This daily digest focuses on market sentiment, new developments in China’s foreign exchange policy, changes in financial market regulations and Chinese-language economic coverage in order to keep DailyFX readers up-to-date on news typically covered only in Chinese-language sources.

– China’s Central Bank will withdraw preferential reserve requirement ratios on banks who no longer meet criteria.

– PBOC Deputy Governor said China’s monetary policy should be moderate and flexible.

– New tax cuts will be introduced to support the real estate market.

PBOC News: China’s Central Bank

China’s Central Bank said that some commercial banks no longer meet the criteria for preferential reserve requirement ratios (RRR); thus the Central Bank will raise RRR on those banks beginning on February 25, 2016. In the statement, the Central Bank also explained that the RRR adjustment is based on banks’ performance rather than to restrict new yuan loans issuance, said by some media. The January new yuan loans reading released this week came out at 2.51 trillion yuan, a record high for January.

Sina News: China’s most important online media source, similar to CNN in the US. They also own a Chinese version of Twitter, called Weibo, with around 200 million active users monthly.

– PBOC’s Governor Zhou Xiaochuan and Deputy Governor Yi Gang both gave speeches at the Top 50 Economists Forum regarding reforms and policies. Governor Zhou said a main target of China’s supply-side structural reforms is to eliminate price distortions. He also commented on global monetary policies: Since the 2008 financial crisis, a lot of countries have been in short supply of fiscal tools due to high debt ratios and thus they heavily rely on monetary policy. He didn’t mention the names of those countries specifically. Mr. Yi said that China’s monetary policy should be moderate and flexible. It should prevent liquidity shortage but at the same time, it should not be too loose. Otherwise, it will cause asset price bubbles and add downward pressure on the Yuan.