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China taps blockchain tech to help firns hit by virus

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Giant letters, reading the word ‘blockchain’, are displayed at the blockchain centre, which aims at boosting start-ups, on February 7, 2018 in Lithuania’s capital Vilnius.

Petras Malukas | AFP | Getty Images

BEIJING – As Chinese authorities rush to support businesses struggling to survive the effects of the new coronavirus, blockchain technology is showing its potential in an archaic financing system.

Since the Lunar New Year holiday, 87 China-based businesses have received more than $200 million in loans through a cross-border, pilot blockchain finance platform, Xuan Changneng, vice director of the State Administration of Foreign Exchange, disclosed at a press conference on Saturday. He did not specify a date.

The holiday, also known as the Spring Festival, was extended by three days to Feb. 2 in an effort to limit the spread of a pneumonia-causing virus that has now killed more than 1,500 people. More than half of China further delayed the shutdown by at least a week and many parts of the country are still far from operating normally.

“(Due to the impact of the virus), the negative effects of previous pain points such as lack of trust in business, verification inefficiency, lack of information sharing and difficulty of timely supervision have been further amplified,” Henry Ma, chief information officer at Tencent-backed online lender WeBank, said, according to a CNBC translation of his Chinese-language statement.

“The cross-border, financial blockchain services platform can play a bigger role, and help medium and small-sized enterprises improve the efficiency and convenience of getting export trade financing and other financial credit support,” Ma said.

Privately-run, smaller businesses are among the hardest hit by the virus’ disruptions. In the last few weeks, central and local governments have made a flurry of announcements to support these smaller businesses, which contribute to more than half of national economic growth and employment.

It’s a step up from the national government’s efforts of the last few years — to try to improve privately-run businesses’ access to financing in a state-dominated system with no established credit score records and a preference for state-run enterprises.

As of noon on Friday, banks and financial institutions have supplied more than 537 billion yuan ($76.9 billion) in credit to fight the virus, Liang Tao, deputy head of the China Banking and Insurance Regulatory Commission, said Saturday morning at the same press conference in Beijing.

Blockchain is the same technology behind cryptocurrencies such as bitcoin. Trading of the digital currencies is officially banned in China, but the country has been rapidly pressing ahead with the development of blockchain. In October, Chinese President Xi Jinping emphasized the need for the country to become a leader in the technology.

In theory, a blockchain-based system allows users to create a permanent record of key documents that is easily accessible. This gives lenders a basis of trust and allows them to quickly assess how much money they can safely loan someone. For the Chinese platform pilot, a state media report said it can take just a day to apply for and receive a loan on it. In contrast, traditional loan applications in China can take days or weeks.

WeBank’s Ma also pointed out that with blockchain, regulators can better scrutinize transactions and respond more quickly to fraud or risks.

China’s foreign exchange regulator launched the “cross-border finance blockchain services platform pilot” in March 2019. As of Feb. 3, it had processed $15.9 billion in loans to nearly 2,500 businesses, three-fourths of which were medium and mid-sized enterprises, Xuan said. He noted more than 170 corporate banks have joined, along with 22 provinces, autonomous regions and municipalities.

In addition to building trust, blockchain allows for rapid exchanges of different currencies. The Chinese platform is already handling foreign currencies, and Xuan noted on Saturday that since Hubei province joined the platform in January, foreign businesses located there can benefit from greater efficiency in areas such as export trade financing.

Alex Yang, CEO of blockchain development company V.Systems, pointed out that the blockchain system implemented here is a closed one, in which one entity retains control. That removes some technical hurdles that open source “public” and “decentralized” financial blockchain systems face in achieving the same goal, he said, according to a CNBC translation of his Mandarin-language remarks.

Still, Yang noted that, “if there are more and more applications, and more financial institutions pay attention, then it will be good for the development of blockchain.”

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China reports March manufacturing PMI amid coronavirus outbreak

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China on Tuesday said the official Purchasing Manager’s Index for March was 52.0, beating expectations for an economy hit by the coronavirus outbreak.

Analysts polled by Reuters had expected the official PMI to come in at 45 for the month of March.

In February, the official PMI hit a record low of 35.7.

PMI readings above 50 indicate expansion, while those below that level signal contraction.

China’s National Bureau of Statistics said in its announcement of the PMI reading that there was continued improvement in the prevention and control of the outbreak in March, with a significant acceleration in the resumption of production.

Sub-indices for production, new orders and employment expanded, the bureau said.

In March, the situation of epidemic prevention and control in China continued to improve, the order of production and living was steadily restored, and the resumption of production and production of enterprises accelerated significantly.

Earlier this year, manufacturing activity slowed dramatically in China as the government instituted large-scale lockdowns and quarantines to contain the spread of the coronavirus disease, formally known as COVID-19.

On Monday, China’s Ministry of Industry and Information Technology said that as of March 28, the resumption of work rate for industrial enterprises was 98.6%, and the return of workers stood at 89.9%.

A private PMI survey by Caixin and IHS Markit will be released on Wednesday.

The Caixin/Markit survey features a bigger mix of small- and medium-sized firms. In comparison, the official PMI survey typically polls a large proportion of big businesses and state-owned companies.

— CNBC’s Evelyn Cheng contributed to this report.

This is breaking news. Please check back for updates.

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Amazon fires Staten Island coronavirus strike leader Chris Smalls

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Amazon has fired a Staten Island warehouse worker who organized a strike to demand greater protections for employees amid the coronavirus outbreak.

Chris Smalls, a management assistant at the facility, known as JFK8, said he was fired Monday afternoon following the strike. Smalls and other employees walked out to call attention to the lack of protections for warehouse workers. The workers are also urging Amazon to close the facility after a worker tested positive for the coronavirus last week. The organizers said that at least 50 people joined the walkout.

“Amazon would rather fire workers than face up to its total failure to do what it should to keep us, our families, and our communities safe,” Smalls said in a statement. “I am outraged and disappointed, but I’m not shocked. As usual, Amazon would rather sweep a problem under the rug than act to keep workers and working communities safe.” 

An Amazon spokesperson confirmed to CNBC that Smalls was fired, saying he received “multiple warnings” for violating social distancing guidelines and refusing to remain quarantined after coming into close contact with an associate who tested positive for the virus. 

“Despite that instruction to stay home with pay, he came onsite today, March 30, further putting the teams at risk,” the spokesperson said. “This is unacceptable and we have terminated his employment as a result of these multiple safety issues.”

Amazon also disputed the number of employees that participated in the strike, saying 15 people walked out at the facility. The company called the workers’ accusations “unfounded” and said it has taken “extreme measures” to make sure employees are safe while on the job.

“Like all businesses grappling with the ongoing coronavirus pandemic, we are working hard to keep employees safe while serving communities and the most vulnerable,” the company said in a statement. “The truth is the vast majority of employees continue to show up and do the heroic work of delivering for customers every day.”

Still, Amazon employees at multiple facilities who spoke to CNBC argue that the company’s efforts aren’t enough to keep them safe. They say uneven safety precautions at facilities across the country have sown feelings of distrust between workers and their managers. Workers say they’ve become worried that managers aren’t being honest about whether employees are sick with the virus, so that they can keep the facilities open. 

At some facilities, workers say essential supplies like hand sanitizer and disinfectant wipes are rationed or there’s none available, putting them at risk of catching the virus. Warehouse workers say they’re forced to choose between going to work and risking their health or staying home and not being able to pay their bills. 

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Australia stocks jump 3%; China to release manufacturing PMI numbers

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Stocks in Asia Pacific traded higher on Tuesday morning ahead of the release of China’s official manufacturing Purchasing Managers’ Index for March, expected at 9:00 a.m. HK/SIN.

Australian shares led gains in the region’s major markets, with the S&P/ASX 200 up 3.17%. The moves came after the index got off to a flying start to the week and surged by 7% on Monday.

Over in South Korea, the Kospi also rose 1.63% while the Kosdaq index gained 2.58%. Japan’s Nikkei 225 saw more muted gains as it added 0.51%, while the Topix index advanced 0.13%.

Overall, the MSCI Asia ex-Japan index traded 0.76% higher.

Investors will be watching for the release of China’s official manufacturing PMI for March on Tuesday morning. The data could offer clues to the scale of economic impact from the coronavirus outbreak in China, where the disease was first reported.

“We expect the official manufacturing PMI to rebound from 35.7pt in February to 45pt in March,” Joseph Capurso, senior currency strategist at Commonwealth Bank of Australia, wrote in a note. “That would be above the GFC‑low of 38.8pt reached in November 2008,” he said referring to the Global Financial Crisis.

PMI readings below 50 signify a contraction, while figures above that level indicate an expansion.

Overnight on Wall Street, the Dow Jones Industrial Average rose 690.70 points to close at 22,327.48 while the S&P 500 added 3.4% to end its trading day at 2,626.65. The Nasdaq Composite also closed 3.6% higher at 7,774.15.

Oil prices attempted to rebound from the previous day’s plunge in the morning of Asian trading hours on Tuesday. International benchmark Brent crude futures gained 1.19% to $23.03 per barrel. U.S. crude futures were also up 2.84% to $20.66 per barrel.

The moves came after oil prices plummeted Monday to levels not seen in almost two decades — Brent fell 8.7% to settle at $22.76 per barrel, a price last seen in 2002. U.S. crude fell 6.6%, or $1.42, to settle at $20.09, its lowest level since February 2002.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 99.221, below levels above 100 seen last week.

The Japanese yen traded at 108.04 per dollar after touching an earlier high of 107.72. The Australian dollar changed hands at $0.6167, still above levels below $0.6 seen last week.

Here’s a look at what’s on tap in the trading day ahead:

  • China: Official manufacturing PMI and non-manufacturing PMI for March at 9:00 a.m. HK/SIN

⁠— CNBC’s Pippa Stevens contributed to this report.

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