China cuts RRR by 20 points, ramps up manufacturing to full capacity to makeup coronavirus losses

China, which came to a standstill due to coronavirus outbreak for over two months, cut Reverse Repo Rate (RRR) by 20 basis points on Monday to facilitate more lending as world's second largest ecomy ramped up manufacturing sector to almost 100 per cent of its capacity to make up for big losses.

A reverse repo is a process in which central bank purchases securities from commercial banks through bidding, with an agreement to sell m back in future.

China's manufacturing sector has steily resumed production after shutdown due to COVID-19, with 98.6 per cent of major industrial firms nationwide having restarted work as of Saturday, Ministry of Industry and Information Techlogy (MIIT) said on Monday.

Xin Guobin, vice minister of MIIT, told media here on Monday that around 89.9 per cent of employees in industrial companies with an annual revenue of more than 20 million yuan (about USD 2.84 million) h returned to ir posts.

In coronavirus epicentre Hubei province, which is grually returning to rmal after virus abated, aver work resumption rate of industrial firms have surpassed 95 per cent by far, state-run Xinhua news ncy reported.

production and operation of large pharmaceutical companies producing vitamins, antibiotic, antipyretic and analgesic ingredients have returned to rmal, Xin said.

Meanwhile, 76 per cent of small and medium-sized enterprises have restarted to work nationwide.

Some 92 leing enterprises in key industries have helped boost work resumption of more than 400,000 ir upstream and downstream enterprises, Xin said.

Separately China's central bank on Monday pumped liquidity into market through seven-day reverse repos while cutting interest rate by 20 basis points to lower lending costs and offset ecomic shock of COVID-19.

People's Bank of China (PBOC) injected 50 billion yuan (about USD seven billion) into market through seven-day reverse repos at an interest rate of 2.2 per cent, central bank said in a statement on its website.

Before Monday's move, PBOC has skipped reverse repos for 29 straight tring days, Xinhua report said.

Ma Jun, a member of monetary policy committee of PBOC, said RRR cut indicates that central bank has strengned counter-cyclical justments in face of production resumption at home and a worsening

external ecomic environment.

Cutting reverse repo rate would help lower lending costs for real ecomy, said Ma, who believes that justments in monetary market rates are w better reflected on market lending rates thanks to reform of loan prime rate (LPR).

Wen Bin, a chief researcher with China Minsheng Bank, said 50 billion-yuan reverse repos would help meet short-term market liquidity demand.

PBOC also pledged on Friday after a regular meeting of its monetary policy committee to improve its macroecomic control to limit fallout of COVID-19 outbreak and better shore up its ecomy.

Aside from Monday's rate cut, China still has ample monetary policy and tools at disposal, Ma said, ting that China remains only major ecomy that keeps a rmal monetary policy and is able to enhance counter-cyclical justments with regular operations.

Also China on Monday said it will lift foreign ownership limit on securities companies in a bid to attract more foreign investments.

limitation on foreign stakes in securities firms in China is scheduled to be scrapped on April 1 as country moves ahe with opening its financial industry to foreign investors, according to top securities regulator.

Eligible foreign investors can file applications for registration of new securities firms or change of actual controller of existing ones in accordance with applicable laws and regulations after new regulation goes into effect, China Securities Regulatory Commission said.

China suffered hundreds of billions of dollars of losses as it virtually shut country and closed almost all factories for over two months to prevent spre of coronavirus which emerged in central Chinese city of Wuhan.

While it kept coronavirus epicentre Hubei province with over 56 million people under lockdown since January 23, it began easing curbs in last few weeks all over country.

Hubei too started opening up after drastic fall in cases.

China on Monday reported 31 new cases of coronavirus including 30 imported ones while death toll reached 3,304 with four more fatalities, health officials said.

overall confirmed cases on mainland has reached 81,470 by end of Sunday.

This included 3,304 people died of disease, 2,396 patients still being treated and 75,770 patients discharged after recovery.