MNI China Press Digest Dec 7: Stable Growth, LPR, Strong Yuan

The following lists highlights from Chinese press reports on Tuesday:

• Chinese President Xi Jinping chaired a key Politburo meeting on Monday, which set the tone for stable economic growth next year, according to a Xinhua News Agency readout. The meeting urged for "seeking progress while emphasizing stability," backed by more proactive fiscal policies and prudent and vital monetary policies, Xinhua said. The meeting emphasized consumption, calling for implementing the strategy of expanding domestic demand, with increased spending and effective investment. The meeting also expressed support for a healthy housing industry and meeting buyers’ reasonable demand, and avoided previous harsh tones against housing speculation. MNI notes that the December Politburo meeting on the economy will soon be followed by the Central Economic Work Conference to flesh out detailed planning for next year.
• China’s December Loan Prime Rate (LPR) may be lowered after the People’s Bank of China released as much as CNY1.2 trillion yuan by cutting banks’ reserve requirement ratios, the 21st Century Business Herald said. The People's Bank of China sets the LPR on the 20th of each month. The amount released through the RRR cut, taking place on Dec. 15, will be CNY200 billion more than the previous cut in July, and it comes mostly from targeted cuts that facilitate SME lending, the newspaper said. The cut was made as the downturn demanded monetary policy response, as the yuan faces little risk of depreciation and as the falling prices of coal and crude oil ease pressure on inflation, it said.
• The Chinese yuan is expected to remain stable and strong, likely around 6.3 against the U.S. dollar in the first half of 2022, supported by strong exports and improved logistics, Yicai.com reported citing market participants. Monday's 50 bps RRR cut isn't expected to weaken its strength against the dollar despite a possible narrowing in interest rate spread, it said. Liquidity stimulus may counter some of the downward pressure on the economy and support the yuan in turn, the newspaper said. Should China continue pursuing “zero Covid”, its high trade surplus may last longer, which has become the dominant factor supporting the yuan, along with capital inflow into China’s equity and bond markets, the newspaper said.