MNI China Press Digest Aug 25: Pro-Growth Focus, RRR Cut, EU

The following lists highlights from Chinese press reports on Wednesday:

• China has this month intensified signals for a pro-growth focus in the next four months, with increased cross-cycle adjustment measures to ensure a prelude to next year's reasonable growth, the Securities Times said in a front-page report. The PBOC has disclosed that it has made expanding credit the primary objective for the next four months, the official securities newspaper said. The cost of capital is expected to be low given ample monetary supply, the newspaper said. Credit expansion will stabilize after a slowdown in July, and aggregate financing is expected to rebound, it said.
• The PBOC may time another RRR cut when the liquidity is pressured by CNY3.05 trillion of MLFs maturing before the yearend, as simply rolling over MLFs will see more funds going to large banks instead of smaller banks supporting SMEs, the 21st Century Business Herald reported citing analyst Luo Yunfeng with China Merchants Securities. The RRR cut in July lifted the currency multiplier of creating money to a record high of 7.41, compared with the previous peak of 7.16 in August 2020, the newspaper said. The possible RRR cut will not affect the size of the central bank's balance sheet, as the contraction by about CNY1 trillion in July is mainly due to the decline in the balance of structural monetary instruments such as MLFs, the newspaper said.
• The drastic change in Afghanistan provides a renewed opportunity for cooperation between China and the EU as both sides have economic interests in the region, the Global Times said in an editorial. What has happened in Afghanistan proves that the U.S. is an unreliable partner that will always sacrifice others to protect its own interests, the state-owned newspaper said. European leaders should see that the best course of action is to strengthen cooperation with China, and if the U.S. uses its dollar to sanction Afghanistan, financial cooperation between China and the EU with the rising status of the euro and the yuan may help the country out, Global Times said.