Launching China Economic Issues

The HKMA has launched a dedicated research series on economic, monetary and financial developments in China.

With closer economic and financial integration between Hong Kong and the Mainland, there is increasing recognition that developments in the Mainland economy have important implications for Hong Kong's economic well-being and financial stability, and for its role as an international financial centre. This recognition is reflected in the HKMA's efforts to foster financial co-operation between Hong Kong and the Mainland, and expand our country's financial markets.

As part of our efforts on this front, we have strengthened our monitoring and research on the Mainland economy. This week we are launching China Economic Issues (CEI) – a dedicated research series which aims to provide detailed analysis of economic and financial market issues on the Mainland. This represents a significant addition to our existing publications on the Mainland economy, which include regular assessments in the Half-Yearly Monetary and Financial Stability Report and special studies published in the HKMA Quarterly Bulletin or as Research Memorandums.

In analysing the important economic, monetary and financial developments in the Mainland economy, CEI focuses on their implications for Hong Kong. How will these developments affect Hong Kong's economic growth? What are the implications for financial stability in Hong Kong? What should be Hong Kong's strategies and policies to strengthen our position as China's international financial centre?

We are publishing five reports written during 2006 to launch the series. The topics of the reports encompass a number of key aspects of the Mainland's macroeconomy and financial markets. The first issue in the series analyses the interest-rate structure of the Mainland, arguing that the issuing rate of central bank bills and the repo rate are the key policy and money market rates. Another paper presents empirical estimates suggesting that changes in the renminbi exchange rate in effective terms can affect the Mainland's external trade. Two other papers review recent developments in commodity futures and renminbi derivatives markets, and consider implications for Hong Kong's role in the growth of these markets. In particular, the study on renminbi derivatives markets finds that, in the onshore market, forward pricing has been increasingly driven by financial fundamentals such as the interest rate differential between the renminbi and US dollar denominated assets.

We aim to make CEI accessible to a wider audience with an interest in Mainland issues, and not just those specialising in the financial and economic fields. The main text of each report therefore focuses on explaining the economic logic, while technical analyses are often attached as appendices for the more technically inclined readers.

We hope CEI will become useful reference material for researchers and observers of the Mainland. Like research papers prepared by other central banks, CEI reports do not necessarily represent the HKMA's views, and the views expressed in the papers are those of the authors. As always, we welcome comments and suggestions, and look forward to hearing your thoughts on how to improve CEI.

Joseph Yam
8 March 2007

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