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China's central bank has maintained its medium-term lending rate at 2.0% to stabilize the yuan amid pressures following the U.S. presidential election. The People's Bank of China aims for gradual policy adjustments, with expectations of potential reserve requirement ratio cuts and a cautious approach to interest rate changes as it navigates economic challenges. The offshore yuan has depreciated over 3% since late September, prompting discussions on balancing economic revitalization with exchange rate stability.
China"s central bank has maintained its benchmark lending rates, with the 1-year loan prime rate at 3.1% and the 5-year rate at 3.6%, as it evaluates the impact of recent stimulus measures amid a sluggish economy. Despite a recent cut in rates, economic indicators show weak industrial production and a steep decline in real estate investment, although retail sales have shown some improvement. Analysts predict continued slow growth, with Morgan Stanley forecasting around 4% growth for the next two years, while Goldman Sachs anticipates a slight deceleration in GDP growth to 4.5% by 2025.
China's consumer prices rose at the slowest pace in four months in October, with a 0.3% increase year-on-year, while producer prices fell 2.9%, marking the largest drop in 11 months. Despite a substantial 10 trillion yuan stimulus package aimed at easing local government debt, analysts predict limited immediate impact on economic activity and demand. The central bank's recent aggressive monetary measures and upcoming tax policies for the housing market may provide some support, but a recovery in consumption and the housing sector is expected to take time.
China's exports surged by 12.7% in October, marking the highest growth in 19 months, while imports fell by 2.3%, exceeding expectations. The rise in exports is attributed to improved weather, price discounts, and the upcoming holiday season, amidst ongoing economic challenges and recent stimulus measures. Factory activity also showed signs of recovery, with the purchasing managers' index rising to 50.1.
China's parliament will convene from November 4 to 8, with expectations of announcing fiscal stimulus details. The meeting follows a call for enhanced fiscal and monetary policies, as local governments face challenges, and analysts predict support will prioritize them over direct consumption boosts. China's economy grew 4.8% in the first three quarters, slightly below the 5% target for 2024.
Bruce Pang
People
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