CBN丨PBOC to boost national forex reserves in HK

2025年01月13日 19:57 21世纪经济报道 21财经APP 李莹亮

Hi everyone. I’m Stephanie LI.

Coming up on today’s program

China will allocate more forex to assets in Hong Kong, PBOC chief says at the Asian Financial Forum;
China's foreign trade hits new high in 2024.

Here’s what you need to know about China in the past 24 hours

China will significantly increase the proportion of the its foreign exchange reserves allocated to assets in Hong Kong, said People's Bank of China Governor Pan Gongsheng on Monday.

Speaking at the Asian Financial Forum, Pan outlined four key priorities to support Hong Kong's role as an international financial center, including enhancing financial market connectivity between the mainland and Hong Kong.

He also highlighted the importance of a thriving capital market for Hong Kong's financial ecosystem, with plans to collaborate on macro-prudential and financial stability measures. The central bank aims to facilitate more high-quality companies listing and issuing bonds in Hong Kong while deepening financial cooperation in the Greater Bay Area.

Hong Kong will launch a new yuan-denominated trade finance scheme and expand the hours and scope of its Bond Connect program for Chinese mainland investors, Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, said at the forum.

Beijing will support Hong Kong in the launch of the trade finance scheme using 100 billion yuan in currency swaps for one, three and six months, Yue told reporters on the sidelines of the forum.

The PBOC and the HKMA have a currency swap arrangement for a total 800 billion yuan.

Under the new facility, banks can exchange their Hong Kong dollars for yuan funding with the HKMA at interest rates linked to onshore rates, providing banks in the SAR with a stable source of relatively lower-cost yuan funds, Yue said.

The HKMA and the PBOC are also working to implement the linkage of the mainland’s Internet Banking Payment System and the SAR’s Faster Payment System.

This linkage can support residents in both places in making real-time, small-value, cross-boundary remittances, by entering the recipient’s mobile number or account number, the HKMA said, adding that some services are expected to be launched around mid-2025.

At the same forum, Hong Kong Chief Executive John Lee said the city plans to further boost competitiveness as an international asset and wealth management center, as well as exploring new opportunities including setting an international gold trading center.

The government is set to relax the requirements of the invest entrant scheme this March to attract more top-tier global businesses and talent and to expand joint asset projects with mainland financial markets, including strengthening Bond Connect trading, said Lee.

The Asian Financial Forum, organized by the Trade Development Council, drew about 3,600 business leaders, policymakers and specialists from more than 50 countries and regions to discuss ways for empowering the next growth engines of the world.

China's exports surged to a record high in 2024, providing a much-needed boost for the economy as the prospect of biting tariffs imposed by US President-elect Donald Trump looms. The total value of China's foreign trade reached a record high of 43.85 trillion yuan in 2024, marking a 5 percent year-on-year growth, statistics from the General Administration of Customs showed. China's exports amounted to 25.45 trillion yuan last year, reflecting a 7.1 percent year-on-year increase, while imports totaled 18.39 trillion yuan, marking a 2.3 percent rise compared to the previous year.
China will further implement the special campaign to stimulate consumption, actively expand imports and attract foreign investment this year, according to a national commerce work conference held in Beijing from Saturday to Sunday. The country will step up efforts to implement the consumer goods trade-in program. More diversified consumption scenarios will be created, and service and digital consumption will be promoted. In terms of foreign trade, China will actively expand imports, develop cross-border e-commerce and green trade, and promote trade digitalization. To attract foreign investment, China will expand voluntary and unilateral opening up in an orderly manner, give full play to the role of national economic development zones in attracting foreign investment, and improve services for foreign enterprises.

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Switching gears to financial news

China today raised the macro-prudential adjustment parameter, a multiplier that decides the upper limit of outstanding cross-border financing available to an institution, from 1.5 to 1.75, effective immediately, according to the People's Bank of China and the State Administration of Foreign Exchange.

Wrapping up with a quick look at the stock market

Chinese stocks closed down on Monday with total turnover dropping below the 1-trillion-yuan mark since Sep 25. The benchmark Shanghai Composite dipped 0.2 percent while the Shenzhen Component ended flat. Hong Kong’s Hang Seng index also closed 1 percent lower, and the TECH index fell 0.9 percent.