The Daily Update - China Exports / Saudi Arabia’s New Energy Minister

China’s exports took another turn for the worse last month as shipments again fell faster than expected, once more pointing to the fallout from the ongoing trade wars as well as slowing of the global economy. Overall exports fell 1% from a year earlier, the most since June, against analysts expectations of +2.2%. By far the biggest fall was exports to the US, falling 16% year-on-year, on the back of the 6.5% decline in July. Imports from the US slumped by nearly 22.5%.

In an effort to offset the slowing economy the PBoC announced on Friday that it will cut the required reserve ratio (RRR) for all commercial banks, reportedly freeing up funding of approximately CNH900bn (USD126bn), thus allowing banks to increase their lending ability. It’s the seventh time since early 2018 that the rate has been cut. The cut will be effective from the middle of September. As well as cutting the RRR for commercial banks, the PBoC will also cut the reserve ratio for city commercial banks operating in Chinese provinces by 100 basis points, being effective from the middle of October.

Also over the weekend Saudi Arabia’s Energy Minister Khalid Al-Falih was sacked and replaced by Prince Abdulaziz bin Salman, a son of the king, the first time a member of the ruling Al Saud family has held the energy minister post in the world’s top oil exporter. Although Prince Abdulaziz is a longstanding member of Saudi Arabia’s OPEC delegation, he is not expected to change the kingdom’s oil policy any time soon. This is due to the fact that he helped negotiate the current agreement between OPEC and non-OPEC countries to cut global crude supply to support prices and balance the market. Interestingly, since 1960 Saudi Arabia has had just 5 oil ministers, however as mentioned none of them has been a royal.

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