On Thursday, Citi announced the appointment of Dr. Xiangrong Yu as the bank’s new China chief economist.
He succeeds Dr. Li-Gang Liu, who recently stepped into the new role of Asia Pacific head of Economic Analysis, across the bank’s Global Wealth Management Division.
In his new post, based in Hong Kong, Yu will be responsible for the bank’s views on China’s economy and policy.
He brings to the role 15 years of experience in economics research, as well as experience advising institutional clients as an economist at China International Capital Corporation (CICC), and in similar capacities at the Hong Kong Monetary Authority (HKMA) and the International Monetary Fund (IMF).
Joining Citi in 2017, Yu most recently served as the bank’s deputy head of China Economics, and a spokesperson for the bank told FinanceAsia that to date, Yu has spearheaded various analyses.
The spokesperson cited Yu’s recent research efforts as including: the publication of a China economic and inflation outlook; research on implications to the Chinese market of external events (such as federal inflation hikes); involvement in monetary policy calls; notes on fiscal stimulus; as well as commentary on last week’s news that China’s central reserve – the People’s Bank of China (PBOC) – will transfer RMB 1 trillion ($157 billion) in profit to the Ministry of Finance to boost fiscal spending.
On this recent move by the PBOC, Yu shared with FA, “[This] suggests effective fiscal expansion amid a conservative headline deficit and shows the improved coordination between monetary and fiscal policies to drive growth.”
“The transfer would work like a 50 basis points, and/or a RRR (reserve requirement ratio) cut, distributed across 12 months. It will have no impact on the dividend payout of listed SOEs (state owned enterprises).”
Additionally, Yu told FA that he expects another interest rate cut or further RRR reduction around the corner.
“The financial data missed expectations in February and showed unusually weak credit appetite – medium/long-term household loans declined for the first time ever… The government will need to step up its efforts to protect the downside of the property sector in order to sustain the credit growth.”
On inflation, he noted that Consumer Price Index (CPI) inflation was muted on soft consumer demand, while sequential Producer Price Index (PPI) growth turned positive in February due to commodity shocks.
“Geopolitical tensions raise inflationary pressures. We have revised our CPI inflation forecast from an expectation of 2% to 2.3%, and for PPI, from an expectation of 3.4% to 5.6% for 2022.”
“Inflation won’t constrain monetary policy for now, but could become more a source of concern in the second half of the year.”
“We maintain our call for a 25 basis point policy rate reduction and a 50 basis point RRR cut in the first half of 2022, and see the coming months as appropriate windows for the PBOC to act.”
Yu holds a PhD in economics from the University of Wisconsin-Madison and earned his economics MA and BA from Peking University.
