-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Chart Packs -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessREPEAT: MNI: China Seen Cutting Growth Target Amid Trade War
Repeats Story Initially Transmitted at 05:40 GMT Jul 13/01:40 EST Jul 13
--MNI Interview With Bank of China Economist Zong Liang
--China ODI to U.S. Sharply Drops: BOC Zong
--China to Provide Credit Bailout To Impacted Sectors: Zong
--USDCNY at 6.6 a "Comfortable Level": BOC's Zong
BEIJING (MNI) - China may accept slower growth and selectively boost
liquidity to help lessen the impact of the trade war with the U.S., Zong Liang,
vice general manager of the Strategic Department at the Bank of China (BOC),
told MNI in an interview.
Policymakers may allow "a modest drop of the GDP target" if the conflict
escalates to the extreme, Zong said. The central bank will support the sectors
hardest hit by the ongoing conflict by preferential credit measures, such as
reducing the reserve ratio, he said.
"The trade war is the biggest uncertainty for China's economy, which will
push the country to further open up the domestic market and accelerate to
explore new outside markets," said Zong, who is also the chief researcher at
BOC.
Zong spoke to MNI after the U.S. announced on Tuesday a checklist to place
a second round of tariffs on a further $200 billion of Chinese imports,
following the first round of levies on $34 billion goods imposed on July 6.
Beijing immediately responded with countermeasures.
The economist, who advises the government on policy-setting, expects more
China-U.S. confrontation and retaliatory measures before things improve.
--SPENDING POTENTIAL
However, the domestic market's spending potential will offset some of the
impact of a trade war, so the country will press on with the opening up of its
goods and capital markets and attract foreign participation, he said.
"China will significantly lower the barriers of entry in some key sectors,
such as automobile, medicine while cutting tariffs for other trade partners,
particularly for other soybean exporters," Zong said.
In addition, the country is trying to attract foreign capital by easing
controls and becoming a friendlier destination for investment.
"The opening-up policies involving financial markets will help attract
global capital and prevent investment from flowing all to the U.S. under the
trade war threats, which is also a measure to counter the extreme American
policy," Zong said.
--NEW INVESTMENT DESTINATIONS
China will seek out new investment destinations and pursue initiatives such
as the Belt and Road to offset the loss of exports into the U.S., said Zong.
Direct investment into the U.S from China will likely plunge. "The 'America
First' principle and the protectionism the U.S upholds will discourage Chinese
companies," said Zong. China's government will also discourage its companies
from investing in the U.S., he said.
ODI from China to the U.S. in the first five months plunged 92% from last
year to USD 1.8 billion, the least in seven years, according to a report last
month by the research firm Rodium Group.
The current so-called structural easing is appropriate for the current
economic conditions by improving the targeted enforcement, according to Zong.
--STRUCTURAL TOOLS
"Both the domestic real economy and the outside situation do not leave much
space for big changes in China's interest rates, so structural tools, including
targeted RRR cuts, are the right option," Zong said.
"Against the backdrop of the trade war, we need to prepare our companies,
particularly those that may be heavily hit, so the policy will provide some
liquidity support," he said.
However, Zong warned that the central bank should gauge the pace of further
RRR cuts against the impact of the trade spat and unstable yuan exchange rate.
As a specialist at BOC in charge of one-fourth of the cross-border yuan
settlement in China, Zong said the band of the yuan's volatility against the
U.S. dollar has been confirmed in the recent years, so USDCNY6.3-6.9 should be
a comfortable level.
"USDCNY at about 6.6 is appropriate being in the middle of the band," Zong
said. As the currency is a managed float, the yuan will not experience sharp
volatility like the U.S. dollar, he said.
--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
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.