Weekly News 4 - 8 December 2023
Monday, 4 December 2023 “China frames ‘One Province, One Policy’ plan for financial risk” (Business Standard 2023:8).
China's financial regulator, led by Li Yunze, urges provinces to develop individualized plans for managing financial risks, emphasizing a tailored approach instead of a uniform strategy. This directive comes about a month after officials committed to establishing a mechanism to address local debt issues. The country, facing economic challenges, aims to enhance financial risk management, acknowledging the need for region-specific policies.
Li emphasizes a "one province, one policy" approach to risk prevention and management. The focus includes investigating individuals causing major risks and addressing chaos and disruptive behaviour in markets. Additionally, recent pledges include optimizing the debt structure of central and local governments and establishing mechanisms for resolving debt risks and disputes over consumption. People's Bank of China Governor Pan Gongsheng reiterates the commitment to controlling the monetary sluice, indicating a strategy to manage liquidity and money supply.
Tuesday, 5 December 2023 “France keen to lend technical expertise for South Asian power trade” (Mattoo and Baruah 2023:2).
France expresses interest in sharing technical expertise with India for developing cross-border power trade in South Asia, particularly with Bangladesh, Nepal, and Bhutan. Lise Breuil, India country director for AFD, highlights France's experience in creating the European cross-border power market. India aims to establish a robust South Asian energy market, with initiatives such as the India-Nepal-Bangladesh power trade agreement and the India-Sri Lanka power line project.
Ajay Tewari, ministry of power, envisions connecting India's grid with neighbouring countries for a unified market, fostering economic benefits and renewable energy investments. The 'One Sun One World One Grid' scheme aims to link national grids with countries in West Asia and Southeast Asia, with MoUs signed for power connectivity with Saudi Arabia, and plans for the UAE and Singapore.
Wednesday, 6 December 2023 “FDI Inflows Drop 16% in H1 due to Global Recession” (The Economic Times 2023:12).
India's FY24 first-half gross Foreign Direct Investment (FDI) fell by almost 16% to $33.12 billion, marking a second consecutive decline, attributed to global recession fears, the Russia-Ukraine conflict, and reduced GDP growth in major source countries like Singapore, USA, and UK. FDI equity inflows also dropped nearly 24% to $20.49 billion. Minister Pankaj Chaudhary highlighted the impact of factors like natural resource availability, macro-economic stability, and global investment climate on FDI. The government's "investor-friendly" FDI policy aims to attract more investments, allowing 100% foreign investment in most sectors under the automatic route.
Thursday, 7 December 2023 “Private Investments likely to gain pace in H2: CII President” (Gera and Sharma 2023:10).
Confederation of Indian Industry (CII) President R Dinesh anticipates a surge in private investments, becoming more widespread in the second half of the year, providing a crucial boost for the economy to achieve a 6.8% growth in FY24. Survey results from CII members indicate increased investments in H2, spanning various sectors with capacity utilization ranging from 75% to 95%. Noteworthy is the rise in investments in service sectors like real estate and hotels, along with infrastructure-related industries.
Dinesh acknowledges the positive impact of supportive tailwinds on the economy and highlights the importance of maintaining fiscal discipline amidst growing populism. He emphasizes the need for sustained economic growth, outlining key focus areas for the government, including infrastructure, federal reforms, employment support, and sustainability. Dinesh suggests a GST council-like structure for consensus-building on reforms and proposes an employment-linked incentive scheme, especially in sectors like tourism and healthcare, to enhance job creation.
Friday, 8 December 2023 “China’s exports grow for first time in 6 mths” (Business Standard 2023:10).
China's exports grew 0.5% Year-over-Year in November, marking the first positive uptick in six months and providing a boost to the economy. However, imports unexpectedly declined by 0.6%. Analysts suggest that negative sentiment-based surveys may be masking potential improvements in conditions. Challenges persist for Chinese manufacturers, with continued contraction in new export orders. Moody's advised its China staff to work from home ahead of downgrading the outlook for sovereign bonds to negative, citing concerns about potential government inspections.
References:
- Business Standard. 2023. “China frames ‘One Province, One Policy’ plan for financial risk”. 4 December 2023: 8.
- Business Standard. 2023. “China’s exports grow for first time in 6 mths”. 8 December 2023: 10.
- Gera, Ishaan., and Sharma, Yogita Seth. 2023. “Private Investments likely to gain pace in H2: CII President”. The Economic Times, 5 December 2023: 10.
- Mattoo, Shashank., and Baruah, Rituraj. 2023. “France keen to lend technical expertise for South Asian power trade”. Mint, 5 December 2023: 2.
- The Economic Times. 2023. “FDI Inflows Drop 16% in H1 due to Global Recession”. 6 December 2023: 12.
