INSUBCONTINENT EXCLUSIVE:
country's financial system on Wednesday, seeking to avoid a cash crunch that would put further pressure on weakening economy
China's policymakers are pledging to step up stimulus measures this year and do more to protect jobs as economic growth cools to 28-year
But a raft of measures last year from big rail projects to tax cuts seem to have had little impact so far, with recent data suggesting
activity is cooling more quickly than expected."The news is clear - economy needs help," said Trinh Nguyen, senior economist for emerging
Asia at Natixis in Hong Kong.Wednesday's open-market operation, bank's largest net single-day injection on record, came a day after
China's state planner, central bank and finance ministry all offered reassurances to investors, signalling more spending and other types
of policy support.But shockingly weak December trade data released earlier this week, along with shrinking factory activity, are stirring
speculation over whether more rapid and aggressive policy measures are needed to turn world's second-largest economy around.Authorities
now agree economy needs more decisive support "and today's large injection reflects that," Ms Nguyen added.The People's Bank of China
(PBOC) said Wednesday's injection was aimed at ensuring there are ample funds in financial system, which is facing strains as tax payments
peak in mid-January, and as demand for cash picks up ahead of Lunar New Year holidays starting in early February."The banking system's
overall liquidity is falling rapidly," it said in a statement.While sizable injections are common this time of year ahead of long holidays,
addition was much heftier than usual and follows a large cut in banks' reserve ratios announced this month, which will free up a total of
$116 billion for new bank lending.The first stage, a 50-basis-point cut, came into effect on Tuesday
An equal-sized cut is scheduled for January 25.The move also came a day after money supply data showed several of China's key credit
gauges continue to languish around record lows, despite government efforts to channel more funds to cash-starved companies and lower their
financing costs.While authorities have urged banks to keep lending to struggling firms and even dangled incentives, banks are wary of bad
loans after a long regulatory crackdown on riskier lending.Many businesses, facing slowing sales, are in no mood to make fresh investments
that Beijing is counting on
New medium- and long-term corporate loans last month fell to less than half of average December levels, Nomura noted.More help on wayChinese
officials have repeatedly pledged more support for economy while vowing they will not resort to "flood-like" stimulus that Beijing has
unleashed in past, which quickly juiced growth rates but left a mountain of debt.Asked if PBOC needed to cut benchmark interest rates, a
PBOC deputy said on Tuesday that existing policy measures should be improved.Analysts at OCBC said comments suggest PBOC is willing to give
existing measures time to work, and is in no rush to switch to more aggressive tactics at this point."I have never seen such huge amounts of
reverse repos central bank is making its attitude known," said a trader at a brokerage house in Shanghai."It's saying, 'don't question my
determination'" to stabilise market expectations, trader said.Markets appear to agree that policymakers will stick with modest measures for
some time yet.Chinese stocks and money market rates, sensitive to hints of policy shifts, were little changed on Wednesday
The seven-day repo rate, a closely watched measure of liquidity, was 2.6142 per cent on Wednesday afternoon, slightly lower than previous
day's close."While (PBOC's ) net injection is big, it's little versus what a rate cut would release, which is what people in market are
watching for," said Ken Cheung, senior Asian FX strategist at Mizuho in Hong Kong.Weakest growth in 3 decadesIn a rare encouraging sign,
home prices remained buoyant in December, suggesting that at least some of Beijing's efforts at support are beginning to have an effect
Construction also appears to be slowly picking up as regulators fast-track approvals of more infrastructure projects.But analysts agree
steps so far will take some time to percolate through broader economy, with most not expecting activity to convincingly bottom out until
summer.On Monday, China is expected to report economy grew 6.6 per cent in 2018, cooling from 6.9 per cent previous year and slowest rate of
expansion country has seen in 28 years.The pace is expected to slow further to around 6.2 per cent this year
Some analysts' in-house models suggesting activity is already much weaker than official data suggests.Darkening picture further, hopes are
dimming once again that China will be able to reach a trade deal with United States in current negotiations
US tariffs have increasingly weighed on Chinese exports in recent months, disrupting its supply chains and dragging down business and
consumer confidence.US Trade Representative Robert Lighthizer did not see any progress made on structural issues during US talks with China
last week, Republican US Senator Chuck Grassley said on Tuesday.
