PBOC's liquidity boost raises fears over third-quarter Chinese GDP data
Central bank reported to be pumping cash into mainland lenders to combat slowing economy
News of a 400 billion yuan (HK$506.6 billion) boost in liquidity to regional and mainland-wide banks on the eve of today's release of quarterly economic data signalled that the mainland economy probably grew more slowly than expected between July and September.
Mainland media said yesterday that the People's Bank of China would inject up to 400 billion yuan into 20 joint-stock banks, doubling a figure reported late on Friday.
The yield on mainland 10-year government notes fell 10 basis points on the news.
Beijing is set to release figures for third-quarter gross domestic product growth today. Some analysts say growth may have slowed to as low as 7.3 per cent, the slowest pace in five years.
The data will come on the heels of other disappointing figures, such as lower-than-expected inflation in consumer prices and the slowest growth in fixed-asset investment since 2002.
Analysts said reports of the central bank move were probably intended to soften market reaction to weaker-than-projected GDP results.
"It should be a sign that third-quarter GDP growth will be lower than expected," said ANZ Bank chief China economist Liu Ligang. "Otherwise they wouldn't do this before the release of the data."