MNI China Press Digest Dec 22: Tariffs, Deposit Rates, PBOC

Highlights from Chinese press reports on Friday:

• China will reduce import tariffs for 1,010 commodities below most-favoured nation tax rates starting from Jan 1, 2024, according to a statement from the State Council Tariff Commission. The measure will support advanced manufacturing by covering short supply items such as lithium chloride, low-arsenic fluorspar, high-purity aluminium, and gas diffusion layers for fuel cells. However, China plans to raise tariffs on specific commodities including ethylene, propylene, and LCD glass substrates in accordance with WTO rules. Overall, policymakers aim to improve linking domestic and international markets and ensure the seamless operation of the nation's supply chains. (Source: 21st Century Business Herald)
• Major state-owned banks will start a new round of deposit interest-rate cuts, only three months after the last round of adjustments, Yicai.com reported. Industrial and Commercial Bank of China took the lead to announce a 10bp cut to three- and six-month, and one-year time deposits, a 20bp cut to two-year, and a 25bp cut to three- and five-year since Friday. After the adjustment, the rates were reduced to 1.15-2%. Banks could further lower deposit rates to offset the pressure on profit margins following the cuts of existing mortgage rates, said Ming Ming, chief economist at CITIC Securities. The net-interest margin of commercial banks was 1.73% by end-Q3, a decrease of 0.21 percentage points from the same period last year, data by National Administration of Financial Regulation showed.
• The People’s Bank of China will promote the private economy to “become bigger, better and stronger," and increase new lending and loan proportion to technological innovation, private SMEs, advanced manufacturing, and green development, said PBOC Governor Pan Gongsheng at a symposium on economic and financial situation. Pan said the resilience of China’s forex market has increased significantly, and the yuan has remained stable at a reasonable and balanced level. (Source: PBOC Website)