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The Daily Brief for Thursday, 16 February 2017

Donald Trump pledged to honor the One-China policy in a lengthy February 9 phone call with Chinese President Xi Jinping and in doing so restored a cornerstone of Sino-US ties that he had threatened to upend by accepting a phone call from Taiwan’s President Tsai Ing-wen. However, warns Nicholas R. Lardy, Trump hardliner Peter Navarro’s stance toward Beijing means a trade war is still possible and it is a fight that neither China nor the US would win.

As Malaysian police detain more suspects for the assassination of North Korea’s genial former heir apparent, the murder is set to become a complex diplomatic issue for Kuala Lumpur, reports The Asia Times. While police are carrying on with a murder investigation by detaining a third person, the Malaysia deputy prime minister stressed that the bizarre killing will not affect ties between the two countries. This assurance came despite US and South Korean government sources saying they believed Pyongyang agents carried out the assassination.

Michael Flynn’s resignation on Monday, for the world at large, is not about an obscure 19th century law that defines a phone conversation between the US National Security Advisor and the Russian ambassador. What it actually conveys, writes M.K. Bhadrakumar, is that the US is sliding into a vicious civil war.

In Jakarta, the election for a new governor, so far clouded by allegations of blasphemy, phone tapping and even murder, will be decided after another round of voting on April 19. John McBeth reports that a quick count results, with nearly all the ballots counted, showed Purnama winning 43% of the vote, ahead of Baswaden who notched 39% and third-placed Agus Haritmurti Yudhoyono trailing with 17% after he faded badly in the final stretch. A candidate needed to receive 50% of the vote to win the race outright.

Posted inChinaShanghai

China Digest for Thursday, 16 February 2017

Banking industry must avoid debt risks: PBOC paper

People’s Bank of China’s working paper released on Wednesday warns that the industry should avoid debt market liquidity risks and asset bubbles triggered by increasing leverage ratio too quickly. In a Sina Finance report on Wednesday, the banking industry should reduce loans and approving investments too quickly will lead to “debt-deflation” risks, the PBOC said.

China attracted US$139 billion in foreign investment in 2016

Foreign investment into the country rose 2.3% to US$139 billion in 2016 from 2015, said Zhao Chenxi, a spokesman of the National Development and Reform Commission. In a China Internet Information Center report, this showed the country was still attractive for foreign investment, while the total global volume of cross-border investment saw a 13% decrease last year.

Steel production rose in 2016 missing a reduction target

Steel capacity should have dropped by 45 million metric tons in 2016 to comply with government planning targets, but production increased by 1.2%, a Sina Finance report said on Wednesday. Wu Jinglian, a researcher at the State Council’s Development Research Center, said low-efficiency plants did not comply with the government order and it was one of the many limitations of such planning.

Jiangsu set to cut 2017 crude steel output

Jiangsu has set a goal to cut 6.5 million metric tons of crude steel capacity in 2017, the provincial Development and Reform Commission said in a Shanghai Securities Journal report on Wednesday.

SOEs need capital and clarity on debt-to-equity ratios

The State Council department in charge of managing state-owned enterprises (SOEs) should clarify the debt-to-equity ratio, and channel in more capital when appropriate, Caixin reported on Wednesday, citing Yang Kaisheng, an advisor to China’s Banking Regulatory Commission. Yang said the asset-debt ratio of state-owned enterprises increased to 61.5% from 61.2% in the third quarter of 2016, showing the difficulty of deleveraging and the necessity to solve the problem at its root.