RMB round-up: Guo Shuqing takes charge of CBIRC, no tax on RMB oil futures for foreign participants, China keeps A+ ratings with Fitch

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Regulators:

• The China Banking and Insurance Regulatory Commission formally launched this week, appointing Guo Shuqing, who led the China Banking Regulatory Commission (CBRC), as its chief, according to a March 22 announcement jointly issued by the CBRC and the China Insurance Regulatory Commission (CIRC).

  Guo told the CBIRC’s inaugural meeting that the new regulator will follow and obey the leadership of the Financial Stability and Development Committee, help the financial sector serve the real economy, deepen reform and prevent systemic financial risk.

  The State Council announced the merger of the two regulators last week as part of its package to consolidate and reform government institutions.

Derivatives:

• China will not tax foreign investors and brokers for their gains from trading RMB-denominated crude oil futures, the Ministry of Finance, the State Administration of Taxation, and the China Securities Regulatory Commission said in a March 13 notice, which was made public this Tuesday.

  Foreign investors and brokers making a profit or commission on the back of RMB oil futures transactions will not be taxed, said the joint statement. Individual investors trading the product will also be exempted from income tax for three years.

  RMB oil futures are set to launch on March 28. The product will be traded on Shanghai International Energy Exchange, a subsidiary of Shanghai Futures Exchange.

Ratings:

• Fitch Ratings has maintained China’s A+ long term foreign currency issuer default rating, the credit rating agency said in a March 20 press release.

  Fitch attributed the decision to China’s success in increasing growth momentum, noting that economic growth accelerated for the first time in a decade from 6.7% to 6.9% in 2017, at the same time as the country takes tougher action on taming financial risk and credit growth.

  But the agency also warned that it could change its view on China in the near future.

  “The true test for policy, and the direction of the sovereign rating, will hinge on whether the current bias towards tighter financial regulation endures what Fitch anticipates will be a sequential slowdown in the growth outlook over 2018-2019,” Andrew Fennell, director at Fitch, said in the press release.