MNI China Press Digest Dec 20: CPI, Yuan, Deposit Rates

Highlights from Chinese press reports on Wednesday:

• China’s CPI will moderately recover next year as base effects weaken and demand increases during peak consumption season around New Year’s Day and Spring Festival, according to Li Chao, spokesperson at the National Development and Reform Commission. Li said pork prices could continue their current upward trend and the NDRC would ensure smooth supply of food products during peak season. On domestic demand, Li noted industrial companies have maintained positive profit growth for three consecutive months which would boost workers' income and enhance momentum. (Source: Yicai)
• China should promote the appreciation of the yuan in the long run and keep the currency stable, as excessive depreciation would increase the cost of imports and hurt exports, given that a considerable proportion of China's exports are supported by imports, said Han Yongwen, vice chairman at the China Center for International Economic Exchanges. Meanwhile, to stabilise market expectations, it is also necessary to promote the rebound of the stock market value via institutional reforms, stabilise foreign investment growth and guarantee the delivery of unfinished housing projects, said Han. (Source: 21st Century Business Herald)
• While some small- and medium-sized banks raised deposit rates at year-end to attract depositors and prepare for the credit peak early next year, this will likely not change the overall downward trend, National Business Day reported citing analysts. Some joint-stock banks and city commercial banks see inverted rates of three-year and five-year deposits after an average 4.3 bp m/m rise in three-year products in November. An unnamed researcher from a major bank said the deposit interest rates will likely fall further next year with the decline of the benchmark Loan Prime Rate. The average interest rates of two-, three-, and five-year deposits in November dropped by 27, 39.5, and 43.5 bp in November, compared with end-2022, data by Rong360 Digital Technology Institute showed.