MNI China Press Digest, Oct 12: Q3 GDP, Yuan, Bank Risks

MNI (Beijing) - The following lists highlights from Chinese press reports on Monday:

China's Q3 GDP is forecast to have increased 5.3% with real estate and infrastructure projects as the main drivers, while rising manufacturing investment and retail sales in Q4 will help round out positive full-year growth, the Securities Daily reported on Monday citing Guotai Junan Securities. Lagging consumption will catch up as more channels which have been locked down due to the pandemic re-open, according to Li Chao, an economist from Zheshang Securities. Export and production strength also drove growth in Q3, Li said.

The PBOC's cut to the forex risk reserve ratio from Oct. 12 is to dampen excessive expectations of a surging yuan, according to a report in the central bank owned Financial News citing analyst Zhou Maohua at China Everbright Bank. As a countercyclical measure, the move removed banks' need to set aside funds for conducting long-term forex settlement business, therefore facilitating more transactions and helping keep the yuan stable, the newspaper said citing Ming Ming, a researcher with Citic Securities. The yuan gained 3.89% in the third quarter, the biggest rise since 2008. The currency is favored to gain further, driven by China's stable recovery and expectations of positive growth this year, the newspaper said citing analysts.

China should step up efforts to promote the restructuring and mergers of smaller banks unable to meet required levels of risk provision, the PBOC-run Financial News reported citing Zeng Gang, a deputy director of National Institute for Finance and Development. Credit risks are likely to linger into next year as the impact of the pandemic on the real economy transmits to banks, Zeng told the newspaper. Banks can still meet the policy target of forgoing CNY1.5 trillion in profits to benefit small-business borrowers by the end of this year by postponing their year end loan payments, Zeng said.

China will apply "normal" monetary policies, including positive interest rates and yield curves, for as long as possible to support sustainable growth, the China Securities Journal reported citing Yi Gang, the governor of the PBOC. Future monetary policies should ensure reasonable growth of M1 and social financing with controlled liquidity to reduce economic fluctuations, Yi said. China's financial system should continue to support the growth of innovative high-end manufacturing and other leading industries, and apply the dual-circulation model for the further opening-up of the economy, the Journal said citing Yi's deputy Chen Yulu.