The People's Bank of China warns against downward pressure on the economy

The People's Bank of China said on Friday that the Chinese economy was facing downward pressure on the latest update of the central bank's monetary policy implementation report, Reuters reported.

Increasingly, Beijing's financial watchers' concerns about China's slowdown are likely to exacerbate investor fears about the strength and viability of the world's second-largest economy. China's gross domestic product slowed to 6.5% in the third quarter, its weakest quarterly pace since the global financial crisis.

The PBOC also said Friday that it would encourage financial institutions to increase their loans to small private companies. It comes just a day after Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, announced that the big banks would now divert one-third of new loans to private companies, two-thirds of which are lending to the private sector, according to local sources.

He added that the private sector had received only 25% of loans from the Chinese banking sector, while it was responsible for 60% of the output of the economy.

The increased signs of an economic slowdown in Beijing arise in a context of continuing trade tensions with Washington. Investors pointed to higher export figures on Thursday as further evidence that Chinese exporters loaded their cargoes ahead of the expected increase in US tariffs that would come into force on January 1.

President Donald Trump and his Chinese counterpart Xi Jinping are expected to discuss trade relations on the sidelines of the G-20 summit later this month.

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At the same time, China on Friday released figures for consumer price inflation and producer prices, posting a slight decline in the PPI to 3.3% from the previous month at 3.6. %, but a stability of the CPI at 2.5%.

The yuan fell. One dollar

USDCNY, + 0.3259%

Last purchase 6,9569 yuan, up 0.3%, and 6.9482

USDCNH, + 0.1113%

in the free offshore market, up 0.1%.

Treasury bonds, which tend to attract the demand for safe havens due to worries about the global economy, saw yields drop after the release of the PBOC's monetary policy report, with the Treasury note to 10 years.

TMUBMUSD10Y, + 0.00%

down 2.6 basis points to 3.206%.

Bond prices move in the opposite direction of returns.

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