MNI China Press Digest Oct 23:RRR Cut, WMP, Dual Circulation

The following lists highlights from Chinese press reports on Friday:

The PBOC is not likely to cut required deposit-reserve ratios to help banks deal with deposit shortages but may use OMOs and MLFs to help when bond issuances or loans are high, the 21st Century Business Herald reported citing an unnamed chief analyst with a securities house. To lower financing costs for non-financial firms, the PBOC required commercial banks to step back from offering high-interest-rate deposit products, resulting in money flowing out of banks, particularly small-and-middle sized banks. The interest rates of interbank deposits issued by those banks have risen to 3.49% from 2%, the lowest point reached in May, the source said adding that monetary policy was likely to maintain the current "tight balance".

China's wealth management products continue to drop in terms of issuance and earning yields after the introduction of new asset management regulations, the Securities Daily reported citing Xu Chengyuan, an analyst from Golden Credit Rating. The regulations have resulted in banks pulling away from expanding the scale of their products, while the stock market rallies have also drawn capital away from the wealth sector. WMPs have long been one of main channels of off-balance-sheet financing for banks. Future wealth management products will follow the Net Asset Value (NAV) standard and become the mainstream, reported the Daily.

China will focus on high quality development and follow the economic development pattern of Chairman Xi Jinping's dual circulation strategy during the 2021-25 Five Year Plan, the People's Daily said citing a meeting of the Standing Committee of the CPC Politburo. Chairman Xi Jinping told the meeting that China would strive for the alleviation of poverty, the mitigation of major risks, and progress in pollution control. Under the dual circulation strategy, the domestic market is the mainstay while the internal and external markets promote each other.