SwedCham China Insights for the Week of June 19 - June 23 , 2023

Top news of the week:

China’s cabinet pledges to roll out more measures to spur growth

June 19, 2023

China is mulling several policies to promote sustained recovery of its economy, according to a State Council executive meeting chaired by Premier Li Qiang. The meeting also deliberated and adopted an action plan to support financing for technology-based enterprises and a draft regulation on the supervision and administration of private investment funds.

Hong Kong SAR launches dual counter model

June 20, 2023

The Hong Kong Exchanges and Clearing Ltd (HKEX) officially launched the highly anticipated Hong Kong dollar-yuan dual counter model on June 19, marking a landmark progress in the yuan’s internationalization and strengthening the city’s status as an international financial hub.

China cuts lending benchmarks to revive slowing demand

June 21, 2023

China cut its key lending benchmarks on June 20, the first such reductions in 10 months as authorities seek to shore up a slowing economic recovery. The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.55%, while the five-year LPR was cut by the same margin to 4.20%.

China, Germany to boost win-win cooperation, address global challenges

June 22, 2023

During separate talks with German Chancellor Olaf Scholz and German President Frank-Walter Steinmeier, Premier Li Qiang highlighted the importance of stable China-Germany relations and cooperation at higher standards and quality. As his first overseas visit since becoming premier, Li chose Germany as the first stop, showing the importance China attaches to its relations with Germany.

Li Qiang puts forward 3-point proposal on deepening China-France cooperation

June 23, 2023.

China and France should jointly maintain the security and stability of global industrial and supply chains, strengthen cooperation on innovation, and foster a sound business environment, according to Premier Li Qiang.

Insight of the week:

U.S. Secretary of State Antony Blinken concluded a long-anticipated visit to China on June 19, holding a sit-down meeting with President Xi Jinping after talks with other senior officials, including Director of the Office of the Central Commission for Foreign Affairs, Wang Yi, and Foreign Minister Qin Gang. The visit was an attempt to repair the deteriorating relationship between the two countries. Xi emphasized the importance of a stable China-U.S. relationship and mutual respect in his meeting with Blinken. In a previous meeting between Blinken and Qin Gang on June 18, Qin said that coming into the talks, the relationship between the U.S. and China was “at the lowest point since its establishment.” This did not serve the fundamental interests of the two peoples or meet the shared expectations of the international community. But after speaking for over five hours, both sides had more positive things to say. In the “candid, in-depth, and constructive” talks, China emphasized the need to stabilize the Sino-U.S. relationship and reiterated the “one China” policy on the Taiwan issue. Both sides agreed on maintaining open channels of communication across the full range of issues.  However, there are key issues between the nations that remain unresolved, including that of restoring military-to-military communications between the U.S. and China. Blinken is the first U.S. Secretary of State to visit China since 2018, and his talks with senior Chinese officials were seen as a key litmus test for whether the two governments could stop relations from continuing to plummet at a time of lingering distrust.

Premier Li Qiang’s European tour came as Antony Blinken was holding high-talks with President Xi Jinping. The Premier started his visit to Germany and France on June 18. Li capped his week-long trip to Europe with a rejection of “decoupling”, urging the continent to “rise above differences” with China and to cooperate on global problems such as climate change and poverty alleviation. During his trip, Li stressed that China will continue to open up and improve its business environment, and called on China and Europe to rise above differences, demonstrating the importance China attaches to the European market in an era of heightening geopolitical tensions. Li’s six-day tour of the EU’s two biggest economies is his first overseas trip since he became premier in March. The observer considers that the Premier’s visit to Europe, which included bilateral as well as multilateral engagements, has achieved positive results in confirming the importance of strengthening economic ties with Germany and France amid the “de-risking” rhetoric and has dispelled, to a certain extent, misunderstanding over the matter.