China Press Digest Oct 14: Slower GDP, More Credit, US Censure

The following lists highlights from Chinese press reports on Thursday:

• China should pursue loose monetary policies to counter a slowdown, and the central bank should cut RRRs in due course to enhance banks' lending to new growth drivers and weak links of the economy, Yicai.com reported citing Wu Chaoming, chief economist of Chasing Securities.The average forecast for China's Q3 GDP growth is 5.35%, with the expectation of annual GDP forecast revised to 8.15% from 8.72%, as real estate regulations and power cuts will continue to hamper the economy, Yicai said. Real estate investments and exports, the two main drivers of the recovery from the epidemic, may head downward, while power cuts could affect production and further suppress business activities, with the risk of stagflation rising, the newspaper said citing Luo Zhiheng, deputy dean of Yuekai Securities Research Institute.
• China's new loans and aggregate financing are likely to rise in Q4, as fiscal spending and the sale of local government special bonds accelerate while reboudning consumption drives credit demand, Yicai.com reported citing analysts. New loans slowed significantly in September due to the contraction of medium and long-term lending to residents and businesses amid cooling housing market as well as rising producer costs, the newspaper said. Analysts are divided on the necessity of an RRR cut in Q4, with some calling for a 0.5 pp cut to stabilize credit growth, while others arguing further easing will dilute the policy goal of stabilizing the macro-leverage ratio and supporting the real economy, the newspaper said.
• China has overcome the difficulties of an economic recovery more effectively, so it has a powerful foundation to resist U.S. censure and lead international competition, the Global Times said in a commentary. The U.S. and Western countries are dependent on Chinese products in many areas, and it is difficult to implement an alternative strategy, said the newspaper. However, China faces a debt default represented by real estate giant Evergrande Group, a sluggish property market, and a shortage of electricity, which pressured growth, said the newspaper. China should speed up measures to alleviate the power shortage, and the government needs to carry out regulation based on facts and reality, and not hesitate to break through restrictions, the newspaper said.