BEIJING: 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 banks must keep their reserves in a timely manner due to growing economic headwinds 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.
There was no guarantee that China Evergrande Group would have enough money to meet debt repayments, as per a statement by China Evergrande Group on Friday.
The yield on China's 10 year treasury bonds, the most actively traded in the interbank market, fell 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 property sector to worsen further, and Beijing may have to step up 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, saying that China would make its policies more targeted to cope with any downward pressure.
It added 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.
Some advisers told Reuters that authorities will recommend a 2022 economic growth target that falls below the 6 per cent target set for 2021, as per the advice given by the government.