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China eases policy with reserve ‘cut’ for rural lenders – report Anti-graft body probes state-owned company head

SHANGHAI, April 18, (AFP): China will cut the amount of funds that rural banks must keep in reserve, state media said, in a small easing of monetary policy by the government as it tries to provide support to the slowing economy. The powerful State Council, China’s cabinet, said it would allow a cut in the reserve requirements for some county-level commercial banks and cooperative banks in rural areas, the official Xinhua news agency said late Wednesday, but gave no details. The announcement came on the day the government said gross domestic product grew 7.4 percent year-on-year in the first quarter, sharply down from 7.7 percent the previous three months owing to a slow global recovery as well as domestic structural reforms. “Currently, downward pressure on economic growth still exists,” the State Council was quoted by Xinhua as saying, adding the government would plan for “stable” growth. Some analysts have forecast the government could cut reserve requirements for banks nationwide, given the slowdown in the world’s number two economy and key driver of global growth.

But Bank of America-Merrill Lynch economist Lu Ting said the “targeted” move reduced the chances of a broader cut in the short term. “The macro impact of this targeted (reserve) cut is rather small, though the targeted (reserve) cut sends a signal of a new type of policy easing,” he said in a research note. China last adjusted reserve requirements in 2012, cutting them to 20 percent for large financial institutions and 16.5 percent for smaller ones, according to media reports. But rural lenders have even lower requirements, officials have said. The central bank could not be reached for comment. Chinese leaders have publicly ruled out a massive stimulus package to kick-start growth as the country tries to shift away from investment as a major economic driver, but it has unveiled tax breaks for small firms and railway construction for a boost.

The head of one of China’s major state-owned firms is being investigated by the country’s anti-graft authority, the body said Thursday, following allegations of graft made by a domestic journalist. China Resources chairman Song Lin is being probed for “suspected serious violations of discipline and law”, China’s Central Commission for Discipline Inspection said in a brief statement on its website. The jargon used in the statement would suggest a corruption investigation has been launched. A journalist with China’s official Xinhua news agency, Wang Wenzhi, last July accused Song of “corruption involving a huge amount” and has since made further allegations. Song has denied any wrongdoing. China Resources, a Fortune Global 500 company, is a conglomerate operating in sectors including retail, property, finance and electricity. Communist Party authorities have been waging a much-publicised anti-graft campaign in the year since President Xi Jinping came to power. But critics say no systemic reforms have been introduced to increase transparency to help battle endemic graft.

Chinese police hauled away dozens of workers Friday to break up a march on a factory complex targeted by tens of thousands of laborers striking against the world’s largest maker of athletic shoes, while a government trade union said it would mediate the labor dispute. More than 40,000 workers went on strike this week against Yue Yuen Industrial (Holdings) Ltd, bringing production to a halt at the manufacturer, which makes shoes for companies including Nike and Adidas. About 1,000 workers marched down a street Friday after workers rejected a company proposal.

The Guangdong Federation of Trade Unions urged the workers to act rationally, but said it was “taking a clear-cut stand” that the workers’ rights must be protected. The federation said it had instructed its municipal agency in the southern city of Dongguan - where the factory complex is located - to mediate. The workers have been striking since April 5 to demand the Taiwanese-owned company make social security contributions as required by Chinese law and meet other demands. Management of Yue Yuen could not immediately be reached for comment, but in a public announcement Thursday, the company offered to make social security payments only if the workers would agree to retroactively pay their own required contributions into the fund. It said those refusing to return to work on Thursday would be punished, but did not specify how.

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