The People’s Bank of China stated in its annual report that the downward pressure on the economy has increased, and the potential risks of the financial system are difficult to eliminate in the short term
The People’s Bank of China is preparing to gradually reduce the risks of some financial institutions. The PBOC and other regulators have rescued several small and medium banks on the verge of bankruptcy. It took over the contractor bank in May because of the bank’s severe credit risk. It also supported Jinzhou Bank.
The bank will focus on defusing risks such as small and medium-sized financial institutions next year, promote deleveraging, pay attention to the huge debts of state-owned enterprises, curb hidden debts of local governments, and prevent residents’ debt ratios from rising too quickly
In early 2019, the CBRC approved banks to issue perpetual bonds to reduce the risk of large banks. PBOC expects 13% of banks to still be rated as high risk. The PBOC is concerned about local government debt, increased corporate bond defaults and real estate bubble risks. The combination of tightening credit, loosening currency, and easing finances to meet the challenge. One of them may be to issue special bonds next year in advance, relax the proportion of special bonds that can be used as capital, and expand the scope of use.
As the currency continues to take easing measures and economic growth slows down
the dollar will start a new round of decline against the renminbi. It is expected to have a certain support at 6.96, which is also the high level in 2017 and 2018. It is expected that the second half of next year, especially in the fourth quarter In the quarter, RMB may be tested on 7.4.