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MNI (London)
     BEIJING (MNI) - China and the U.S. signing the 'phase one' agreement
benefits them both along with the rest of the world, stokes market confidence
and will create a lasting positive impact, the People's Bank of China said
Thursday. 
     "Without a doubt, this news is linked to the yuan's recent appreciation" as
the market grows more upbeat on improved China-U.S. relations, Zhou Xuedong, the
central bank's director of general executive office said in Beijing Thursday.
     Here are the main takeaways from remarks by Zhou and Sun Guofeng, the
central bank's director of monetary policy, Ruan Jianhong, director of
statistics and analysis and Zou Lan, director of market operations:
     - China's higher total social financing last year was supported by the
growing lending to the real economy and the slower contraction of lending
through shadow banking, with a large increase in long-term loans to companies
and corporate bonds issuances, Ruan said.
     - The PBOC has pushed the reform of its loan prime rate mechanism and
improved transmission from money market rates to loan rates, Sun said. The
actual rate of the whole economy should be considered when deliberating rate
cuts, he added. The average loan rate in December 2019 was at 5.74%, the lowest
since Q2 2017, and 0.5 percentage point lower than the high point in 2018. Sun
also noted that the current benchmark deposit rate structure will remain for a
long time.
     - There is still some though limited space for RRR cuts, as the current
ratio at average 9.9% is already low compared with both advanced and emerging
economies, and China should keep some wiggle room against future risks, Sun
said.
     - The yuan's flexibility rose in 2019 with a volatility rate of 4%, Sun
said.
     - Statistics show that the banking system didn't boost loans to local
government funding vehicles to swap their debt, and long-term loans to
infrastructure sector were also steady, said Ruan.
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MI$$$$,MT$$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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