Posted on 28 Aug 2015
"We are all worried about the Chinese
economy...In fact, with the government pushing out so many pro-growth
policies in a matter of days, I think we can only expect more anxiety
over the expectations of how the economy is going to perform," a
Hebei-based steelmaker said.
Another steelmaker in the Anhui
region said: "These few days the Chinese stock markets have been
plunging, a telling sign of how badly the economy is doing. With the
government doing so much to try to lift the economy, we are even more
certain in knowing the country's economic health isn't faring well."
"I
am leaning toward the pessimistic side in my expectations going forward
with regard to China's economic and manufacturing performance," the
steelmaker added.
On top of the Yuan 140 billion injection, the
PBoC cut its lending interest rate by 25 basis points to 4.6%, and also
lowered the cash reserve ratio required of banks in the country, pushing
the one-year deposit rate down 25 basis points to 1.75%, in a move made
effective Wednesday.
This will give banks more liquidity to make loans.
These
stimulus policies follow a slump in Chinese equity markets this week.
The Shanghai Composite Index continued to decline Wednesday, albeit by a
smaller extent than earlier in the week, losing 1.27% on the day to
2,927.288.
The SHCOMP tumbled 7.6% Tuesday after having already dropped 8.5% Monday.
Industry sources said they were unlikely to benefit immediately from the new stimulus policies.
The
steelmaker in Hebei said the measures were "geared toward helping the
equity markets recover, and not toward helping manufacturing", so it was
unlikely that steel and iron ore players would receive more aid.
"Banks
are not inclined to extend new loans with more attractive interest
rates to these lossmaking industries," the steelmaker added.
"The
rate cuts are going to take some time to flow down to the manufacturing
industries. It is not immediate," a source at a Zhejiang-based mill
said. "We aren't getting any new loans from our bank, so there is no
impact for now on improving our ability to buy seaborne iron ore."
