MNI China Press Digest April 27: PBOC, Employment, Bank Profit

Highlights from Chinese press reports on Thursday:

• Analysts expect the People’s Bank of China to guide down interest rates on loans further, targeting key and weak sectors through its structural monetary tools, with a cut to the reserve requirement ratio in Q3 or Q4 to lower lenders’ funding costs possible, China Securities Journal reported. The PBOC must keep the cost of business and consumer credit low to support the economic recovery. The analysts expected the central bank to enhance support to sectors such as technology, green transition, infrastructure and small businesses. The strength of easing will likely reduce this year compared to the fourth quarter last year, but overall liquidity will remain high in the interbank market, they said.
• China plans to add one million jobs for young people in 2023 as its unemployment ratio jumped to a record high, China Business Network reported citing a circular issued by the State Council. The government wants to prioritise new graduates which totaled about 11.58 million, with the unemployment ratio of young people aged 16-24 increases to 18.3% in Q1 compared to the overall ratio at 5.5%. The circular asked state-own companies to open more positions and lenders should strengthen credit support to sectors that provide new jobs. The authorities will increase subsidies to companies absorbing additional employees.
• China commercial banks' profits suffered in Q1 due to higher interest rates on loans, a surge in deposits and the slow recovery of financial markets, 21st Century Business Herald reported on Wednesday. According to the China Banking and Insurance Regulatory Commission, lenders made net CNY667.9 billion profit in Q1, rising 1.3% y/y, compared to 5.4% at the end of 2022. Meanwhile, the non-preforming loan ratio printed 1.68% and added CNY125.9 billion , down 0.09pp from the same period last year. Lenders enhanced credit support to house buyers with 92% of new mortgage loans directed to the first-house buyers.