CBN丨15 bps in 2 month: China cuts benchmark lending rate to shore up growth

China Business Now李莹亮,见习记者张然 2022-01-20 19:04


Hi everyone. I’m Stephanie LI.


Coming up on today’s program.


  • China's central bank lowers one-year and five-year LPR by 10 and 5 basis points, respectively;

  • Top regulators set out to regulate China's platform economy.

Here’s what you need to know about China in the past 24 hours 


Just as widely anticipated, China’s central bank cut its benchmark lending rate for a second straight month on Thursday, and lowers a mortgage reference rate for the first time in nearly two years.

This came after an unexpected cut to the interest rate of the one-year medium-term lending facility (MLF) on Monday. 

The one-year loan prime rate (LPR), on which most new and outstanding loans are based, was cut by 10 basis points to 3.7 percent, according to the People’s Bank of China (PBOC). In December, the PBOC cut the one-year LPR for the first time since April 2020.

The five-year LPR, which is a reference for mortgages, was lowered by 5 basis points from 4.65 percent to 4.6 percent, which was the first cut for 21 months.

Beijing has been trying to keep a lid on surging home prices and debt levels in recent years, but more developers are defaulting and many construction projects have been delayed. With the property downturn seen persisting through the first half of this year, and with sporadic coronavirus outbreaks dampening consumer activity, many analysts expect more easing measures soon. 

After China's top leadership acknowledged the increasing downside risks in December, more front-loading policies by the central bank are warranted. The LPR reductions are expected to stimulate corporate investment and social consumption, two major levers of economy, as China is facing the headwind of economic slowdown this year.





China's top regulators on Wednesday released a sweeping guideline on regulating various aspects of online platform businesses, including their investments in financial institutions, big data-enabled price discrimination against customers and monopolistic behaviours, to promote the industry's sound and sustained development. 

Online platform economy, valued at 39.2 trillion yuan in 2020, accounts for 38.6 percent of GDP and plays an increasingly prominent role in China’s social and economic development.

The 19-point notice, which was issued by nine central government organs led by the National Development and Reform Commission, said that online platform companies mush strictly regulate their investments and stakes in financial institutions and local financial organisations, and meet the required leverage ratio. 

Supervision of payments should be improved to cut the "inappropriate connection" between payment tools and other financial products.

The circular also proposed revision of the country's anti-monopoly law and improving laws related to data security and personal information protection.






Update on COVID-19


  • Mainland China reported 43 domestic cases on Wednesday, with 24 in Henan province, 14 in Tianjin, 3 in Beijing and 2 in Zhuhai city of Guangdong. 


Next on industry and company news


  • Ownership of Chinese video site operator Youku has passed from Alibaba Cultural Entertainment to one of its units, the Shanghai-based Quan Tudou Network Technology. Alibaba’s digital media and entertainment division, which includes Youku and Tudou, earned 8.1 billion yuan in the third quarter last year.


  • China’s central SOEs registered their best performance ever in 2021, with net profits hitting 1.8 trillion yuan, up 29.8 percent year on year. The average debt-to-asset ratio reached 65 percent at the end of December.


  • China penalized a unit of state-owned oil giant PetroChina for illegally trading imported crude oil. The subsidiary of PetroChina was cited for reselling 180 million tons of imported crude oil to 115 local refinery companies over the past 15 years, the National Audit Office found, which would have a market cost of more than $100 billion at today’s prices.


  • US coffeehouse chain Starbucks announced its new alliance with on-demand local services giant Meituan after an exclusive contract with Alibaba-backed Eleme expired, enabling more consumers to make reservations at its stores and get their coffee delivered. Starbucks could potentially expand its business by tapping into Meituan's 62 million customers base.


  • European aircraft manufacturer Airbus will set up its first sustainable aircraft life cycle services centre in China after signing a memorandum of understanding with the government of Chengdu, Sichuan province. With an investment of 6 billion yuan ($945 million), the centre will provide services including aircraft parking, storage, maintenance, upgrades, conversions, dismantling and recycling.


  • China’s e-commerce giants and Canada’s Shopify, have signed a deal which will give merchants in the U.S. and China better access to customers on their respective platforms and markets. The deal will allow Shopify merchants in the U.S. to sell their products on JD’s marketplace, giving them access to JD’s 550 million active customers in China. 


  • Tencent ranked as the most valuable private Chinese company in 2021, despite a 1 trillion yuan wipeout, with a value of 3.9 trillion yuan last year, followed by chipmaker Taiwan Semiconductor Manufacturing Company with 3.7 trillion yuan, according to Hurun Research Institute. Alibaba fell from the top spot to the third position. 


Wrapping up with a quick look at the stock market


  • Chinese stocks continued to edge down on Thursday as stocks in the oil and gas sector declined. The Shanghai Composite fell 0.09 percent and the Shenzhen Component lost 0.06 percent. However, the Hang Seng Index surged 3.4 percent as the TECH index rallied. 


Biz Word of the Day


  • The Debt to Asset Ratio, also known as the debt ratio, is a leverage ratio that indicates the percentage of assets that are being financed with debt.



Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI, ZHANG Ran, WEN Sixian

Producer: XIANG Xiufang

Sound Editor: WEN Sixian, Andy YUAN

Graphic Designer: ZHENG Wenjing, LIAO Wanni

Co-produced by 21st Century Business Herald Dept. of Overseas News & SFC Audio/Video Dept.

Presented by SFC

编委:  于晓娜







21世纪经济报道海外部 南财音视频部  联合制作

南方财经全媒体集团  出品

(作者:李莹亮,见习记者张然 编辑:李艳霞)