MNI China Press Digest Feb 16: PBOC, Capital Flows, MLF

Highlights from Chinese press reports on Thursday:

• The People's Bank of China (PBOC) will promote the further two-way opening up of China’s financial markets, and ensure more support for the real economy in 2023, according to minutes from the central banks’ recent Financial Market Work Conference. The PBOC said it will step up the implementation of differentiated housing credit policies according to localised conditions, and will be closely monitoring dynamic changes in the housing market to better implement its policies. In 2023, the central bank will enhance market mechanisms for bond underwriting and investor qualification, improve the macro management of financial bonds, and develop market-oriented pricing of the bond market. The conference was attended by vice governor Pan Gongsheng.
• China's cross-border capital flows were stable in January, and the supply and demand of foreign exchange inside and outside the country was balanced, according to Wang Chunying, deputy director of the State Administration of Foreign Exchange. Wang, speaking to reporters, noted overseas investors had bought a net USD27.7 billion of domestic stocks, setting a record high for a single month, as foreign financial firms returned to China following the end of the Covid-zero policy. The foundation for maintaining stable cross-border capital flows is solid, and the spill-over effects from worldwide monetary tightening have eased.
• The PBOC’s decision to increase the net amount of its medium-term lending facility (MLF) in February will help curb a rise in money market rates, which will help stabilise market expectations and allow banks to support economic growth by providing credit to the economy at a lower cost, according to the Securities Daily. Citing analysts, the paper said maintaining a stable policy rate on the one-year loan prime rate (LPR) in the short term will enhance stability in the exchange rate market, and alleviate pressure on banks' net interest margins. Downward adjustment in the five-year LPR is likely, especially if the real estate market improves less than expected, the paper said.