China

The PBOC, HKMA, and SFC jointly announced eleven measures on 7 July 2026 to deepen offshore yuan infrastructure, with the centrepiece being an expansion of the RMB Business Facility from 200 billion to 500 billion yuan and the addition of tenors up to three years — five times the facility's October 2025 launch size. The package also raises the Southbound Bond Connect annual quota to 800 billion yuan, schedules a five-year offshore Chinese government bond futures contract on HKEX for 3 August, and prefigures a standing seven-day offshore RMB liquidity tendering mechanism. Each measure maps directly onto constraints the IMF identified in its 2025 Article IV consultation: offshore RMB markets that lack depth and liquidity, a shallow FX hedging market, and a shortage of globally accessible safe RMB assets.

MOFCOM Announcement No. 23 of 2026 added ten named US entities to China's export control list on June 22, 2026, including MP Materials, USA Rare Earth, Ball Aerospace, Oshkosh Defense, and L3Harris Maritime Services, barring them from receiving dual-use goods. The action came two weeks after the Pentagon expanded its Section 1260H Chinese military companies list from 134 to 188 entities, its largest single increase since the list was created. The exchange confirms that both governments are now using entity lists as a routine, reciprocal policy instrument, with a consistent two-to-three-week response cycle between US and Chinese designations.

Two independent economist surveys and prediction-market pricing converge on a Q2 2026 GDP print of 4.6 to 4.7 percent year-on-year, a deceleration of roughly half a percentage point against the 5.2 percent Q2 2025 base. The consumption side is the weakest link: May retail sales posted their first year-on-year decline since December 2022, fixed-asset investment deepened its contraction to -4.1 percent through May, and PBOC credit expansion is flowing more to state-directed infrastructure than to households. A print at or below 4.7 percent with continued retail-sales contraction would clear the threshold for a headline loan prime rate cut at the late-July Politburo meeting window, which the PBOC has explicitly left open since holding the LPR unchanged in April.