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November/December 2017

Contents

Editorial

China outlines its global ambitions

All eyes were on Beijing in October as the 19th Communist Party Congress took place. Staged in the Great Hall of the People every five years, the congress brought together over 2,000 party members to shape policy, decide on political positioning and set the agenda for the years ahead.

The headline event at this year’s Congress was President Xi Jinping’s mammoth three hour and 23-minute speech where he signalled the arrival of a “new era” in Chinese politics. At the heart of his speech was the notion that now is the time for China to truly rise up onto the global stage and lead the world on political, economic, military and environmental issues.

The good news for investors in China is that Xi is committed to pushing ahead with market-oriented reforms of both the financial system and foreign exchange rate. He announced that the government will “clean up rules and practices that hinder a unified market and fair competition, support development of private firms and stimulate vitality of all types of market entities”.

Xi indicated that China is also committed to further opening its doors to foreign businesses. “China’s open door will not be closed – it will only be opened wider,” he declared.

Debt spectre

While this rhetoric sends a positive message to everyone that has a stake in China’s success – treasurers may be especially buoyed by the promise of a more open economy, allowing them to integrate China more effectively into their global treasury operations – concerns regarding the levels of debt in China continue to persist.

Indeed, high levels of corporate debt were one of the reasons for S&P’s recent downgrade of China. Although Chinese authorities stated that S&P made the wrong decision, the Central Bank has recently voiced its concerns that corporates may have taken on too much debt.

Reports from Bloomberg show that some Chinese companies are increasingly struggling to carry their debt burden. The news outlet announced that there were 17 defaults between June 2016 and June 2017 in China’s bond market, nearly three times the number of defaults recorded in 2015. Bad corporate debt levels in China have also reached a ten-year high.

A bright future but…

China therefore stands at an interesting juncture in its modern history. On the one hand, it has set out grand global ambitions that few would argue it will meet. On the other hand, however, there are concerns that China will not be able to adapt to its ‘new normal’ quickly enough, potentially resulting in a crisis that will send shockwaves across the world.

One thing is certain though, the eyes of businesses around the world will continue to be focused on the world’s second-largest economy for the foreseeable future.

Thank you to our readers

It has been another interesting and eventful year in corporate treasury and Treasury Today Asia is proud to be your valued source of treasury information.

Next year, we will continue to offer you the in-depth, insightful articles and print editions that you expect, whilst also expanding our portfolio of multimedia content to give our readers new and improved ways to consume our content.

See you in 2018!