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26 May 2014
China: Policy easing is starting to add up - Nomura
FXStreet (Bali) - Nomura highlights that the small but continuous steps taken by Chinese authorities to ease policies are starting to add up, making these measures no longer a "mini-stimulus".
Key Quotes
"Policy easing has picked up in recent months. Figure 1 summarises the main policy measures that have been announced since February. Unlike in late 2008, government leaders have been very careful to avoid signalling any “aggressive policy easing”."
"We believe that, once the myriad of piecemeal measures are considered in totality, they are starting to amount to something quite significant. For instance, on the monetary side, the People‟s Bank of China (PBoC) disbursed RMB100bn through its re-lending facility to the China Development Bank (CDB) in April for the renovation of shantytowns."
"If we assume the PBoC maintains this monthly disbursement in May and June, it will have injected about RMB400bn of base money into the economy via its re-lending facility. This, together with targeted reserve requirement ratio (RRR) cut for small rural banks, would be equivalent to a 45bp RRR cut."
Key Quotes
"Policy easing has picked up in recent months. Figure 1 summarises the main policy measures that have been announced since February. Unlike in late 2008, government leaders have been very careful to avoid signalling any “aggressive policy easing”."
"We believe that, once the myriad of piecemeal measures are considered in totality, they are starting to amount to something quite significant. For instance, on the monetary side, the People‟s Bank of China (PBoC) disbursed RMB100bn through its re-lending facility to the China Development Bank (CDB) in April for the renovation of shantytowns."
"If we assume the PBoC maintains this monthly disbursement in May and June, it will have injected about RMB400bn of base money into the economy via its re-lending facility. This, together with targeted reserve requirement ratio (RRR) cut for small rural banks, would be equivalent to a 45bp RRR cut."