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"The situation is already very bad for dollar-based funds to invest in China's tech sector. There isn't much room for things to get worse," said Beijing-based China Growth Capital partner Wayne Shiong. Biden's move will likely make China-focussed venture capital firms feel more urgency to raise yuan funds from Chinese investors, he said. In response to Biden's executive order, China's commerce ministry said it was "gravely concerned" and reserved the right to take countermeasures. But the executive order is barely going to do anything, and China escalating would risk turning a molehill into a mountain."

Persons: Florence Lo, Joe Biden's, Donald Trump, Weiheng Chen, Wilson Sonsini, Biden, Chen, Wayne Shiong, Biden's, Yuan, Pan, Trump, Derek Scissors, Kane Wu, Michael Martina, Roxanne Liu, Ziyi Tang, Yantoultra, Sumeet Chatterjee, William Mallard Organizations: REUTERS, U.S, Reuters Graphics Reuters, China Growth Capital, Chinese Academy of Social Sciences, TECH, Hua Hong Semiconductor, Analysts, American Enterprise Institute, Thomson Locations: China, U.S, HONG KONG, WASHINGTON, Beijing, Washington, Shanghai, Hong Kong, Singapore, Bengaluru

Most economists expect another modest 10 bps LPR cut in the second half - on top of a 25 bps cut in banks' requirement ratio (RRR). The PROC last cut the RRR - the amount of cash that banks must hold as reserves -- in March, by 25 bps. Each 5 basis points LPR cut could reduce pre-tax profits of major banks by as much as 1.8%, China Merchants Securities said in a report. "A small rate cut is a useful painkiller for symptoms but cannot alleviate the real problem," said Gary Ng, Asia Pacific senior economist of Natixis. On Friday, China's cabinet discussed policy measures to support the economy.

Persons: COVID, NIM, Wang Yifeng, Wang, Gary Ng, China's, Zhang Ming, Zhang, Morgan Stanley, Kevin Yao, Ziyi Tang, Kripa Jayaram, Sumeet Chatterjee Organizations: People's Bank of China, Reuters, Everbright Securities, China Merchants Securities, Asia Pacific, stoke, Chinese Academy of Social Sciences, Thomson Locations: China, BEIJING, Beijing, Asia

☆ China may cut rates further in H2, government researcher says
▼ + stars: | 2023-06-06 | by ( ) www.reuters.com time to read: +1 min

BEIJING, June 6 (Reuters) - China will likely further cut banks' reserve ratio and interest rates in the second half of this year to support the economy, the China Securities Journal reported on Tuesday, citing policy advisors and economists. China's economy rebounded faster than expected in the first quarter but lost momentum at the beginning of the second. Zhang Ming, a researcher at the Chinese Academy of Social Sciences, a top government think tank, told the state newspaper that low inflationary pressures in China will provide room for monetary easing. China can consider further rate cuts and target the reserve requirement ratio (RRR) cuts to lower lending costs, said Zhang. Li Chao, chief economist at Zheshang Securities, also expects potential rate cuts and RRR cuts in the second half of this year, the report said.

Persons: Zhang Ming, Zhang, Li Chao, Ziyi Tang, Ryan Woo, Shri Navaratnam Organizations: China Securities, Chinese Academy of Social Sciences, Zheshang Securities, U.S . Federal Reserve, United, Thomson Locations: BEIJING, China, Beijing, United States

☆ China has an inflation problem. It’s way too low
▼ + stars: | 2023-04-24 | by ( Laura He | ) edition.cnn.com time to read: +6 min

That’s raising the specter of a tailspin of falling prices and wages from which the economy may struggle to recover. “Our core view is that China’s economy is deflationary,” wrote Raymond Yeung, chief economist for Greater China at ANZ Research, last week, soon after China released its first-quarter GDP growth figures. Instead of spending money, people are hoarding cash at a record rate. “Even with a conservative estimate, 500 billion yuan in consumption vouchers will drive one trillion yuan in overall consumption, ” Li said in a video posted on his Weibo social media account on Tuesday. In return, the government could receive at least 300 billion yuan through taxes generated by the increase in spending, he said“So it only takes 200 billion yuan in spending for the central government to drive one trillion yuan in consumption,” he said.

☆ Analysis: China's 'atypical' deflation cycle gives central bank a headache
▼ + stars: | 2023-04-19 | by ( Kevin Yao | ) www.reuters.com time to read: +5 min

China GDP"China is entering an 'atypical' deflation cycle, which means deflation amid economic recovery," said Jinyue Dong, senior economist at BBVA research. China's new bank lending hit an all-time high in the first quarter. The central bank cut lenders' reserve requirements ratio (RRR) for the first time this year in March. But analysts say that is largely due to last year's low base caused by COVID-19 curbs that hit consumers the hardest, rather than underlying household demand. Reuters GraphicsNew household loans, mainly mortgages and consumer loans, accounted for 16% of total new loans in the first quarter, despite a jump in mortgages in March, while corporate loans made up for the rest.

☆ China keeps insisting its real-estate market is not in a crisis — even as just about every sign points to the opposite
▼ + stars: | 2023-02-06 | by ( Huileng Tan | ) www.businessinsider.com time to read: +5 min

The IMF said in a report on China's economy that the country's property crisis remains "unresolved." But China's hit back at that, saying its property market "has been operating smoothly in general, and is not in a 'crisis' situation." China's real estate market has been mired in debt woes for the past few years. The IMF says China's property crisis "intensified" in 2022The IMF said in its Friday report China's property crisis "intensified" in 2022. The debt crisis also had a deep social impact.

The “three red lines” policy on debt ratios has begun aggravating market stress and impairing balance sheets. Those on the wrong side of those lines found themselves almost entirely locked out of credit markets. In short there are now more property firms on the wrong side of the red lines than when the policy was first rolled out, and even the most financially healthy are struggling. They are also mulling letting companies in good financial condition raise debt by more than the current 15% annual limit, per Bloomberg. However, the three red lines remain in place for now.

☆ China steps up support for private sector to boost Covid-hit economy
▼ + stars: | 2022-12-19 | by ( Laura He | ) edition.cnn.com time to read: +5 min

Hong Kong CNN —Beijing has vowed to go all out next year to save its Covid-hit economy by boosting consumption and loosening control over private industry, including the struggling tech and property sectors. Covid infections are surging in China after leaders unexpectedly eased its restrictive Covid policy earlier this month. Stabilizing economic growth is the top priority for 2023, according to an official readout following the conclusion of the Central Economic Work Conference (CEWC), a key annual meeting of top leaders, which ended Friday. “We need to encourage and support the private sector economy and private enterprise in terms of policy and public opinion,” the statement said. A shopping mall is decorated with rabbit stickers to welcome the Lunar New Year, the Year of the Rabbit, on December 10, 2022 in Beijing, China.

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