International News 22/05
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On the US trade war with China, this is the IMF's criticism of America.
The International Monetary Fund (IMF) has said that the United States would benefit from maintaining its open trading system rather than imposing new import tariffs. The IMF stressed the need for the US and China to work together to resolve their trade tensions. The imposition of trade restrictions, such as those recently announced by President Joe Biden, can disrupt trade and investment, fragment supply chains, and lead to retaliation. The IMF has forecast an increase in global trade restrictions, with an estimated 3,000 by 2023, up from 1,000 in 2019. If severe fragmentation into geopolitical blocs were to occur, it could lead to a potential 7% reduction in global economic output, equivalent to the combined GDP of Japan and Germany. The IMF's view is that the US should maintain its open trade policy for the benefit of its economic performance, and it encourages both the US and China to address the underlying concerns that contribute to trade tensions between them.
Property sector remains sluggish, new home prices in China fall sharply.
New home prices in China posted their fastest monthly decline in nine years in April, according to data from the National Bureau of Statistics. Prices fell 0.6 per cent on a monthly basis, worse than the 0.3 per cent drop in March, and the sharpest pace of decline since November 2014. House prices have now fallen for ten consecutive months. On an annual basis, new home prices fell by 3.1% in April, the sharpest decline since July 2015. The Chinese authorities have made efforts to revive the struggling property sector, a key driver of the country's economy. However, these efforts have not resulted in a significant recovery. In response, policymakers are considering proposals for local governments to purchase millions of unsold homes.
NIM falls, Chinese banks stop offering high-yield deposit products.
Several banks in China are discontinuing certain deposit products that offer higher interest rates. This decision is being made to ease the financial burden on Chinese banks as they face pressure on their profit margins. Bank of Communications (BoCom), Postal Savings Bank of China, Industrial Bank and China Citic Bank are among the banks that have announced that they will no longer offer some higher-interest retail and corporate deposit products. Instead, they will lower the rates to match the benchmark current account rate, which allows withdrawals at any time. The changes will take effect from 15 May and will affect higher-yielding products such as overnight deposits and term deposits. Beijing has also instructed commercial banks not to offer deposit rates above the regulated ceiling. Smaller banks have been competing for customers by offering higher interest rates, prompting them to lower their deposit rates amid economic challenges and reduced credit demand.