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CCTV Script 18/01/2016

– This is the script of CNBC's news report for China's CCTV on January 18, Monday.

Welcome to CNBC Business Daily, I'm Qian Chen.

While we are waiting for 2015's Q4 GDP data from major economies, let's quickly take a look at how analysts forcast the global economy in 2015 and 2016.

This WALL chart is based on Goldman Sachs' 2016 GDP forecast report.

The yellow bars represent each country's 2015 growth, while the blue dot means its gorwth forcast this year.

From left to right, from high to low...

First, let's take a look at India. Thanks to its strong manufacutring and services sectors, India is expected to enjoy a 7.4% GDP growth in 2015.

Goldman expects the country to have a even stronger growth in 2016...climbing to 7.8%.

Other EMs, with a stronger dollar in 2015, capital outflows were rushing out from these countries. In additional, weaker demand from China and falling commodity prices both contributed to the slowdown of EM countries, including Brazil and Russia.

However, Goldman sees that EMs are better positioned than in previous crises, but countries with currencies pegged to the dollar are most at risk of difficult adjustments. Meanwhile, reserve buffers and less reliance on hard currency debt will help EMs manage rebalancing.

The World Bank is giving EMs similar outlooks as well -- seeing a bouncing back in those countries from the currenct bottoms, lasting to 2018.

At the same time, the DM will enjoy a stable recovery.

Among the DMs, Goldman expects the ECB and BOJ will continue its stimulating measures to boost the economy.

We might see the two major economies growin by 1.7% and 1% respectively, while the US and UK will have their labor markets continue march toward fulll employment. However, a stronger dollar will continue bringing extra pressure to American companies.

So overall, the global growth will rise to 3.5%, EMs to 4.9% and DMs keeping around 2%.

Lastly, let's get back to the Chinese economy. Goldman believes that China's slowing down will make its GDP fall to 6.4% in 2016, while the World Bank has not adjusted its 7% forcast, but IMF is giving out a more negative number --6.3%...

Demand from China and its currency movement will still be key things to watch out for.

CNBC's Qian Chen, reporting from Singapore.

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Welcome to CNBC Business Daily, I'm Qian Chen.

With the IMF set to decide on whether to include the Yuan in its SDR basket, we look back at some of the key milestones for the Chinese currency.

In December 1996 Beijing allowed the yuan to be fully convertible into foreign currencies, but ONLY for trade purposes. Not for the capital account.

During the Asian financial crisis, China won praise for not devaluing its currency leaving the Yuan pegged at 8.28 against the US dollar.

WALK

Fast forward to 2005, after Beijing joined the WTO and China shocked the world on July 21 with a 2.1% revaluation, putting the Yuan at 8.11 to the greenback.

It was pretty stable until the global financial crisis... then, in July 2008 the PBOC effectively pegged the Yuan against the dollar at 6.83 as an emergency measure. It stayed around there until the middle of 2010, when the global economy started to recover, returning to a managed float based on a basket of currencies.

Around the same time, the PBOC and HKMA expanded the scope of Yuan clearing in Hong Kong, and offshore trading took off.

WALK

By June 2013 the Yuan was gaining recognition around the globe, and the Bank of England became the 20th central bank to sign a swap deal with the PBOC.

The Chinese central bank has been stepping up reforms this year ahead of the IMF decision.

WALK

And in August , the PBOC surprised investors with a near 2% devaluation, and a shift to a more market oriented yuan reference rate. Another big news in Nov last year... the IMF announced to include YUAN to its SDR basket...marking another milestone for yuan's internationalization.

Now, what's next?

Still facing many challenges ahead, China's policymakers are expectde to conitnue guiding the opening up of the country's financial system and the economy's transition away from export manufacturing and toward consumption.

As the mainland economy slows and regulators scramble to contain wild moves in the yuan and stocks, volatility is a part of the "new normal" for China.

CNBC's Qian Chen, reporting from Singapore.

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Welcome to CNBC Business Daily, I'm Qian Chen.

During the process of currency internationalization, volatility is hardly avoided.

Let's take a look back at how the RMB has performed during the past decade.

After 2005, when Beijing joined the WTO, China has taken many steps in an effort to internationalize its currency, YUAN. The PBOC shocked the world on July 21, 2015, with a 2.1% revaluation, putting the Yuan at 8.11 to the greenback.It was pretty stable until the global financial crisis... then, in July 2008 the PBOC effectively pegged the Yuan against the dollar at 6.83 as an emergency measure. It stayed around there until the middle of 2010, when the global economy started to recover, returning to a managed float based on a basket of currencies.

Than, quickly jumping to August, 2015, which marks a tipping point here.

The PBOC guided the CNYUSD midpoint fix lower, resulting in a 2-day-weakening streak, or 3% devaluation in the Chinese currency.

So overall, between 2006 to 2014, CNYUSD has got strengthened by 23%.

However, starting from 2015, with the FED ending its QE programs and started to expect rate hikes, dollar has been getting stronger. As a result, the PBOC wanted to furthur unpeg Yuan with the dollar as a stronger yuan will hurt China's already slowing down economy.

As a result, in 2015, CNYUSD has weakened by 4.6% and for the first two weeks into 2016, the yuan has depreciated by 1.4% against the greenback.

However, the guided depreciation has brought market volatilities across the globe, not just the Chinese currency and equity markets. So far, the Chinese government has been trying to use its reserves to support the market, intervening the off-shore RMB market in Hong Kong, and for these two trading days, we've been the PBOC set the dollars vs yuan middlepoint fix higher, in an effort to stablize the market.

Data from JP Morgan shows that since 2014's Q2, capital outflows from China has reached $1 trillion. The bank, however, says that major volatilities will happen mainly in the H1 of 2016.

CNBC's Qian Chen, reporting from Singapore.

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