China's central bank cuts reserve ratio for some lenders

The Shanghai Composite Index falls some 2.5 per cent this morning. — Reuters pic

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China is signaling that it is anxious about its economy.

Despite China's flagging economy, President Trump has rejected recent Chinese calls for negotiations over the trade dispute, claiming the offers are inadequate and that it is not the right time to make a deal. These banks traditionally serve the country's big state enterprises. It has even censored bad economic news.

It is the fourth time the country's central bank has cut its reserve requirement this year. The key question is how to channel cash to the real economy.

An afternoon recap of the day's most important business news, delivered weekdays. With this third round of tariffs, the United States is now imposing double-digit tariffs on around half of the products it imports from China each year.

Xu further added, "The trade war's impact on the economy is showing". In June, the gap was more than 70 bps, and traders say any further narrowing could increase capital outflows from China. Still, tariffs could hurt the economy the longer they last.

US Vice President Mike Pence last week accused China of aggressive trade and other policies and said Beijing was bent on interfering in upcoming US elections.

Consumers are spending less. One-year NDFs are settled against the midpoint, not the spot rate. Wage growth is plodding.

Tourism spending by domestic travellers in the first four days of the National Day holiday, which ended on Sunday, rose just 8.1% from a year ago, which is much less than the 21% growth recorded in 2017, according to figures from the China Tourism Academy. The pace at which companies are defaulting on their bonds has quickened.

In response, officials have pledged to pump billions of dollars into infrastructure projects, shored up the value of the currency and moved to backstop a plunging stock market.

The move remains targeted at adjustment with a goal to optimize the liquidity structure of commercial banks and the financial market and to reduce financing costs, said the central bank.

Worldwide investors had started to load up on Chinese shares as global index compilers moved to increase weightings of yuan-denominated shares on their benchmarks and this year's slump made valuations more compelling relative to global peers.

It comes as the USA and China have forced duties on each other's products in succession that is hitting organizations and dangers harming the worldwide economy.

On Sunday, the People's Bank of China said it would cut the amount of money that some lenders are required to hold in reserve - called the reserve ratio - by 1 percentage point.

Total tax cuts for the year are expected to exceed 1.3-trillion yuan (US$189-billion), according to Mr. Liu.

The People's Bank of China's turn will discharge 1.2 trillion yuan in liquidity, with 450bn yuan of that because of counterbalance developing credits - meaning 750bn yuan will be infused into the money related framework.

Some analysts saw the central bank's reserve requirement cut as a sign of more easing to come.

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