MNI China Press Digest Nov 24: RRR Cut, Real Estate, Growth

The following lists highlights from Chinese press reports on Thursday:

• The People’s Bank of China is expected to cut the reserve requirement ratio on Friday, after the State Council executive meeting on Wednesday mentioned using RRR cuts in a timely and appropriate manner to maintain reasonable and ample liquidity, 21st Century Business Herald reported. It may only be a 25bp cut given the need to provide space for additional monetary policy moves, the newspaper said. The possible RRR cut comes amid a slower economic recovery, with October retail sales falling and investment decelerating. Inflation will face downward pressure in the next quarter, and the PPI is likely to keep declining over the short to medium term following October’s 1.3% fall, the newspaper said citing Zheng Houcheng, director of Yingda Securities Research Institute. Since 2019, RRR cuts have been signalled by the Premier at the State Council executive meeting or other occasions, and followed by a PBOC announcement at the end of the week, the newspaper noted.
• The PBOC clarified that private and state-owned firms should be treated equally under its recently unveiled 16-point support plan for the real estate sector, in a notice issued on its website on Wednesday. The central bank said loan restructuring should protect creditors and allow independent commercially driven negotiations between financiers and real-estate developers. The PBOC will support high-quality real estate firms to acquire distressed assets using market orientated methods, and will use policy banks to issue special loans to guarantee delivery of homes for sound borrowers.
• China should aim to bring economic growth back to normal as soon as possible, with the recovery of consumption particularly important amid weakening external demand which could slow exports and manufacturing investment growth next year, Caixin reported citing Wang Yiming, a member of the PBOC’s Monetary Policy Committee. It is necessary to release the spending potential of 460 million families, as it will be difficult to maintain the supply-demand balance if consumption is not supported as exports fall, said Wang. Next year’s monetary policy should continue to be prudent, tilted to loosening, and maintain reasonable and ample liquidity, Wang added.