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VIEW: SocGen write that "amid mounting........>

CHINA: VIEW: SocGen write that "amid mounting signs that growth is slowing
further, the PBoC made two easing announcements during the first week of 2019:
lowering the required reserve ratio (RRR) for all banks by 100bp and broadening
the coverage of its targeted-RRR scheme. Together with the soon-to-launch
targeted-MLF programme, the total liquidity injection will be RMB800bn. In light
of the seasonal spike in liquidity demand ahead the Lunar New Year, we can
hardly say that this amount is significant. Also, the PBoC reiterated that it
has no intention to flood the economy and its stance remains "prudent". To us,
what really stands out with the 100bp cut is the early timing and no-strings-
attached style of the announcements. It shows a stronger sense of urgency - but
not panic - from policymakers. We maintain our view that China's growth will
still get worse in 1H (before stabilising later), and so policy help will keep
coming. More RRR cuts is a foregone conclusion and we argue that the PBoC should
begin to lower interest rates. On the fiscal front, although early March is the
official date for 2019 budget, we may get early announcements of tax cuts soon."

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