China's NPC ends with new initiatives - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, says the market's immediate focus is on today's FOMC meeting and Dutch elections. However, China's annual legislative session (National People's Congress) ended earlier today, and Premier Li unveiled a new initiative.  Late this year, China will allow overseas funds to buy onshore bonds in Hong Kong.  

Key quotes

"Details on the mechanics, including implementation timeframe, were not immediately available, but the general thrust is consistent with other measures to boost market accessibility and encourage inflows.  The State Administration of Foreign Exchange (SAFE) announced at the end of last month that foreign institutions that invest in interbank debt market could trade a range of financial products, including forwards, swaps, and options mainland counterparties."

"This weekend, while the G20 are meeting in Germany, US Secretary of State Tillerson is expected to meet China President Xi and Premier Li.  The meeting should pave the path that will lead to the first summit between Trump and Xi in early April.  As we have noted, Trump has walked back from some of the more antagonizing rhetoric, like the threat to abandon the one China policy or to cite China as a currency manipulator.  While there are several Trump Administration officials and advisers that are particularly antagonistic to China.  However,  as we have noted, there are others who accept the general framework the global liberal world order the US has helped facilitate.  Chinese officials, being politically savvy,  are likely to encourage the latter.   Although some of Trump’s supporters may not like it, don’t be surprised if China is not cited as a manipulator in next month’s Treasury report. "