MNI China Press Digest July 21: Yuan, RRR Cut, SMEs

Highlights from Chinese press reports on Friday:

• The People’s Bank of China’s move on Thursday to raise a parameter on cross-border corporate financing under its macro-prudential assessments to 1.5 from 1.25 will allow companies to borrow more overseas and attract capital inflows to offset the depreciation pressure on the yuan. The move will also send a strong signal to ensure the stability of yuan at a time when the U.S. Federal Reserve could hike rates further and make speculation too expensive. (Source: 21st Century Business Herald)
• The PBOC will likely cut the reserve requirement ratio in Q3 to support credit expansion and encourage growth, said Feng Lin, senior analyst at Golden Credit Rating. If the PBOC implements the RRR cut, it may keep the medium-term lending facility rate unchanged while lowering the quotation of the Loan Prime Rate, especially for loans with maturities above five years, in order to drive down the rate of mortgages, said Feng. (Source: Securities Daily)
• China will implement financial support measures to boost the private sector, according to Xu Xiaolan, vice minister at the Ministry of Industry and Information Technology. Speaking at a recent press conference, Xu said China attaches great importance to the development of SMEs and will guide the finance industry to increase credit and loans to the sector. The government can use the National Small and Medium Enterprises Development Fund to focus investment on national strategies. The Ministry of Industry and Information Technology will continue working with other departments to expand specialised SME listings on regional equity markets including Beijing and Zhejiang. (Source: State Council Website)