MNI China Press Digest Dec 12: PBOC, Pork, November Data

Highlights from Chinese press reports on Tuesday:

• The People’s Bank of China will likely cut the interest rate and reserve requirement ratio in the first half of 2024 to boost domestic demand and resolve local debt risks, said Wang Qing, chief macro analyst at Golden Credit Rating. Wen Bin, chief economist at Minsheng Bank noted low prices and imported inflation pressure gave the PBOC room to cut alongside the expected narrow China-U.S. interest spread, should the Federal Reserve end rate hikes in mid-2024. The PBOC should guide banks to lower deposit interest rates moderately, reduce banks’ liability cost and drop the benchmark Loan Prime Rate by 5-10 bps in the near future, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance Co. (Source: China Securities Journal)
• Pork prices will rise slightly in the short term after failing to increase during peak season as demand has not met supply, according to a report from CITIC Securities. Researchers at China Post Securities expect a limited pork-price rebound before the spring festival, but the industry will experience improved capacity balance in 2024 on a month-on-month basis. In a report from Bruck Research, analysts said market supply will decline after spring 2024 as the market consumes the fattened and frozen pig stockpiles. (Source: Yicai)
• Consumption will drive economic growth in Q4 with economists predicting a 12.1% y/y increase in total retail sales for November, according to Yicai. The news outlet expects November industrial production to slow from the previous month, but grow 5% y/y due to low base effects. Economists predicted fixed-asset investment will grow 2.9%, unchanged from October. Overall, November’s data will show significant improvements from last year, but domestic demand remains insufficient and the foundation for economic recovery still needs consolidation, the economists noted. (Source: Yicai)