The Association of Southeast Asian Nations (ASEAN) became China’s biggest trading partner in the first half of this year, accounting for 14.7% of China’s total foreign trade volume, amid upgraded free trade area protocol and supply chain cooperation.
China’s trade with ASEAN stood at 2.09 trillion yuan (US$299 billion) in the first six months, up 5.6% year on year. Exports to ASEAN rose 3.4% to 1.15 trillion yuan, while imports climbed 8.5% to 938.57 billion yuan, said the General Administration of Customs.
The expansion was partly buoyed by growing farm produce trade with ASEAN members under the upgraded protocol of the China-ASEAN Free Trade Area, which came into effect in October 2019, according to GAC spokesman Li Kuiwen. The farm produce trade between the two sides grew 13.2% in the first half of this year.
Another driver of trade between the two sides was the interconnectivity in electronic manufacturing between China and countries like Vietnam, Malaysia and Singapore along the global supply chain, said Li. Integrated circuits, for instance, saw imports from and exports to ASEAN grow 23.8% and 29.1% in the period.
During the same period, China’s trade with Vietnam jumped 18.1%, pushing the bilateral trade volume to the top slot among ASEAN members, while trade with Thailand rose 9.2%.
Foreign exchange funds
China’s outstanding yuan funds for foreign exchange declined in June, said the People’s Bank of China (PBoC). The funds stood at 21.17 trillion yuan ($3.02 trillion) at the end of June, down by 6.02 billion yuan from the previous month.
As the Chinese yuan is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by a trade surplus and foreign investment in the country, adding funds to the money market. Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity.
China’s foreign exchange reserves expanded to $3.11 trillion at the end of June, up 0.3% from the end of May, according to the State Administration of Foreign Exchange.
Market liquidity
The PBoC pumped cash into the financial system through open market operations to maintain liquidity in the market Wednesday.
A total of 400 billion yuan was injected into the market via the medium-term lending facility (MLF), said the PBoC. The funds will mature in one year at an interest rate of 2.95%. The central bank skipped reverse repos Wednesday.
The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
Company news
Chinese technology company Huawei Technologies said the British government’s move to ban Huawei’s involvement in Britain’s 5G networks was a “disappointing decision” which “threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide.”
“This disappointing decision is bad news for anyone in the UK with a mobile phone,” said Ed Brewster, a spokesperson for Huawei UK in a statement.
“Instead of ‘leveling up,’ the government is leveling down and we urge them to reconsider. We remain confident that the new US restrictions would not have affected the resilience or security of the products we supply to the UK,” Brewster said.
The British government announced Tuesday that buying new Huawei 5G equipment would be banned after December 31, 2020, and all Huawei equipment would be removed from the country’s 5G networks by the end of 2027.
The story was written by Xu Jiangshan and Liu Licong and first published at ATimesCN.com. It was translated by Nadeem Xu.