China - Weekly Recap: Containing Financial Risks Still A Top Priority

BMI View: It is likely that Chinese policymakers will continue to seek to contain financial risks in the economy ahead of the 19th Party Congress that will be held in H217. Meanwhile, the investigation of former Chongqing party secretary Sun Zhengcai brings a degree of uncertainty as to who will form the next generation of leaders.

Latest Developments:

  • On July 19, the Chinese embassy in Washington stated that China has made significant progress on its 100-day trade deal with the US, while an officer in the Trump administration announced that the two countries failed to agree on most major trade issues.
  • On July 20, the State Council published a guideline on promoting the development of artificial intelligence (AI) in China. According to the guideline, the country aims to make the industry a 'new and important' driver of economic expansion by 2020 by focussing on areas such as AI software and hardware, intelligent robotics and vehicles, virtual reality, and augmented reality.
  • On July 24, Xinhua News reported that China's Politburo acknowledged during its meeting chaired by President Xi Jinping that the economy performed strongly in the first half of 2017, but also stated that the country will look to strengthen the coordination of financial regulation, stabilise the property market, and prevent financial risks.
  • On July 24, China's Ministry of Defence warned India not to underestimate China's ability and willingness to defend its territory amid a military standoff between the two countries in the Donglang region.
  • On July 24, the Central Commission for Discipline Inspection stated that Sun Zhengcai, the former party secretary of Chongqing, was under investigation. Sun is the first incumbent Politburo member to be probed under President Xi Jinping's anti-graft campaign.He was widely considered to be a promising candidate for the Communist Party of China's sixth generation of leaders before the probe.
  • On July 24, Hong Kong announced that it will allow mainland officials to enforce Chinese laws inside the Mainland Port Areas in the Special Administrative Region.
  • On July 24, China's Ministry of Foreign Affairs stated that it will support the setting up of joint ventures with the Philippines for energy projects in the disputed South China Sea. In contrast, the ministry urged Repsol, a Spanish company, to halt its oil drilling projects in the South China Sea, as the company was in cooperation with Vietnam.
  • On July 25, Reuters reported that the US will target more Chinese financial institutions that are suspected to be doing businesses with North Korea in the near future.
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