The Chinese flag is seen in Beijing.
BEIJING Reuters -- A Chinese newspaper run by the State Council, warned the market against simplistic interpretations of monetary policy moves as easing expectations gathered steam, suggesting that China is not about to unleash a huge wave of credit in panic.
Expectations that the central bank will ease policy have gone up after Premier Li Keqiang said on Friday that the amount of cash banks must keep as reserves will be reduced in a timely way due to the growing economic difficulties whipped up by an increasingly troubled property sector.
The Economics Daily said in a commentary on Monday that this is a rather simplistic interpretation of macro policy, which could lead to misunderstandings.
According to the commentary, China's monetary policy will be more focused on its continuity and stability while taking into account the government's short-term and long-term goals.
China Evergrande Group cautioned on Friday that it wouldn't have enough funds to meet debt repayments, because of the indebted property behemoth China Evergrande Group.
The yield on China's 10 year treasury bonds, the most actively traded in the interbank market, fell by almost 5 basis points in early trade on Monday on the easing expectations.
In a note on Monday, Nomura analysts said that they expect the economy and the property sector to worsen further, and Beijing may have to increase policy easing measures in the spring of 2022 to avoid a hard landing.
The financial daily ruled out the possibility of a flood of stimulus to prop up the economy and said that China would make its policies more targeted to cope with any downward pressure.
It said that coordination between monetary policy, fiscal policy and industrial policies will be stepped up.
After a broad-based cut to the amount of cash banks must hold as reserve in July, the Chinese central bank has defied market expectations for further policy easing.
Advisers to the government will recommend that authorities set a 2022 economic growth target that is less than the 6% target for 2021, according to some advisers.