China

EU, China look to ease tensions, push on with business

BRUSSELS (AP) — Top European Union officials are holding talks Monday with Chinese President Xi Jinping and Premier Li Keqiang at a time of rising tensions between two major trading partners over the fallout from the coronavirus crisis and Beijing’s increasing control over Hong Kong.

European Council President Charles Michel, EU commission President Ursula von der Leyen and the bloc’s foreign policy chief, Josep Borrell, will hold two video conferences separately, first with the premier and later with Xi.

The meetings are not expected to produce concrete results — no joint statement will be issued — but the Europeans hope it will boost slow-moving talks on an investment agreement and build some common ground for tackling thorny political issues at a face-to-face meeting, hopefully late in the year.

The EU sees China as a “systemic rival” that offers great opportunities but also presents many challenges. The coronavirus pandemic has created new obstacles, notably what Brussels sees as a China-orchestrated campaign of disinformation about the pandemic that could put lives at risk.

The meetings come at a time when China stands accused of trying to influence European officials and Borrell has twice denied in recent months that the External Action Service — a kind of EU foreign office that he leads — has bowed to Beijing’s pressure to alter documents.

While the 27-nation EU is China’s biggest trading partner, it is often divided in its approach to Beijing. Yet the new security law for Hong Kong has galvanized the bloc. EU

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China calls on banks to give up US$212 billion in profits to finance cheap business lending

China’s government is reaching beyond its monetary policy tool box to free up capital and direct funds towards the nation’s cash-starved businesses to help the economy claw its way out of its worst slump in four decades.

The government has called on banks to sacrifice as much as 1.5 trillion yuan (US$212 billion) in profits this year to finance cheap loans, cut fees, defer loan repayments and grant more unsecured loans to help small businesses survive the downturn caused by the coronavirus lockdown.

Separately, the State Council, China’s cabinet, signalled late on Wednesday that it would cut the amount of reserves banks are required to hold at the central bank, freeing up more money to spur lending.

“We are guiding the market to lower lending rates through interest-rate reform,” Yi Gang, the governor of the People’s Bank of China (PBOC), told the Lujiazui Forum on Thursday, confirming the move was a de facto cut in interest rates. “Financial institutions are urged to sacrifice profits to benefit corporate borrowers, helping reduce their borrowing costs.”

Yi added that the PBOC would achieve the goal by directing financial institutions to offer lower lending rates, adding fresh funds at low rates that can be accessed by borrowers directly, and slashing service fees.

The profits to be sacrificed would be equivalent to roughly 75 per cent of the entire net profit of the commercial banking industry in 2019, based on the data from China Banking and Insurance Regulatory Commission (CBIRC).

China’s US$41 trillion banking system

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