PBOC Suspends Buying Bonds

15 Jan 2025

Compiled by the Caixin newsroom and edited by Josh Dummer

A rundown of the news making headlines in and around China:

PBOC pauses bond purchases: As yields continue to slump and prices rise, China’s central bank has suspended open market purchases of government bonds. The People’s Bank of China (PBOC) said Friday it would resume purchases in the future based on supply and demand conditions. The PBOC restarted open market purchases in August last year, buying a net total of 1 trillion yuan of government bonds through year-end. Yields have steadily fallen, implying demand outstrips supply amid the country’s increasingly accommodative monetary policy. The yield on 10-year government bonds fell from above 2.5% at the start of 2024 to just under 1.7% on Dec. 31.

Tesla Facelift: Tesla launched an updated version of its popular Model Y in China on Friday, aiming to regain sales momentum amid mounting competition from local rivals. The redesigned Model Y features a refreshed exterior and upgraded interior, with a starting price of 263,500 yuan ($35,900), reflecting a 5.4% price increase over the previous version. Deliveries are scheduled for March in China, though its launch date in other markets is unclear. Tesla’s market share in China, the world’s largest electric vehicle market, has been sliding due to competition from rivals such as Xiaomi, which has sold 135,000 vehicles since its debut in March 2024. In its promotional post on social media, Tesla China described the upgrade as “a comprehensive evolution, welcome for comparison.” Xiaomi Chairman Lei Jun quickly shared the post, replying “OK.”

Fake Russian foods: Shanghai’s market watchdog has cracked down on fraudulent “Russian goods” stores in the city. Since late December, the authorities have found several cases of false advertising, with domestically labelled goods being sold under the guise of imported products. Earlier in December, several Russians posted videos on Chinese social media saying they’d never seen some of the “imported” brands before. Russian products — especially bread, sausages, vodka and honey — have become a hot retail trend in recent months. Trade between the two nations has skyrocketed since Russia was placed under Western sanctions over its invasion of Ukraine.

More drone control: As China pushes forward its “low-altitude economy,” it should strengthen regulations and tighten management to ensure safety, a think tank argues. In its latest white paper, the Shenzhen-based International Digital Economy Academy said that the country lacks sufficient infrastructure to monitor low-altitude traffic such as drones. Last month alone, a large number of drones crashed at an aerial show in Fujian province and a large, fixed-wing drone caused a fire when it crashed in Hubei province. Policymakers see giving unmanned drones and electric vertical take-off and landing aircraft a greater role in industries such as transportation, logistics and tourism as a potential source of fresh economic growth.

Chinese soccer reform: The head of the Chinese Football Association (CFA) revealed at a Thursday meeting that the body will delegate the operation of professional leagues to a new body, leaving it as solely the regulator. Chinese soccer has been dogged by corruption scandals since a crackdown kicked off in 2022. At least 14 mid-to-high-level CFA executives or coaches have since been probed, and the former head coach of the national team was jailed last month. According to a state media report of the meeting, Chairman Song Kai also said that the CFA will “make every effort to push Chinese football back on track, regroup and start a new long march for Chinese football.”

Compiled by the Caixin newsroom and edited by Josh Dummer (joshuadummer@caixin.com)

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