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CHINA

Swiss central bank OKs China currency trading

Switzerland's central bank said Wednesday it had signed a pact with the People's Bank of China (PBOC) to set up clearing arrangements for renminbi trading in a move hailed by the domestic banking lobby.

Swiss central bank OKs China currency trading
Photo: AFP

The Swiss banking sector, facing the end of the secrecy that was once the bedrock of its business, is turning to China as it seeks new markets for the future.
   
The Swiss National Bank (SNB) said the pact will "promote the use of the renminbi by enterprises and financial institutions in their transactions and help facilitate bilateral trade and investment."
   
The Chinese bank meanwhile also agreed to extend a pilot scheme for foreign investors in Switzerland with a quota of 50 billion renminbi ($8 billion).
   
The SNB and PBOC had reached a bilateral swap agreement — a currency exchange deal — in July.
   
The Swiss Association of Bankers hailed the move and the quota saying the latter was "an important prerequisite for Swiss banks to be able to invest directly in renminbi denominated products and to participate in the renminbi capital market."
   
Between October 2010 and February last year, the renminbi climbed from 35th place to seventh place in the list of international currencies used globally for transactions, overtaking even the Swiss franc, the Swiss bankers' association said.

Meanwhile, at the World Economic Forum in Davos on Wednesday China's Premier Li Keqiang sought to allay fears over the Asian giant's growth outlook, telling business and government elites that the economy is not heading for a sharp slowdown.
   
A day after China posted the weakest growth in almost a quarter of a decade, Li vowed to push on with structural reforms which he said would deliver "quality growth" rather than just a high top-line figure.
   
"What I want to emphasize is that regional or systemic financial crises will not happen in China and that the Chinese economy will not head for a hard landing," Li said.
   
He added that if China did not lose sight of its planned reforms, its economic train "will not lose speed or momentum" but will "run smoother and stronger".
   
China's economy grew by 7.4 percent in 2014, slower than the 7.7 percent in 2013, raising concerns at a time when the global economy is looking to the Asian giant to maintain growth momentum.
   
The full-year result, the worst since 3.8 percent recorded in 1990, comes after one of the pillars of the global economy was hit by manufacturing and trade weakness as well as declining prices for real estate, which has hammered the key property sector.
   
In its latest World Economic Outlook update, released Tuesday, the International Monetary Fund projected even slower growth this year, of 6.8 percent.
   
African and Latin American commodity producers in particular are watching anxiously as slackening demand in China hurts their vital exports.
   
But Li argued that efforts made by the government to shift China's economy away from one that is investment and export driven towards greater consumption would ultimately make growth more sustainable for the world.

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CHINA

Swiss claim China deal posed no threat to dissidents

The Swiss strongly rejected accusations this week that a deal allowing Chinese officials to enter Switzerland and interrogate Chinese nationals, which only recently came to light, put dissidents at risk.

Swiss claim China deal posed no threat to dissidents
Chinese Foreign Minister Wang Yi meets Swiss Foreign Minister Didier Burkhalter in Beijing in 2016. Photo: Mark Schiedelbein/POOL/AFP
Switzerland entered into a so-called re-admission agreement with China back in 2015. The deal expired on Monday.
   
The agreement, which remained a secret until Swiss newspaper NZZ divulged its existence in August, specified the terms for Chinese officials to travel to the country and interrogate Chinese nationals set for deportation.
   
Asia-focused rights group Safeguard Defenders this week published the text of the deal, plus a report about how it differed from similar agreements with other countries, and could pose a threat to “those the Chinese government wants to be returned”.
   
The details coming to light are “going to tarnish Switzerland's reputation”, Peter Dahlin, who heads the organisation, told AFP.
   
Following the initial revelation of the agreement in August, since-jailed Hong Kong dissident Joshua Wong weighed in on Twitter, decrying the secretive nature of the deal.
   
“Five years after the secret deal was signed, no Swiss MP had ever heard of the deal,” he tweeted on August 24, warning that “dissidents in exile” from Hong Kong, Taiwan and elsewhere, could risk extradition to China.
 
 
'Standard practice'
 
The Swiss migration ministry meanwhile flatly denied that there was anything secretive about the China deal, insisting it was a standard, “technical arrangement” like the ones it had reached with some 60 other countries.
   
While the agreement had never been posted publicly like many such deals, it “can be obtained on request at any time”, it said in a statement.   
 
Ministry spokesman Reto Kormann also stressed to AFP in an email that persons seen as threatened, like Uighur Muslims or Tibetans, would not be considered for expulsion, and “would not be questioned by Chinese officials”.
   
He explained that readmission agreements were needed because “most states are only willing to take back their own citizens if they can verify their identity”.
   
“Accordingly, such interviews are standard practice in Switzerland as in other European states.”
   
The China deal had been put to use only once in the past five years, in 2016, the ministry said. During that mission, “two Chinese officials stayed in Switzerland for several days to interview a total of 13 people”, it said.
   
The Swiss migration ministry had expected to renew the agreement before it expired on December 7. But it said is was not worried it had lapsed, stressing it was possible to invite in foreign delegations even without it.
   
After the deal came to light back in August, left-leaning parties called for more oversight, and the issue will now be discussed by parliament in the coming months.
   
After that, ministry spokesman Daniel Bach told AFP, talks with Chinese authorities about reinstating the deal would begin. “It is in Switzerland's interest to renew this agreement,” he said.
 
 
'Misleading'
 
The Safeguard Defenders report meanwhile maintained that Switzerland's deal with China was in no way like its agreements with other countries.
   
The report compared Switzerland's deal with China to the ones it has with Sweden, India, Hong Kong and Britain, and said it found glaring differences.
   
“It differs so much,” Dahlin said, that comparing it to typical readmission agreements “is itself misleading”.
   
While such agreements are usually reached with immigration departments or foreign ministries, the deal with China was reached with its public security ministry, which handles immigration, but also police and intelligence matters.
   
The Chinese “experts” sent in are not immigration bureaucrats, but “agents”, Dahlin said, adding that the deal allowed them to “roam freely, conduct interviews and interrogations unsupervised”.
   
He warned the agents could conceivably also move freely throughout Europe's passport-free Schengen area, which “would obviously be a major concern for the capitals in the countries around Switzerland”.
   
Kormann however stressed that the Swiss migration ministry plans the duration of assignments, and the duration of the visas accordingly.
   
Hua Chunying, a spokeswoman for the Chinese foreign ministry meanwhile told AFP the criticism of its agreement with Switzerland was based on “a misinterpretation of the facts”.
   
“Other European countries engage in similar cooperation with China,” she said.
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