MNI China Press Digest April 15: RRR Cut, Investment, Credit

The following lists highlights from Chinese press reports on Friday:

• The People’s Bank of China may cut the reserve requirement ratio on Friday, taking the window opportunity before the Federal Reserve hikes interest rates and shrinks its balance sheet again, the Securities Daily reported citing Wen Bin chief researcher of Minsheng Bank. The probability of policy rate cut in April will be reduced accordingly if RRR was cut this month, the newspaper said citing Wen. A RRR cut can provide banks with sufficient funds to allocate treasury bonds and local government special bonds, coordinating with the fiscal efforts to promote investment, the newspaper said citing Wen.
• China’s infrastructure investment may grow over 10% y/y in Q1, with this year’s total likely to rise by 5-8%, driving up economic growth, the China Securities Journal reported citing analysts. The National Development and Reform Commission has approved 11 projects, with a total investment of CNY287.9 billion in Q1, the second-highest reading for the same period since 2016, just less than Q1 2019, the newspaper said. Infrastructure demand may exceed the market's expectation in Q2 as the epidemic eases and fiscal efforts continue to accelerate projects, the newspaper said.
• Large banks are encouraged to lower their provision coverage in an orderly manner, so to increase their lending ability, the China Securities Journal reported. The asset quality of the banking industry has been greatly improved with the non-performing ratio at a low level of 1.73% by end-2021, leaving downward space for lowering the 196.91% provision coverage ratio without affecting banks’ risk control needs, the newspaper said. The loan loss provision-to-outstanding non-performing loans ratio is required to fall between 120% and 150%, the newspaper added.