China Launches International Payment System to Boost E-commerce Industry
China’s Central Bank has recently launched the new China International Payment System (CIPS) in Shanghai, which will provide capital settlement and clearing services for cross-border RMB transactions affecting financial institutions domestically and abroad. The new CIPS was implemented in a move to facilitate trade clearing services for cross-border RMB transactions and improve clearing efficiency for direct participants in the RMB market. The new system is expected to lower transaction costs, reduce the processing times, and thus ease pressures on both local and international e-commerce platforms.
China’s domestic payments system only supports Chinese characters, making it difficult for overseas financial institutions to directly clear RMB transactions with their Chinese counterparts. Previously, cross-border clearing of RMB funds had to be transacted either through one of the offshore RMB clearing banks in places such as Hong Kong, Singapore and London, or with the help of a corresponding bank on the Chinese mainland.
China’s High Technology Manufacturing Industry Fueled by Government Support
China’s top two high-speed train manufacturers, the CNR and CSR Corp, were merged into the world’s biggest firm CRRC Corp earlier this year, a big step towards a bigger share in the global market. Meanwhile, China’s two biggest rail equipment manufacturers have reported a net profit of RMB 5.32 billion and RMB 5.49 billion, respectively, in 2014, up 28 and 33 percent. Following the merger, the Chinese government announced a so-called “Made in China 2025” strategy in May this year, which put an emphasis on high-tech manufacturing industries ranging from space, renewable energy to bio-engineering.
China’s high technology manufacturing industry has seen massive development in the last five years. In 2013, the total profits of China’s high technology manufacturing industry totaled RMB 723.37 billion, up 165.5 percent compared with that in 2008. China’s National Development and Reform Commission (NDRC) made a statement to encourage overseas acquisitions made by companies that are engaged in high-tech equipment sectors, including railway, energy and agriculture, by offering financial support. Along with the release of the statement, the NDRC mapped out a two-year plan to boost the development of six industries: railway transport equipment, high-tech marine equipment, industrial robots, electric cars, modern agricultural machinery and high-end medical devices.
An Overview of China’s October Industrial Output
According to the data released by China’s National Bureau of Statistics, China’s value-added industrial output expanded 5.6 percent year on year in October, slightly down from 5.7 percent in September due to a slowdown in the country’s mining and energy sectors. Specifically, manufacturing output grew by 6.7 percent, whereas mining output growth further dropped to 0.4 percent from 1.2 percent in September. Meanwhile, the output of the electricity, heating, gas and water sectors lost 0.3 percent. The country’s state-owned enterprises are still struggling to make profit with weak performance in industrial output. China’s inland regions saw local industrial output growth of 7.7 percent in October, followed by 7.6 percent in western areas and 6.5 percent in eastern areas.