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China’s foreign exchange reserves stood at USD3.2 trillion at the end of December, down USD63.5 billion from November, a decrease of 1.94%, Securities Daily reported citing data by State Administration of Foreign Exchange. The decline was mainly attributed to a stronger U.S. dollar which led to an overall fall in global asset prices. Export resilience, stable cross-border capital flows and the implementation of additional policies will help support the basic stability of fx reserves, the newspaper said citing analysts.

China has issued its first national-level guidance to promote the development of government investment funds, aiming to support innovation and entrepreneurship with market-oriented approaches, Shanghai Securities News reported. The guidance said it is necessary to set the duration of government investment funds, develop it as long-term and patient capital while encouraging the participation of social security and insurance funds, as well as increase government’s investment ratio for venture capital funds to boost market confidence, the newspaper said.

The People’s Bank of China may cut the reserve requirement ratio as Beijing ramps up government bond issuance, as the expected expansion of the deficit ratio and increased supply of special treasuries and local government bonds will lead to funding fluctuations, Shanghai Securities Daily reported citing Ming Ming, chief economist of CITIC Securities. Some believe there is still a "window period" for a RRR cut in Q1 given the peak period for credit supply. Lian Ping, director of the China Chief Economists Forum, predicts an about 1% RRR cut in 2025, with room for 40-50 basis points of interest rate cuts, the newspaper said.