MNI China Press Digest Jan 16: PBOC, China-EU, December Data

Highlights from Chinese press reports on Friday:

• The PBOC's structural policy tool interest rate cut of 0.25 percentage points will influence the banking system more precisely than a broad based cut, according to experts interviewed by Yicai. Market analysts noted that the rate reduction lowers the cost of obtaining medium- and long-term funding from the central bank and does not directly push down deposit and lending benchmark rates or the LPR. As a result, the cut exerts only a limited direct impact on banks’ net interest margins. Analysts at CICC expect listed banks’ performance in 2026 to show “steady progress” with year-on-year revenue growth of 2.5% in 2026 and 3.6% in 2027, while net profit attributable to shareholders is projected to rise by 1.9% and 2.6%. Easing net interest margin pressure, higher-quality credit expansion, a recovery in fee-based income and accelerated supply-side reforms will jointly support a re-rating of the banking sector, CICC added.
• Chinese and European industries have warmly welcomed the positive outcome of the electric vehicle tariff case, saying that the “soft landing” will significantly boost market confidence and inject fresh momentum into China–EU cooperation in automobile trade and investment, said He Yongqian, spokesperson for the Ministry of Commerce. Under the current international environment, China and the EU have achieved a highly meaningful resolution of the case within the framework of WTO rules, she added. The ministry will continue to support both sides in deepening cooperation across production and supply chains based on market principles and in making active contributions to the global green transition.
• China’s real GDP growth in the fourth quarter of last year could have slowed to around 4.5%, bringing full-year real GDP growth to approximately 5%, according to Yi Xian, Chief Macro Economist at Huatai Securities, ahead of next week’s release of annual economic data. He noted that a rebound in some industrial product prices has improved price indicators and nominal GDP growth in the fourth quarter may edge up to 3.9%, reflecting a narrower decline in the GDP deflator. Results from Yicai’s chief economist survey show that the average forecast for year-on-year growth in industrial value-added in December 2025 stands at 4.9%, slightly above the 4.8% recorded in the previous month. Economists surveyed by Yicai project average year-on-year growth of 1.8% in total retail sales of consumer goods for December 2025, up from 1.3% in the prior month. On the investment side, the same survey indicates that fixed-asset investment likely contracted by 2.2% year-on-year in December 2025, an improvement from the 2.6% decline recorded in November. During the New Year holiday, consumer activity strengthened, with spending from Jan 1 to Jan 3 rising 6.1% year-on-year, led by a 9.3% increase in goods consumption and a 1.1% rise in service consumption, Yicai noted.