MNI China Press Digest July 11: PBOC, Pensions, SMEs

Highlights from Chinese press reports on Friday:

• The People’s Bank of China is likely to cut the reserve requirement ratio and interest rate again in the second half of the year while maintaining ample liquidity through the medium-term lending facility and outright reverse repos, Shanghai Securities News reported, citing Wang Qing, analyst at Golden Credit Rating. The central bank will also deploy innovative structural tools to direct funds toward technological innovation, green development, and support for small and medium-sized enterprises, elderly care, and consumption, the newspaper said, citing Liang Si, researcher at the Bank of China Research Institute.
• China will raise the basic pension for retirees by an average of 2% from 2024, Shanghai Securities News reported, citing a statement from the Ministry of Human Resources and Social Security. The adjustment will focus on groups with lower pension levels. In 2024, the basic pension insurance fund for urban employees recorded income of CNY7.5 trillion and expenditure of CNY6.8 trillion, resulting in a generally balanced budget with a slight surplus, the report said.
• China’s Small and Medium Enterprise Development Index (SMEDI) fell to 89.1 in Q2, down 0.4 points from Q1 but still above levels seen in the same periods of 2023 and 2024, Securities Daily reported. SMEs faced weaker demand, intensifying price competition, and shrinking profit margins during the quarter, alongside a high base effect from Q1, the paper said, citing Ma Bin, executive vice president of the China Association of Small and Medium Enterprises. Sub-indexes for construction, transportation, social services, and accommodation and catering each declined by no less than 0.5 points, it added.