Profit growth of Chinese listed banks is likely to slow down to around 20 percent next year, according to a report released by the Bank of Communications (BOCOM), the country's fifth biggest commercial bank by asset scale.
The deceleration was mainly caused by a decline of growth in interest-earning assets, due to stable credit growth, a slowdown in foreign capital inflow and an increase in funds flowing out of the banking system, said the report.
The bank estimated that interest-earning assets of Chinese commercial banks will rise by 14 percent next year and contribute 15 percent of total net profit, compared with a 17 percent contribution in 2011.
The renminbi is coming close to having a reasonable exchange rate, Chinese Commerce Minister Chen Deming said at the G20 summit.
Chen told reporters on Thursday that the yuan has risen by about 30 percent against the US dollar since 2005, and China's trade surpluses are declining when compared with the value of its gross domestic product.
In September, selling pressure appeared for the yuan, showing that the market perception of the currency is starting to change, Chen added.
The Chinese yuan closed at a record high against the dollar on Friday. Its reference rate was set at 6.3165 on Friday, the highest it has been since July 2005.
A sharp rise in China's yuan currency might cut the U.S. trade deficit by as much as one third and create enough American jobs to put at least a modest dent in the unemployment rate.
Then again, it may also lead to a destabilizing spike in Chinese unemployment and spark a trade war that drags the global economy back into a deep recession.
These are the conflicting forces U.S. lawmakers must consider as they decide whether to pass a bill which would pressure Beijing into letting its currency rise more rapidly.
The debate over whether China's currency is undervalued is essentially closed. Beijing readily acknowledges that a gradual yuan appreciation is in its best interest, and it has allowed the currency to rise by about 6.5 percent since June 2010.
Chinese Premier Wen Jiabao urged stronger financial support for cash-strapped smaller businesses, the state-run Xinhua News Agency reported on Wednesday, in the latest indication of the toll China's inflation fight is taking on its small and midsize businesses.
Mr. Wen made the remarks during his visit to China's eastern Zhejiang province on Monday and Tuesday, according to Xinhua. Zhejiang is home to numerous small entrepreneurial businesses.
Smaller enterprises should be a priority for bank credit and enjoy more tax preferences, Mr. Wen said, according to Xinhua. He added that banks should set targets for loans to small companies, reduce the cost of credit for them and allow them a higher nonperforming loan ratio.
To prevent the funding shortage from spreading, Mr. Wen also called for better regulation of private lending, Xinhua said.
Read more: Chinese Premier urges China's Banks: Lend to Small Businesses
On Wednesday, the yuan — also known as the renminbi or “people’s currency” — rose to a record post-float high, as the dollar fell to 6.3772 yuan on mainland Chinese markets, according data from the state-run Xinhua News Agency.
However, plunges in global stock markets and for many commodities on Thursday sent the Chinese unit back down, with the central bank’s dollar “parity rate” — the midpoint of the government-set trading range for the domestic market — rising to CNY6.3808 Thursday and CNY6.3840 on Friday.
China's currency and government bonds offer investors a unique way to take advantage of the country's continued strong economic growth.
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