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The new normal in China’s financial markets

Nicole Chen
Nicole Chen
Head of China, Refinitiv

At a time of volatility amid the COVID-19 pandemic, China is actively taking firm steps to continue to promote reform and financial liberalization to strengthen its economy. How are China’s financial markets navigating the new normal?


  1. Refinitiv has evolved and enhanced its annual RMB Market Outlook Forum by taking its flagship event online this year.
  2. Refinitiv’s recent Market Outlook Webinar series, which gathered nearly 3,000 attendees, saw industry leaders share insights, noting there are several fundamental factors that should support a steady rise of the RMB exchange rate, including China’s export recovery, the attractiveness of Chinese assets and the decline in the U.S. dollar index.
  3. Refinitiv remains firmly committed to delivering robust China market data, insights and tools to support the business continuity of its clients and empower investors to make better decisions.

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With technology-led processes, virtual office environments and online events likely to become the “new normal” in a post-COVID world, Refinitiv also evolved and enhanced its annual RMB Market Outlook Forum by taking its flagship event online this year.

Refinitiv’s recent Market Outlook Webinar series featured an expanded line-up of industry leaders in China who shared insights into a wide spectrum of topics including opportunities in a post-pandemic era, trends in China’s macroeconomy, and the global FX outlook. The webinar series took place over two weeks and gathered nearly 3,000 attendees from across the financial industry.

China’s Post-Pandemic Economic Outlook

The COVID-19 pandemic has especially impacted China’s “troika” of growth drivers – consumption, exports and investment.

One of the speakers Zhang Ming, Director of the International Investment Research Office at the Institute of World Economics and Politics Chinese Academy of Social Sciences, shared that China’s GDP growth rate has been gradually declining, and this is attributable to an ageing population and the shift from the manufacturing sector to the service industry being the main pillar of economic growth in the country.

However, it was also discussed how China’s economy will move towards structural reform in the future, with its recent policy announcement at the 13th National People’s Congress in May.

Premier Li Keqiang spoke about China’s shift from “six stabilities” or ensuring stability in employment, finance, foreign trade, foreign investment, domestic investment, and market expectations, to “six guarantees”, which refers to guaranteeing employment, basic livelihoods, market order, food and energy security, the stability of industrial supply chains and the operation of local government functions.

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Liquidity in the Post-Pandemic Environment

On the topic of market liquidity in the post-COVID environment, Chang Ming, Deputy General Manager of Jwin Capital shared that traders have absorbed market liquidity during the pandemic, and returns can be obtained by hedging bond interest rates or duration exposures.

He also advised that traders should use liquidity to determine the likelihood that the market has bottomed and assess the assets and liabilities of financial institutions. Although the probability of a second market bottoming has been very high following the recent market drawdowns, when viewed from the perspective of debt stability, the current risk of a second bottoming is minimal.

In fact, he said a second market dip may be a positive development as it could indicate the exit of short-term investments from the market, leaving a good investment window for long-term funds and it could also better optimize the structure of financial markets.

COVID-19’s impact on FX markets

Weighing in on outlook for FX markets, Li Liu Yang, Chief Foreign Exchange Analyst of China Merchants Bank highlighted that the movements of the U.S. dollar exchange rate can be viewed from the perspective of risk appetite and the relative attractiveness of the U.S. economy.

Factors such as the relatively poor control of the pandemic in the U.S., the increase in domestic unrest factors as well as changes to global fund flows have reduced the attractiveness of the U.S. economy.

Looking at the performance of major asset classes, investors’ risk appetite has increased in recent months, and this recovery in risk appetite may not be beneficial for safe-haven assets like the U.S. dollar.

Turning to the Chinese Yuan, Li stressed that despite the global pandemic and the intensification of U.S.-China trade tensions, there are several fundamental factors that should support as steady rise of the RMB exchange rate, including China’s export recovery, the attractiveness of Chinese assets and the decline in the U.S. dollar index.

Navigating the new normal

Following the event, we continue to reflect on the challenges that still lie ahead of us but also the opportunities that they bring.

Refinitiv remains firmly committed to delivering robust China market data, insights and tools to support the business continuity of its clients and empower investors to make better decisions.

Identify trends, generate and test hypotheses, and develop viewpoints and research with Refinitiv Datastream


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