Issue Three 2010
Recent reports have shown that China’s industrial profit for Q1 2010 was more than double that recorded for the same period in 2009. According to the People’s Bank of China, the 102.6% increase in profits has largely come from growing domestic demand, with the steel and power sectors experiencing particularly high levels of growth. While the RMB 690.8 billion ($101.2 billion) figure is impressive, analysts sounded a note of warning as the comparison base during Q1 2009 was a particularly low point for the global economy. A recent report released by China’s Ministry of Commerce was also conservative in its outlook, with predictions for the nation’s foreign trade tempered by high unemployment in the EU and US. The rising costs of raw materials and labour were also cited as challenges for China’s trade enterprises going forward.
An aspect of foreign trade that is becoming easier in China however, is that of cross-border trade settlement in renminbi. In this issue’s China Focus article we take an indepth look at the pilot scheme which is currently underway and examine the thought process behind this bold move from the Chinese authorities. We also look at the latest developments in the pilot scheme, such as the broadening of its scope to new mainland cities and its global opening up. We also look at the practicalities of how the cross-border settlement process really works.
The difficult economic backdrop is also affecting the way that companies raise finance in China. While the bank market remains the predominant source of funding for companies, the bond market is becoming increasingly popular. In this issue’s Treasury Practice article we look at how the corporate funding market has developed since the crisis and examine the latest trends, such as reverse mergers.
We examine another treasury trend in this issue’s Question Answered, which looks at green practices in the treasury environment. Our expert contributors discuss the ins and outs of paperless processes as well as the tangible benefits of going green.
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