China’s central bank has announced a spate of measures to help an economy that has been hit by lockdowns to control the current Covid-19 outbreak, but the focus on boosting credit probably means the chances for broad-based easing are shrinking.
The People’s Bank of China (PBOC) told banks to meet the “reasonable funding needs” of local government financing vehicles (LGFV), according to a document released with the foreign exchange regulator on Monday.
It also urged more lending to people with “flexible employment” such as taxi drivers, online shop owners and truck drivers, and provide longer-term and cheaper loans to small businesses.
In the announcement of 23 measures, the central bank vowed to step up the use of targeted tools including the relending programme, which provides funds for banks to lend to sectors that include those hit by the pandemic.
The various relending programmes are expected to lead to 1 trillion yuan ($157 billion) in additional bank loans, it said.
The measures came after China reported its biggest decline in consumer spending and worst unemployment rate since the early months of the pandemic in March 2020, as lockdown measures to stop Covid-19 infections disrupted activity.
The support for LGFV financing is rare as regulators have been tightening the rules governing the sector in recent years in an attempt to push local governments to bring their debts back on to their official balance sheets.
The announcement suggests “the chance of broad policy interest rate and RRR [reserve requirement ratio] cuts is lowered further as the PBOC did not mention them in the discussion on monetary policy tools”, Goldman Sachs analysts including Hui Shan wrote in a report.
“Instead, the PBOC’s monetary easing could be more reliant on targeted policy tools in coming quarters.”
Banks should lend more to infrastructure projects and purchase local government bonds to help them front-load investment, and shouldn’t “blindly” suspend or withdraw loans from LGFVs, to ensure they can deliver projects under construction, the PBOC said.
Policy banks will also need to step up their financing to major investment projects, it said.
On housing policy, the PBOC called on local authorities to set appropriate minimum down payments and mortgage rates based on each city’s conditions, and urged banks to support the reasonable financing needs of property developers and construction companies.
The central bank also asked banks to increase the share of private companies among the recipients of new corporate loans.
The PBOC has transferred 600bn yuan of profit to the central government as of mid-April and this was mainly used for tax rebates and transfer payments to local governments, it said.
The profit transfer had the impact of increasing the base money supply by 600bn yuan, which has the same effect as a 25 basis-point cut in the RRR, it said.
The statement followed the central bank’s move on Friday to provide lenders with a modest cash boost while refraining from cutting interest rates. That cautious approach to monetary easing comes as some analysts argue the key to bolstering growth now lies in adjusting strict Covid-19 controls rather than offering more liquidity.
Separately, the China Banking and Insurance Regulatory Commission vowed to increase financial resources for the logistics, transportation and courier industries, and use relending funds to lower financing costs.
This will provide funding help to smaller businesses suffering from temporary difficulties due to Covid-19, the regulator said.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Killing of Qassem Suleimani
Essentials
The flights: You can fly from the UAE to Iceland with one stop in Europe with a variety of airlines. Return flights with Emirates from Dubai to Stockholm, then Icelandair to Reykjavik, cost from Dh4,153 return. The whole trip takes 11 hours. British Airways flies from Abu Dhabi and Dubai to Reykjavik, via London, with return flights taking 12 hours and costing from Dh2,490 return, including taxes.
The activities: A half-day Silfra snorkelling trip costs 14,990 Icelandic kronur (Dh544) with Dive.is. Inside the Volcano also takes half a day and costs 42,000 kronur (Dh1,524). The Jokulsarlon small-boat cruise lasts about an hour and costs 9,800 kronur (Dh356). Into the Glacier costs 19,500 kronur (Dh708). It lasts three to four hours.
The tours: It’s often better to book a tailor-made trip through a specialist operator. UK-based Discover the World offers seven nights, self-driving, across the island from £892 (Dh4,505) per person. This includes three nights’ accommodation at Hotel Husafell near Into the Glacier, two nights at Hotel Ranga and two nights at the Icelandair Hotel Klaustur. It includes car rental, plus an iPad with itinerary and tourist information pre-loaded onto it, while activities can be booked as optional extras. More information inspiredbyiceland.com
Manchester United v Liverpool
Premier League, kick off 7.30pm (UAE)
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Mercedes V250 Avantgarde specs
Engine: 2.0-litre in-line four-cylinder turbo
Gearbox: 7-speed automatic
Power: 211hp at 5,500rpm
Torque: 350Nm
Fuel economy, combined: 6.0 l/100 km
Price: Dh235,000
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Killing of Qassem Suleimani
