– This is the script of CNBC's news report for China's CCTV on August 26, Wednesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Hours after China unleashed a fresh bout of monetary stimulus in a fresh bid to stabilize the country's unruly equity market and quell concerns around an economic slowdown, investors are already looking for more aggressive action from authorities.
The People's Bank of China (PBoC) late Tuesday slashed the reserve requirement ratio (RRR) by 50 basis points to 18 percent for most big banks - in a move that's expected to release an estimated 750 billion yuan of liquidity into the market
It also cut both the benchmark lending and deposit rates by 25 basis points to 4.6 percent and 1.75 percent, respectively.
[MARTIN LAKOS Macquarie Private Wealth Division Director] "(The cuts) should release about of 700 bn RMB into the market and into the banking system. 065256 We also certained the view that having seen now five interest rate cuts, we are going to get a U-shape recovery in China, we are looking for furthur RRR cuts into the 4th quarter, but we are looking for a growth that recovers from 6.8% in the 3rd quarter back to over 7% in the 4th Q."
Besides monetary policy, Goldman also expects authorities will also step up fiscal support financed through local government bond issuances, better utilization of idle fiscal deposits and more support to the policy banks. China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China, the so-called policy banks, have a different remit from state-owned commercial banks as they focus on providing long-term financing for key projects supported by Beijing.
Goldman wasn't alone in its predictions for further stimulus. ANZ economists Liu Li-Gang and Louis Lam also believe another RRR cut is on the cards amid weak demand in the economy.
[Stephen Roach Former MS Asian President] "In China, you got to make a distinction between the markets and the economy. I think the economy is in a much better shape than the markets that lead you to believe. There's obviously some issues to be addressed, the rebouncing towards service-led consumer-driven economic growth in China is actually preceeding a surprisingly rapid rates."
The cuts from the PBOC might bring more downward pressure to the Chinese currency, according to Martin Lakos, from Macquarie Private Wealth.
However, China's export sector will coninue to benefit from a weaker YUAN.
[MARTIN LAKOS Macquarie Private Wealth Division Director] "We certainly think with the yuan depreciation, that starts to get some attraction in regrads with the export side. It's also worthy noting that we've been quite some degree of stability in the European economies, that's even despite the Greek bailout couple months ago. And as a result, is a big export area for China. so we are expecting to see that to stabilize as well. That's clearly a good news for the yuan, and also is China."
We also discussed businesses' confidence in China with some global giants' executive managers. Apple's CEO Tim Cook replied our very own Jim Cramer in an email that he remains confident in China's growing middle class.
While Andrew Mackenzie, CEO of BHP Billiton, said China's growth might continue to slow down, he believes it's on the right track of a economic transition.
[Andrew Mackenzie, CEO, BHP Billiton | London] "We always said as a company that as China evolved its growth would fall steadily from double digits 7 and maybe lower in the future as it moves to being more consumption based which it has to do to be a more stable and sustainable consumption based developing economy. It's making the progress well and we're just seeing that happen. It's slightly slower growth, but at the same time a transition to more of a consumption based economy is the right evolution that gives us faith that in the future they will be a major contributor to the world economy."
CNBC's Qian Chen, reporting from Singapore.