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MNI China Press Digest July 9: RRR Cut, Prudent Policy, EU

MNI (Singapore)

The following lists highlights from Chinese press reports on Friday:

  • The PBOC may carry out structural monetary policies including cutting targeted reserve requirement ratios and refinancing to agriculture and small business in the second half, the 21st Century Business Herald reported citing analysts. Major moves such as a wide-ranging cut of interest rates or reserve ratio are unlikely, as the two-year GDP will be close to the potential, the newspaper said. There could be a RRR cut for lenders meeting the inclusive finance requirement to lend to SMEs, which can help resolve insufficient bank capital while keeping liquidity controlled, the newspaper said citing Wu Chaoming, chief economist of Chasing Securities.
  • The PBOC will continue to implement a prudent monetary policy, reform the loan prime rate system, and promote further reductions in actual loan rates, Deputy Governor Fan Yifei said at a press conference on Thursday, according to a transcript on China.com.cn. As the next step, the PBOC will merge the benchmark lending interest rates with market interest rates, Fan was cited as saying. The central bank must make good use of policies encouraging local banks to lend to SMEs, defer the businesses' loan repayments, and lowering their financing cost, Fan said. PBOC will also actively promote the wider use of its digital yuan both wholesaling to commercial banks for larger sums and to consumers for retail transactions, he said.
  • European governments are unlikely to carry out the non-binding resolution of the European Parliament passed on Thursday, which advocated tough measures on China over Hong Kong freedom as well as a diplomatic boycott of the 2022 Beijing Winter Olympics, the Global Times said in a commentary. There is a large gap between the resolution of the EP and actual policies of the EU, it said. If Washington and Brussels insist on launching fierce confrontations with China regarding issues of Hong Kong and Xinjiang, China is willing to accept the result of such confrontations, it said. China doesn't believe the pressure piled from the U.S. and the West will have a big influence, it said.
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