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China
Intelligence for Better Decision Making
Central bank interest rate cuts
July 26, 2024 | Government Actions- On July 25, the People's Bank of China (PBOC) conducted a 200 billion yuan medium-term lending facility (MLF) operation with a winning rate of 2.3%, a decrease of 20 basis points.
- This MLF operation diverged from the usual timing around the 15th of the month due to increased liquidity demand toward the end of July.
- The PBOC's MLF operation aimed to meet the medium- and long-term funding needs of financial institutions and maintain reasonable liquidity levels.
- The operation is part of broader efforts to support economic recovery by reducing comprehensive financing costs and stimulating demand.
- On July 22, benchmark loan market rates (LPR) for one year and five years were reduced by 10 basis points.
- Experts indicated that the influence of the MLF rate on LPR is weakening, signaling a shift in the monetary policy framework and interest rate transmission system.
- The PBOC conducted two MLF operations in July; the second one on July 25 was to enhance financial support to the real economy.
- Financial institutions are advised to monitor mid-month liquidity more closely during this transition phase.
- Recent increases in MLF operations and reductions in MLF and deposit interest rates aim to bolster economic stability.
- On July 15, a separate 100 billion yuan MLF operation was conducted with a winning bid rate of 2.50%.
- Recent interest rate adjustments, including open market operation rates, LPR, and MLF rates, aim to lower financing costs and stimulate effective demand.
- Monitoring data indicated a rise in overnight and seven-day interbank repo rates, higher than the central bank's rates following recent cuts.
- The MLF operation used an interest rate bidding method, allowing for multiple interest rates that better reflect market supply and demand conditions.
- Further measures are being developed to optimize the open market operation mechanism to address liquidity requirements effectively.
- The PBOC injected 200 billion yuan (approximately 28.04 billion U.S. dollars) through the MLF, set to mature in one year.
- Analysts believe these interest rate reductions will alleviate the financial burden on the economy and stimulate demand, demonstrating the central bank's commitment to adequate liquidity for economic recovery.
Banks lowering deposit interest rates
July 26, 2024 | Government Actions- On July 25, ICBC, ABC, BOC, and CCB announced a reduction in their deposit interest rates, affecting demand deposits, time deposits, and notice deposits.
- The one-year fixed deposit rate decreased by 10 basis points to 1.35%.
- The revised interest rates for demand deposits are now 0.15%, while the rates for fixed deposits for various terms are 1.05% (3 months), 1.25% (6 months), 1.35% (1 year), 1.45% (2 years), 1.75% (3 years), and 1.8% (5 years).
- This marks the first reduction in rates this year, following three previous cuts in June, September, and December of the previous year.
- The adjustment follows a 10 basis point decrease in the Peoples Bank of China's 7-day open market reverse repurchase rate to 1.7% and similar decreases in the loan market benchmark rates.
- Experts suggest that the changes reflect the ongoing marketization of interest rates in China and improved pricing capabilities of commercial banks.
- The reduction marks the fifth since September 2022 for the four major commercial banks in China: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank.
- Annual interest rate for demand deposits has been decreased by 5 basis points to 0.15%.
- Fixed deposit rates for three-month, six-month, and one-year terms are now 1.05%, 1.25%, and 1.35%, with reductions of 10 basis points.
- Rates for two-year, three-year, and five-year deposits have been cut by 20 basis points to 1.45%, 1.75%, and 1.8%, respectively.
- Other deposit types have also seen decreases of 10 basis points.
- This is the first significant reduction in deposit rates since December.
- The cuts respond to record low net interest margins of 1.54% as of the end of March.
- Economists suggest further cuts in benchmark lending rates may occur if economic conditions don't improve.
- Challenges remain as deposit rate cuts may not be sufficient to spur consumer spending and investment amidst weak income prospects.
Monitored Intelligence for China - Jan. 25, 2024
News
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424
Government
Releases
41
City/State
Releases
43
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Releases
5
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0
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0
Academic/
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Tank
22
Think
Tank
22
Podcasts
0
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0
Social
Media
0
Business
Releases
1
Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.
The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.
Risk Categories Reported on Today
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7
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23
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18
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11
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Erudite Risk also includes operations categories so you can monitor the environment for better decision making. Everything is tied together--what happens in risk affects operations and what happens in the market impacts risk profiles.
We categorize key intelligence into one of 30 different operations intelligence categories.
Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.
Operations Categories Reported on Today
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15
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10
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1
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4
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12
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1
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3
防汛实录｜箭扣长城下，小村落的一天
Flood prevention record | A day in a small village under the Jiankou Great Wall
Beijing News | Local Language | News | July 26, 2024 | Natural Disasters
On July 24, Xizhazi Village in Beijing's Huairou District prepared for heavy rain following the issuance of weather warnings. Village Secretary Lu Tianlu and other cadres relocated eight villagers from four households to safety as a precaution. The village, situated at the foot of the Jiankou Great Wall, faces significant flood control challenges due to its geography, which causes heavy rainfall. Over 7,600 personnel from 46 teams participated in the flood prevention efforts, and by noon on July 24, 1,812 villagers had been evacuated from 668 households. Preparations included checking bridges, clearing rivers, and stocking up on emergency supplies like sandbags and flotation devices. The village's flood prevention group used satellite phones for communication and coordinated with local authorities for real-time updates. Past experiences with severe rainfall in 2021 informed their approach, leading to thorough preparations this year. The village has seen improved community response to evacuation requests, with residents more willing to comply for safety. Throughout the day, village leaders continued to patrol, monitor conditions, and support relocated villagers, all while rain continued to fall.
Ukraine tells China that Russia is not ready for ‘good faith’ talks
Al Jazeera | English | News | July 26, 2024 | Geopolitical Conflict and Disputes
Ukrainian Foreign Minister Dmytro Kuleba met with China's Foreign Minister Wang Yi in Guangzhou, stating that Ukraine is open to negotiating with Russia, provided that Moscow is willing to engage in good faith. Kuleba emphasized that there is currently no such readiness from the Russian side. China positions itself as a neutral party, advocating for negotiations between Kyiv and Moscow and maintaining it does not provide lethal assistance to either side, despite being a key ally to Russia. Chinese Foreign Ministry spokesperson Mao Ning highlighted the discussion on strengthening bilateral ties and expressed concern over the humanitarian situation in Ukraine. The Kremlin acknowledged Kuleba's remarks align with its own stance but sought further details. Russian President Vladimir Putin's earlier conditions for peace have been dismissed by Kyiv, which is planning an international summit to advance its peace process.
China Focus: China issues this year's first red alert for typhoon
Xinhua | English | News | July 26, 2024 | Extreme Weather Events
China's National Meteorological Center issued a red alert for Typhoon Gaemi at 10 a.m. on July 24, marking the first red alert for a typhoon this year. By 5 p.m., the typhoon was located 70 km southeast of Taiwan's Yilan County and was expected to travel northwestward at 10 to 15 km per hour, making landfall on Taiwan Island that night. It is forecasted to make a second landfall in Fujian Province between Thursday afternoon and evening. Rainstorms are expected to affect southeastern Zhejiang, most of Fujian, and Taiwan Island from 8 p.m. Wednesday to 8 p.m. Thursday. Authorities are advised to prepare for potential flooding and geological disasters, with preparations including returning ships to port and suspending outdoor activities. Additional alerts for storm tides have been issued in Fujian and Zhejiang provinces. The Ministry of Water Resources has activated a Level-IV emergency response for flooding, while the State Flood Control and Drought Relief Headquarters upgraded their response level for flood control in multiple areas.
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