MNI China Press Digest, July 28: PBOC, Dollar, Xi, Home, HSBC

The following lists highlights from Chinese press reports on Tuesday:

The PBOC may lower banks' RRRs twice in H2 by a total of 50 bps and cut the MLF rate by 20 bps to meet the targets of CNY20 trillion in new loans and CNY30 trillion in social financing to consolidate the economic recovery, the 21st Century Business Herald reported. Citing Liu Ligang, Chief China Economist at Citibank, the report said that China's monetary policy should continue to be loose in H2 as the current recovery is still fragile with concerns about PPI deflation, high corporate financing costs and the wide spread in interest rates between China and other major economies.

The U.S. dollar is transitioning to a phase of weakness due to signs of stronger EU integration, increasing risks in U.S. assets and stagnation in global trade, the China Securities Journal reported citing investment bank CICC. This will likely boost demand for precious metals and yuan assets, the newspaper said. Foreign investors have steadily increased their positions in Chinese bonds by CNY322.4 billion in H1, 1.4 times that of the same period last year, the newspaper said.

Chinese President Xi Jinping is likely to use an upcoming speech to unveil more policies to support the Asia Infrastructure Investment Bank (AIIB) and help fund the regional and global economic recovery from the Covid-19 pandemic, the official English-language China Daily reported citing government analysts. Xi is also likely to use the speech to promote China's epidemic containment and growth opportunities, the Daily said.The AIIB has doubled its COVID-19 crisis recovery facility to provide up to $10 billion to member economies, and has approved coronavirus response loans to about a dozen Asian countries, including India, Pakistan, Vietnam, the Philippines, Mongolia and Indonesia, the Daily said.

Chinese authorities may tighten housing policies to keep prices at "healthier levels" in H2 if some cities continue to experience price surges, the Economic Information Daily reported. Citing Yan Yaojin, research director at CRIC, the Daily's report says that the average home price in 100 cities rose 10.9% year on year in H1, with some markets showing larger gains. Hangzhou, Nanjing and Chengdu, three second-tiered cities, led the gains with Chengdu's average jumping as much as 21% y/y, the newspaper said. Housing investments were favored due to lower returns on wealth products and stock volatility.

HSBC may not receive any further benefits in China after it served as an accomplice to the U.S. government's political "murdering" of Huawei, government portal China.com.cn said in a strongly worded commentary written by Tan Hua. Referring to the bank's cooperation with U.S. investigations into Huawei's conduct with Skycom that faulted CFO Meng Wanzhou, the commentary accused HSBC of "shamelessly" bowing to U.S. pressure and agreeing to produce documents to the U.S. Justice Department which betrayed customers for its own illegal interests.