MNI China Press Digest October 23: PBOC, Guan Tao, Stocks

Highlights from Chinese press reports on Monday:

• The People’s Bank of China (PBOC) will promote the sustained recovery of the economy and support the expansion of domestic demand, according to PBOC Governor Pan Gongsheng. In a report delivered to the State Council, Pan said the central bank in future will ensure more precise and powerful monetary policy, and make efforts to reduce financing costs for households and firms. Internationally, Pan said he would promote a normalised and sustainable Sino-U.S. audit cooperation mechanism. Authorities believe the yuan should maintain a stable FX rate at a reasonable and balanced level, Pan added. On property, the central bank will steadily resolve the bond default risks of large real-estate companies. The PBOC will also implement measures to activate the capital market and boost investor confidence. (Source: Yicai)
• China should continue to stimulate the economy and not just settle on achieving the annual growth target of 5%, wrote Guan Tao, former director at the State Administration of Foreign Exchange in an article published by Yicai. It is estimated that achieving the growth target would only need a 4.4% growth in Q4, low-hanging fruit given the higher-than-expected Q3 growth of 4.9% and the low base effect of 2.9% growth in Q4 2022, said Guan. However, the bond and stock market both closed down following the release of strong Q3 data, pointing to weakened expectations for monetary easing and fiscal increases after the economy improves. Guan warns that continuous supports are necessary as China will need to make even greater efforts once growth slows significantly.
• Authorities will likely introduce policies to stabilise the stock market with greater intensity after the Shanghai Composite Index dipped below the 3,000 mark last week, said Yang Delong, chief economist at First Seafront Fund. Many stocks with good long-term performance and high investment value have fallen to 50% off their highs with some even 20% or 30% off, as many investors seek to cut losses at low levels amid panic, which led to the accelerated decline through a key line of defense, said Yang. Asset management institutions have launched a wave of intensive self-purchase, nearly 50 fund companies and securities brokerages have successively issued announcements to purchase their own public funds totaling over CNY2.3 billion since Aug 21. (Source: 21st Century Business Herald)