There are two fundamental reasons why the Chinese government might deliberately allow the renminbi to rise more rapidly: reducing its portfolio risk and containing domestic inflation.
The deemed “too big to fail” banks in China are facing a capital cap of as much as 400 to 500 billion yuan ($62 to 78 billion) in the coming five years, said a former deputy head of the central bank.
“A reckless borrowing by local governments has created excessive debts; however, it seems to be a good idea to address this problem by selling local governments-owned assets in the short term.”
“The government will vigorously support the development of Hong Kong’s renminbi market, and expand channels of capital circulation between Hong Kong and the mainland"
This is the third consecutive monthly increase by the Second-largest economy despite its long-expressed concerns over the safety of dollar assets.
Some 43 percent of local government debt, or 4.6 trillion yuan, falls due this year and the next, with the maturities of other debts coming huddled at 2016-2018.
The European Union is considering raising tariffs to fight against cheap Chinese goods, the Commerce Department said in a statement Thursday
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