China Allows Overseas Raised Yuan for FDI

Beijing : China, the world's fastest-growing major economy, formalised rules allowing foreign firms to use overseas raised yuan to make investments in the country. This is a measure initiative to boost its currency to internationalize.

According to the China Business News, trial scheme will permit overseas companies to use Chinese currency raised offshore to set up companies, make acquisitions, increase stakes in subsidiaries and provide loans.

According to central bank statement, companies will be banned from investing in certain industries without providing details. The statement appeared to have been removed from the central bank's website on Wednesday.

The statement marks the first time China has issued specific rules on yuan denominated foreign direct investment (FDI) in the country and hope it would encourage wider use of the currency overseas.

"This policy on yuan-denominated foreign direct investment is a significant stride towards making the yuan an international currency," Deutsche Bank economist Ma Jun was quoted saying.

The rules are expected to accelerate the issue of yuan-denominated bonds and other forms of yuan financing in Hong Kong, a semi-autonomous Chinese territory, Ma added.

Investors have started piling yuan in a bid to capitalise on the currency's expected appreciation, but there are limited investment outlets for the cash.

The People's Bank of China will review yuan-denominated foreign investment projects on a case-by-case basis, the report said.

Beijing in recent years has relaxed limits on the convertibility of the yuan in its push for greater use of the currency abroad.

The country has signed currency swap arrangements with several nations and launched trials for yuan trade settlement with a number of mainly Southeast Asian countries.

Yuan-related financial products have also boomed in Hong Kong, which has been acting as a test bed for Beijing's ambitious goal to turn the unit into a global currency.

In 2009, China, second largest economy of the world after U.S., approved using the yuan to settle cross-border trade with Hong Kong and last year it relaxed rules to allow non-financial foreign firms to issue yuan-denominated bonds.

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China Social Unrest Getting Out of Control

Chinese police forces have managed for now to control the social unrest in the southern manufacturing city of Zengcheng after the workers set fire to government buildings and installation over the weekend.

The event is seen as the warning sign as the economist says the discord is more pain for markets than the china’s soaring inflation."I think that any amount of cracking down is going to be a little bit like in Syria," Enzio Von Pfeil, CEO of the Economic Time Bond Fund told on CNBC. "You've put out the flame in one section of the kitchen but then another flame erupts in another section of the kitchen."

The reactions were sparked after a pregnant woman was manhandled to the ground by security force who tried to remove her food stall in Zengcheng, located in Guangdong province of China.

The primary issue is that such minor incident should not led to massive protest, but it happening and happening with mass participation so this is the sign of worry in the region.

The problems such as endemic corruption and the lack of rule of law were heightening concerns amid rising prices, is becoming intolerable, the spread of this news on social networking sites is further propagating the unrest.

Von Pfeil believes the problems are also aggravated by the household registration system, known as Hukou, which provides social benefits only to registered residents of a city and discriminates against migrant workers. "People are getting caught between having migrated to a new job, not getting the job, and then not having the social benefits."

The toe current is gaining momentum and the Middle East issues are further fueling; possibility burst can’t be rule out amid worsening economy in China.

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Ozone layer over Arctic Region Becoming Thiner

 As per the report of UN weather expert’s ozone layer over the Arctic region is in critical stage. The layer that protects Earth from harmful ultraviolet (UV) rays is getting thinner and thinner because of the excessive use of harmful chemicals in day to day life.

In order to protect the ozone depletion, in year 1887 a treaty was signed after notifying a hole over Antarctic to reduce the uses of the chemicals like Halons and Chlorofluorocarbons. But, the harmful chemical which was already released into the atmosphere continued to degrade the protective ozone layer for decades.

The World Meteorological Organization (WMO) has revealed that the region over the Arctic region has registered a 40 per cent loss from the start of winter to the late March,2011, which is 10 per cent more that of 2010. The excessive loss was due to presence of chemicals and excessive cold winter.

The ozone layer is now thinner than ever over the Arctic and it will result in the harmful exposure of UV radiation to the areas of Greenland, Scandinavia and Siberia.

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