MNI China Press Digest July 9: PBOC, New Yuan Loans, CPI

Highlights from Chinese press reports on Tuesday:

• The People’s Bank of China's decision to use temporary repurchase and reverse repurchase tools marks the operational start of a new interest rate corridor, according to Wang Qing, chief macro analyst at Golden Credit Rating. However, capital and money markets face limited disturbance given they have followed the new corridor for some time, Wang added. Zhang Xu, chief fixed income analyst at Everbright Securities, said the central bank still aims for reasonable liquidity to finance the real economy, and will not allow investors to speculate on interest rate products. (Source: Securities Daily)
• China’s new yuan loans will likely reach CNY2.3 to 2.5 trillion in June, a year-on-year decrease of CNY500 to 700 billion, more than May’s CNY950 billion, amid sluggish credit demand and policymakers discouraging banks’ pursuit of large scale credit expansion, said Wang Yifeng, analyst at Everbright Securities. Aggregate finance would reach CNY3.3 to 3.5 trillion, compared to CNY2.07 trillion in the previous month, Wang predicted. M2 money supply could reach 6.8%, slowing from May’s 7% reading, said Zhou Guannan, analyst from Huachuang Securities. This week is the PBOC’s window for releasing June financial data. (Source: Securities Daily)
• Analysts expect China’s June CPI to reach 0.4% y/y up from 0.3% in May, amid rising pork prices, Securities Daily has reported citing Zhongtai Securities analysts. Pork prices have increased 27.2% y/y, while fuel costs are up more than 10%. PPI is expected to decline 0.6% y/y due to base effects, narrowing from May’s 1.4% decline, analysts noted. China’s June inflation data is due on Wednesday.