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China stablecoin push – better late than never

South Korea bets on AI investment to revive growth SEOUL: South Korea vowed yesterday to make investment in artificial intelligence (AI) a top policy priority, as the government slashed its economic growth projection for this year due to trade headwinds caused by US tariffs. In the first bi-annual economic policy plan under President Lee Jae Myung’s new administration, the finance ministry said it would introduce from the second half of 2025 policy packages for 30 major AI and innovation projects. These include AI technologies for robots, cars, ships, home appliances, drones, factories and chips, as well as advanced materials and cultural products such as “K-beauty” and “K-food”. “A grand transformation into AI is the only way out of growth declines resulting from a population shock,“ the ministry said in a statement, referring to South Korea’s record low birthrate. While the government plans to include measures such as financial investments, tax incentives and regulatory improvements in the packages, it said it would also create a 100 trillion won (RM302 billion) fund, jointly with the private sector, to invest in strategic sectors. The policy plans aim to make the country one of the world’s top three AI powers and boost potential economic growth rates in a country with the world’s lowest birth rate, the ministry said. South Korea’s potential growth rate is estimated at around 2% and expected to fall below 1% by the late 2040s, though the government hopes the new policies can lift the rate to 3%. Asia’s fourth-largest economy grew in the second quarter at the fastest pace in more than a year, as consumer demand rebounded and technology exports remained robust, but still faces trade uncertainties due to higher US tariffs. Last month, South Korea agreed to a US trade deal that reduces tariffs on the Asian ally to 15% from a threatened 25%, but still higher than the baseline 10% that had been in place. The finance ministry expects the export-reliant economy to grow 0.9% this year, down sharply from the 2% expansion last year and its previous projection of 1.8% in January. The economy is expected to grow 1.8% in 2026, the ministry said. Exports are forecast to grow 0.2% in 2025, but fall 0.5% in 2026, according to the ministry. In 2024, exports jumped 8.1%. Lee’s liberal administration said it would increase government budget spending for next year at a higher rate than this year, emphasising its proactive fiscal policy stance. Other major policy plans announced yesterday include support measures for childcare and work-life balance, stronger sanctions to prevent industrial accidents, regulatory frameworks for digital assets and capital market reforms to win a developed-market designation from a global stock index provider. – Reuters

o Beijing backtracks on crypto ban, eyes Hong Kong for yuan token trials HONG KONG: Sometimes China’s leaders throw markets a curveball, and the latest could prove curvier than most: the country’s state council, or cabinet, may approve a roadmap for boosting global use of the yuan later this month, including a bid to catch up with US progress on stablecoins, per a Reuters report citing unnamed sources. This would follow passage of the Guiding and Establishing National Innovation for US Stablecoins (Genius) Act in Washington. America’s embrace of such tokens had already prompted soul-searching in the People’s Republic, where the state-run Securities Times suggested in June that stablecoins backed by offshore yuan assets could provide “a new path forward for renminbi internationalization in these turbulent times”. Jumping on the bandwagon now may smack of fear of missing out, but it nonetheless marks an inflection point for China’s currency, which is subject to extensive management and strict capital controls. The mere existence of a plan for stablecoins – digital assets that, unlike bitcoin and its ilk, are pegged to fiat currency – would be a massive U-turn for Beijing, which has outlawed cryptocurrency trading and mining in the country since 2021. Hong Kong, which sits outside Chinese capital controls and is already a hub for offshore yuan, would be an ideal place to experiment. The city just launched its own regulatory regime this month for the tokens, which requires every stablecoin to be fully backed by highly liquid assets held in reserve. That means every yuan backed token that is minted will take offshore yuan out of circulation from the city’s pool in equal measure, helping minimize risk to China’s

Beijing’s stablecoin experiment could mark a turning point for the yuan’s role in global finance. – UNSPLASH PIX

yuan, starting with offshore renminbi denominated debt. Issuance of dim sum bonds in Hong Kong this year already topped 475 billion yuan (RM279 billion), per the Financial Times and is on a course to surpass last year’s record high. But that’s largely due to higher yields offered on offshore bonds relative to the domestic market. Of course, it will take significantly more to allow the renminbi to challenge the dollar as a global currency, and any roll-out of yuan stablecoins will be gradual and carefully managed. The country’s leaders are still haunted by the last major push for internationalisation which blew up in 2015, when the People’s Bank of China shifted to a more “market-oriented” system for setting the exchange rate. That coincided with a one-off devaluation which triggered a sell-off so dire that the central bank was forced to burn through US$1 trillion (RM4.2 trillion) of foreign reserves just to stop the fall. It subsequently tightened capital controls, which remain the chief stumbling block to internationalisation. If China is really getting serious about widening foreign use of its currency again, embracing stablecoins can be a positive, if tiny, step in the right direction. – Reuters

stated goal of a strong and stable currency. Obvious candidates to become licensed issuers include the Hong Kong branches of state run lenders like Bank of China and Bank of Communications. They could buy offshore yuan-denominated paper, known as dim sum bonds, to hold in reserve and facilitate issuance. If and when demand for stablecoins grows, China’s central government and policy banks can simply sell more dim sum bonds to these banks to expand the pool of offshore yuan denominated assets. And since the new debt in this scenario simply sits with the banks, authorities do not have to worry about extra liquidity unduly impacting the exchange rate. Use cases will probably be limited at first. Trade finance may be one bright spot: stablecoins can help lower transaction costs, speed up settlements and increase transparency. Stringent anti-money laundering rules included in Hong Kong’s new regulations ought to help assuage concerns over unapproved or illicit use, as should the trail of settlements left on a blockchain by every stablecoin transaction. In an ideal world this would kick off a virtuous cycle that helps bolster global demand for the Early last year, CCRC began negotiating its participation in the two oilfields – Lago Cinco and Lagunillas Lago – and signed in May 2024 a 20 year production sharing contract with Venezuela, said the executive, speaking on condition of anonymity due to the sensitivity of the subject. The contract model, introduced by the Venezuelan government in 2020 under the Anti Blockade Law to cope with US sanctions, allows investors to act as operators in return for an agreed share of production. PDVSA and Venezuela’s oil ministry did not respond to requests for comment. The oilfields in Venezuela’s second largest oil producing region Lake Maracaibo, are part of a group of blocks PDVSA has been seeking partners for in recent years. Most of the intended partners are little known companies with no track record on oil production, according to a PDVSA document. With no previous oil drilling experience, CCRC

Chinese firm begins developing oilfields in Venezuela HOUSTON: China Concord Resources Corp (CCRC) has begun developing two Venezuelan oilfields, planning to invest more than US$1 billion (RM4.2 billion) in a project to produce 60,000 barrels per day of crude oil by end-2026, an executive directly involved in the project said. has since last September sent in around 60 Chinese staff skilled in oilfield development and a Chinese drill rig, aiming to quickly reopen about 100 wells and recover crude output, said the executive.

Production at the two fields, largely mothballed in recent years due to lack of investment and technical expertise, is now running at 12,000 bpd, said the executive. CCRC aims to develop a total of 500 wells and raise output to up to 60,000 bpd by the end of 2026, he said, adding that it’s a mix of light and heavy oil, with light crude to be delivered to PDVSA and heavier crude destined for China. “Because of the US sanctions on Venezuela’s oil sector, no big name companies would dare operate there, handing opportunities to small companies like Concord,“ the executive said. Since the US imposed energy sanctions on Venezuela in 2019, most Chinese state oil firms have stopped lifting oil. Chinese independent refiners, however, continue to buy the oil via traders. – Reuters

The project marks a rare investment by a private Chinese firm in the Opec country, which has struggled to attract foreign capital due to international sanctions on the administration of President Nicolas Maduro. The investment figure and the production plan are being reported for the first time. Beijing has been a key ally of Maduro and his predecessor late President Hugo Chavez and is currently buying more than 90% of Venezuela’s total oil exports. Chinese state oil giant CNPC was among the largest investors in Venezuela’s oil sector before US energy sanctions were first imposed on Venezuela in 2019. China was also a big lender to Venezuela.

OpenAI to launch first India office in Delhi BENGALURU: ChatGPT parent OpenAI will open its first India office in New Delhi later this year, deepening its push in its second-largest market by user numbers. India is a critical market for ChatGPT, where it launched its cheapest yet monthly plan at US$4.60 (RM19.42) just this week, targeting the nearly one billion internet users in the world’s most populous nation.

India from rivals like Google’s Gemini and AI startup Perplexity, both of which have launched offerings that make their advanced plans free for many users in the market. India has the largest population of student users on ChatGPT, and weekly active users here have quadrupled in the past year, OpenAI said in newly shared market data yesterday. – Reuters

help train ChatGPT. The company has denied any wrongdoing. “Opening our first office and building a local team is an important first step in our commitment to make advanced AI more accessible across the country and to build AI for India, and with India,“ OpenAI CEO Sam Altman said in the statement. The company faces strong competition in

OpenAI, which is backed by Microsoft, has been established as a legal entity in India and has begun hiring a local team, the company said in a statement shared with Reuters yesterday.

OpenAI faces legal challenges in India, with news outlets and book publishers accusing the firm of using their content without permission to