China’s Small and Medium sized Banks are stable and the risks they face are manageable, according to the China Banking and Insurance Regulatory Commission (CBIRC).

With sound fundamentals of capital, provision and profit, City Commercial Banks have the capability to fend off various risks, Liu Rong Official with the CBIRC said.

The capital adequacy ratio of city commercial banks came in at 12.7%, while the provision coverage ratio and the non-performing loan ratio registered 150.5% and 2.34%, respectively, all running in a reasonable range.

Rural Small and Medium sized banks, accounting for 85% of banking financial institutions nationwide, have seen an increasing ability to serve the real economy with their solid deposit base and controllable liquidity risks, said Hong Xiaoping, another Official with the CBIRC.

Although a few small and medium-sized banks are indeed facing high risks, this will not weigh on the whole industry, said Xiao Yuanqi Chief Risk Officer of the CBIRC.

Xiao noted that China’s efforts in cracking down on illegal activities in the banking sector have paid off, creating conditions for the industry’s healthy development.

Foreign Direct Investment

Foreign Direct Investment (FDI) into the Chinese mainland fell by 1.3% year on year to 472.18 billion yuan (US$66.13 billion) in the first half of this year, said Gao Feng, spokesperson for the Ministry of Commerce (MoC).

In US dollar terms, the FDI inflow stood at $67.9 billion during the first six months of the year, down by 4% year on year. In June alone, FDI climbed by 7.1% year on year to 117 billion yuan, MoC data showed.

The reading amounted to a total of $16.72 billion, an increase of 3.7% from the same period last year.

Foreign investment in the high-tech service industry hiked by 19.2% year on year during the January-June period, with that of information services, as well as R&D and design, rising by 20.9% and 35.7% respectively.

During the period, investment from Hong Kong, Singapore and the United States logged a year-on-year expansion of 4.2%, 7.8% and 6%, respectively, while FDI from countries along the Belt & Road Maintained a steady growth of 2.9%.

Gao said that the performance of FDI inflow in the first half of the year was better than expected, a sign of foreign investors’ stabilising expectations and confidence in the country’s economy.

Fixed-Asset Investment

The fixed-asset investment of China’s centrally-administered state-owned enterprises (SOEs) rose 7.2% year on year to 1 trillion yuan in the first half of 2020 despite the adverse impact of Covid-19, official data showed.

The growth was 5.9 percentage points higher than in the first five months of the year, and 11.7 percentage points more than that of the first quarter, according to the State-owned Assets Supervision and Administration Commission (SASAC).

The central SOEs have increased their monthly fixed-asset investment since fully resuming operations in March. From March to June, the growth rates of their monthly fixed-asset investment came in at 4.1%, 11.8%, 13% and 21.2%, respectively.

Author: Nadeem Xu