LME Week: Chinese infrastructure to accelerate in H2 2018, SMM says

London, Oct 8 (SMM) – Infrastructure construction in China will accelerate in the second half of the year as Beijing has been loosening policies in the face of potential impact from the trade war, said SMM general manager, Ian Roper.

Speaking to delegates at the LME week in London on Monday October 8, he said that infrastructure investment was cut at the beginning of the year. But that "the Chinese government is clearly accelerating infrastructure spending in response to trade concerns" and that "financial tightening has clearly reversed amid trade pressures". This is likely to boost fixed asset investment (FAI) in the second half of the year.

"Financial conditions clearly eased in April however, and new lending has recovered somewhat, which bodes well for metals demand growth into year end," Roper said.

Policy has eased selectively, as Chinese President Xi Jinping is determined to introduce risk into the financial system, SHIBOR fell by 200 basis points. This reflected that liquidity conditions are much easier and thus supportive to growth

China will increase export tax rebates from November 1 and quicken export tax rebate payments to support foreign trade, the cabinet said on Monday. Officials also said that local governments will step up special bond issuance for shanty-town redevelopment.

Over the weekend, China's central bank announced a steep cut in the amount of cash that banks must hold as reserves, marking the fourth such cut this year. This move, effective from October 15, will inject 750 billion yuan ($109.2 billion) into the banking system with the cut, by releasing 1.2 trillion yuan in liquidity, with 450 billion yuan of that to offset maturing medium-term lending facility (MLF) loans.