MNI China Press Digest Dec 27: PBOC, Lower Deposit Rates, CGBs

Highlights from Chinese press reports on Wednesday:

• China has appointed Lu Lei as deputy governor of the People's Bank of China (PBOC), replacing Liu Guoqiang, according to a statement from the Ministry of Human Resources and Social Security on Tuesday. Lu, 53, steps down as deputy director of the State Administration of Foreign Exchange (SAFE), a post he has held since 2017. Lu served previously as director of the PBOC’s financial stability bureau and research bureau. Lu said in a recent speech it is necessary to revitalise inefficient financial resources, as 80% of all loans in China need to be recycled and reinvested every year, and there are considerable resources to resolve local-debt risks given to the lower leverage of the central government. (Source: 21st Century Business Herald)
• Chinese banks will likely continue to cut deposit interest rates further to reduce funding costs, even after the third round of deposit rate cuts this year starting last week, Financial News reported citing analysts. The rates of time deposits for one-year, two-year, as well as three- and five-year were cut by 0.1, 0.2, and 0.25 percentage points by six major state-owned banks. This provides downward space for loan interest rates next year, and banks’ net-interest margins, which have been under continuous pressure, are also expected to stabilise. The average net-interest margin of commercial banks was 1.73% by end-Q3, a decrease of 0.21 pp from the same period last year, data by National Administration of Financial Regulation showed.
• China’s infrastructure investment growth will likely pick up as projects accelerate to kick start following government bond sales. The National Development and Reform Commission in mid-December has issued two batches of a total 12,500 projects for the issuance of over CNY800 billion out of the CNY1 trillion additional China Government Bonds announced in October. The growth rate of infrastructure investment slowed to 5.8% in the Jan-Nov period, falling from 9% in the first two months, data by National Bureau of Statistics showed. (Source: 21st Century Business Herald)