cent in November compared with the previous month, the National Statistics Bureau said on Monday — well below month-on-month growth of 3-4 per cent seen in such cities earlier this year.

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar, the Financial Times reported. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency by the International Monetary Fund. Some people familiar with Mr Zhou’s sales pitch described it as a “Trojan horse” strategy because it wrapped difficult reforms in an alluring package.

The days when a Chinese iron ore miner could buy a UK video game developer are drawing to a close as Beijing tightens up on cross-border investment by its companies, the Financial Times reported. Investment banks in Asia have worked overtime this year on bringing an expansive range of acquisition targets to aggressive Chinese groups, many of which have strayed far beyond the acquirers’ original scope of business.

Hangzhou’s local government is piloting a “social credit” system the Communist Party has said it wants to roll out nationwide by 2020, a digital reboot of the methods of social control the regime uses to avert threats to its legitimacy, The Wall Street Journal reported. More than three dozen local governments across China are beginning to compile digital records of social and financial behavior to rate creditworthiness. A person can incur black marks for infractions such as fare cheating, jaywalking and violating family-planning rules.

Officials in one of China’s hottest property markets have banned developers from borrowing money to buy land, as local governments embrace increasingly drastic measures to curb soaring home prices, the Financial Times reported. Prices of new residential properties in Nanjing were up 40 per cent year on year in September, in line with increases in other big cities such as Beijing and Shanghai. Over recent months, local governments have tried to cool residential property prices by making it more difficult for people to buy homes.

In its never-ending quest to rein in profligate local officials, China this week ordered its indebted cities and provinces to draw up detailed repayment plans. But for these rules to work, the central government must prove that it is willing to let the miscreants default. Creditors doubt its resolve and expect it to go on bailing out the spendthrifts. As a result, they systematically give more generous lending terms to state-owned enterprises (SOEs) than to their private peers, The Economist reported. The bias is not immediately obvious.

The Chinese company that’s said to be in exclusive discussions to acquire English Premier League soccer team Southampton for as much as 200 million pounds ($248.8 million) has requested a halt to trading in its shares for a further month pending the conclusion of efforts to acquire sports assets, Bloomberg News reported. Shares in Lander Sports Development Co. have not traded since October, and the company requires the suspension to remain pending “major asset restructuring,” it said Wednesday in a regulatory filing.