https://www.scmp.com/economy/china-economy/article/3026064/china-cuts-banks-reserve-requirements-latest-effort-boost
China has just cut the bank's RRR by 50bp to stimulate its economy.
Many analysts had expected China to cut its interest rates to stimulate its economy and they were proven to be wrong when China didn't do as they concluded. We had stated in June 2019 that China wouldn't cut its interest rates but would reduce its RRR further.
http://sg-stock.blogspot.com/2019/07/will-china-cut-its-bank-interest-rates.html
Please read our economic analysis in June to understand the rationale for China not to cut its interest rates.
https://sg-stock.blogspot.com/2019/06/china-has-started-to-sell-us-treasuries.html
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China is facing increasing inflation in the last 2 yrs especially food prices. Its inflation is also projected to increase every year till around 2024/2025.
Hence they won't cut interest rates lightly. It will be reserved for SHTF.
What china has been doing is pump priming by allowing money growth thru lowering lending standards since Q3 of 2018. Examples include closing eye again on shadow banking & repeated rounds of reducing RRR. This is also inflationary but they prefer to hold onto their big interest rate bullets & use specific anti-inflation policies e.g. property controls.
In addition they have decided to preserve their foreign reserves bullets as much as possible by not defending the usd/cny exchange rate to the death. Instead to allow slow controlled devaluation of cny.
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