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ECONOMY
THIS WEEK> THIS WEEK NO. 19, 2014> ECONOMY
UPDATED: May 4, 2014 NO. 19, MAY 8, 2014
Economy
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ORDERS FLOODING IN: A worker in a Zhejiang-based knitwear company is busy producing football fan scarves for the 2014 FIFA World Cup in Brazil (HU JIANHUAN)

Mobile Payment Thrives

The total trading volume of the third-party payment business rose 43.2 percent year on year to 17.9 trillion yuan ($2.9 trillion) in China in 2013.

The country's third-party mobile payment market also grew as transactions exceeded 1.2 trillion yuan ($191.88 million), up a staggering 707 percent year on year, according to a report by the Institute of Finance and Banking under the Chinese Academy of Social Sciences.

The People's Bank of China (PBC), the central bank, suspended code-based payments and virtual credit cards on March 14, and set a limit on the size of third-party payments, causing discontent in some financial quarters.

Fan Shuangwen, Deputy Director of the PBC's Department of Payments and Settlements, said the limit guaranteed security rather than restricting consumption, and would maintain transparency in the process and prevent money laundering.

Direct Money Exchange

China set up a currency-trading center on the China-Viet Nam border on April 26, which will help end rampant illegal private currency trading.

The ASEAN Currency Business Center, initiated by the Agricultural Bank of China (ABC) in Dongxing, southwest China's Guangxi Zhuang Autonomous Region, will allow direct convertibility of the Chinese yuan and the Vietnamese dong, said Zhang Xiaogao, General Manager of the International Business Department of ABC's Guangxi Branch.

The center, the first of its kind in China, will boost convenience for business people in the border areas, Zhang said, adding that it could help end rampant illegal private currency trading.

Exchanges between the two currencies had to be conducted via the U.S. dollar in local banks, contributing to the business of traders that provide illegal services of direct yuan-dong exchanges in the cross-border region.

Downward Trend

The State Information Center (SIC), a government think tank, on April 28 forecast China's economy to expand by around 7.4 percent in the second quarter, with notable downward pressure and rising financial risks.

The SIC predicted the economy will stay on a steady yet slightly downward track in the second quarter, as growth momentum remains sluggish amid slower income growth, easing investment and weak global recovery.

The center named risks from the property market, local government debt and overcapacity as major threats to financial stability.

After years of intense growth, China's red-hot housing market is showing increasing signs of cooling down. In some cities like Hangzhou and Shanghai, there have been reports of price cuts to promote sales.

"Market expectation change and radical adjustment in the sector may lead to systematic risks that will affect related industries and broader financial and economic stability," the SIC warned.

It advised the government to accelerate implementation of proactive fiscal policies and flexible use of prudent monetary policies.

When appropriate, China should consider lowering the reserve requirement ratio for banks, the SIC said.

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