CBN丨China will use timely RRR cuts to keep liquidity ample

China Business Now李莹亮 2022-11-24 20:04


Hi everyone. I’m Stephanie LI.


Coming up on today’s program.


  • China signals possible RRR cut and urges more loans to stabilize property market;

  • Shanghai aims to achieve 500 billion yuan output of future industries by 2030.

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


China will use timely cuts in banks' reserve requirement ratio (RRR), which is the amount of cash that banks must hold as reserves, alongside other monetary policy tools, to keep liquidity reasonably ample, state media on Wednesday quoted a cabinet meeting as saying.

Economic activity in the fourth quarter "is crucial for full-year growth", according to the State Council meeting chaired by Premier Li Keqiang on Tuesday, adding that now was a "critical time" to consolidate the economy's stable foundation.

The central bank is expected to announce a 25 basis points RRR cut as early as Friday. The PBOC last cut the RRR by 25 basis points in April when the central bank released about 530 billion yuan ($74 billion) in long-term capital.

The keenly followed monetary policy move will add to the central government's plan to send supervisory task forces to promote local implementation of pro-growth measures, and a fresh call from financial authorities to stabilize lending to property developers.

The Chinese cabinet vowed to support for rigid housing demand and the needs of those upgrading, accelerating lending to guarantee housing delivery, and encouraging commercial banks to make new loans to the real estate sector.

Simultaneously, the central bank and the banking and insurance regulator on Wednesday issued a 16-point notice, outlining steps to support the property industry, including extending loan repayment and supporting high-quality developers in issuing bonds.

Three of China's biggest commercial banks on the same day agreed to provide fundraising support to property developers, including industry giant Vanke and Longfor, in a coordinated effort to support the healthy development of the property sector.

In addition, the cabinet meeting also called for speeding up investment and construction of major infrastructure projects, while pledging to expand consumption and support sound development of the platform economy.










Moving on to regional highlights


  • Shanghai is aiming to reach an output value of about 500 billion yuan in future industries by 2030, Shanghai Municipal Commission of Economy and Information said on Wednesday. According to the plan, the city will build five future industrial clusters in the fields of future health, future intelligence, future energy, future space and future materials, vowing to launch a number of high-end products using "Chinese standards". In the field of energy, it plans to build 70 hydrogen refueling stations by 2025, with forecasted industrial scale of hydrogen energy to exceed 100 billion yuan. 

    上海打造五大未来产业集群:11月23日,上海市出台《上海打造未来产业创新高地 发展壮大未来产业集群行动方案》,提出打造五大产业集群,争取到2030年未来产业产值达到5000亿元左右。行动方案瞄准“健康、智能、能源、空间、材料”五大产业集群,如在氢能领域,计划到2025年,建设各类加氢站70座左右,建成3到5家国际一流的创新研发平台,燃料电池汽车保有量突破1万辆,氢能产业链产业规模突破1000亿元。围绕五大未来产业集群,上海将建设约15个未来产业先导区,攻关一批核心部件,推出一批高端产品,形成一批“中国标准”。 

  • China's home-developed 16-megawatt offshore wind turbine rolled off the production line in East China's Fujian Province on Wednesday, which has the world's largest single-unit capacity and biggest impeller. With a propeller diameter of 252 meters, the wind turbine covers a swept area of 50,000 square meters, according to China Three Gorges Corp. A single unit could produce clean electricity of 66 million kilowatt-hours per year, meeting the annual electricity needs of more than 36,000 urban households. Meanwhile, it'll reduce the consumption of coal by 22,000 tons and reduce carbon dioxide emissions by 54,000 tons every year. 


Greater Bay Area, Greater future


  • The first new eight-car train from Hong Kong’s MTR Corporation will commence service from Nov. 27 on the Kwun Tong Line, gradually replacing the first generation of urban line trains operated under a British system. It also marks the largest investment for the company of HK$6 billion. The corporation placed an order to purchase 93 new trains manufactured by CRRC Qingdao Sifang, which runs at a maximum speed of 80 km/h with a capacity of over 3,000 passengers. 


Next on industry and company news


  • Shanghai's Disney Resort will reopen on Friday after more than three weeks of suspension, it announced today. Visitors will need to show their negative nucleic acid tests taken within 48 hours to enter Disneyland while the time frame is up to 72 hours for those who are planning to enter other adjacent areas. However, as Shanghai recently adjusted its Covid-19 measures, restaurants in the park will not provide eat-in or take-out service to those who arrived in the city for less than five days.


  • Ganfeng Lithium, one of the world's largest lithium producers, announced late Wednesday that it proposed spin-off and listing of its controlled subsidiary Ganfeng LiEnergy Technology Co., Ltd on the Shenzhen Stock Exchange. Ganfeng Lithium also disclosed that it will increase capital to the subsidiary by no more than 2.09 billion yuan with its own funds among other investments.


Earnings reports express


  • Shares of Xiaomi sank after the Chinese handset giant reported 1.5 billion yuan loss in the third quarter, mostly because of a drop in the fair value of the companies in its portfolio, the Beijing-based company said in its latest earnings report yesterday. Revenue fell nearly 10 percent to 70.5 billion yuan. Revenue from the smartphone business fell 11 percent to 42.5 billion yuan in the quarter from a year ago, weighed down by global smartphone shipments’ 8.4 percent decline to 40.2 million units.


  • Lufax Holding, the Chinese financial technology services provider under Ping An Insurance, reported a 67 percent plunge in third-quarter net profit to stand at 1.4 billion yuan, mainly impacted by the macro environment on the company's core clients, Lufax said in its latest earnings report released today. Revenue fell 17 percent to 13.2 billion yuan. The outstanding balance of loans facilitated dropped 1.3 percent to 636.5 billion yuan from a year earlier, with new loans falling 28 percent to 123.8 billion yuan. Over 87 percent of new loans to non-consumer finance units of Lufax went to micro and small companies.


Switching gears to financial news


  • China Vanke has applied to the National Association of Financial Market Institutional Investors for a shelf offering of bonds worth 28 billion yuan, the self-regulatory organization said Tuesday. A number of other non-state developers have also announced plans for shelf offerings, after regulators continued to issue documents to support builders with quality assets to raise money publicly. Longfor Group Holdings plans to raise 20 billion yuan, while  Gemdale seeks 15 billion yuan.


Wrapping up with a quick look at the stock market


  • Chinese stocks fell on Thursday, as concerns over record high domestic daily COVID-19 cases overshadowed optimism from fresh economic stimulus. The benchmark Shanghai Composite lost 0.25 percent and the Shenzhen Component slid 0.15 percent. Hong Kong stocks finished with another gain as Chinese property developers rallied on more financial supports. The Hang Seng Index rose 0.78 percent and the TECH index gained 0.79 percent.


Biz Word of the Day


  • A shelf offering can be used to pre-register offerings of common stock, preferred stock, debt, or any other type of registered security. A shelf offering can be a primary offering, for example, launching new shares of common stock. Shelf offerings are a way for companies that are already publicly traded to pre-register an offering to be sold at a future date. The offering can then be “taken off the shelf” and brought to market in a short amount of time.


Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI 

Sound Editor: Stephanie LI

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

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(作者:李莹亮 编辑:李艳霞)