China Press Digest Oct 19: Shaken Confidence, Bonds, Real Tax

The following lists highlights from Chinese press reports on Tuesday:

• China should adjust its monetary and fiscal policies to help businesses with funding shortages and revive industrial production, after its reported Q3 GDP fell short of expectations, the Global Times said in an editorial. The weak indicators showed many businesses are in trouble and people's incomes have fallen, the state-run newspaper said. Private businesses' confidence in China was shaken, as they interpreted the government's slew of "macro-control" measures to be "changing course," the newspaper said. Society should be convinced that the government stays committed to speeding up economic development, it said. Infrastructure investment in Q1-Q3 grew by only 1.5% y/y, considered negative after adjusting for inflation, so the major projects during the 14th Five-Year Plan should be accelerated, the Global Times said.
• The Chinese bond market turned more bearish after the PBOC last week failed to signal further easing, and that an RRR cut this year seemed less likely, the 21st Century Business Herald reported citing analysts. The PBOC said it would use MLFs and open market operations to maintain ample liquidity and will promote the launch of carbon reduction support tools, which the market expects to be some re-lending tools that exceed CNY1 trillion, the newspaper said. Though Q3 GDP unexpectedly fell below 5%, the bearish sentiment in the bond market remains unchanged as structural tools like relending aiming to boost credit may be the main measure to support the economy in the near term, instead of monetary easing, the newspaper said citing an anonymous trader at a state-owned bank in Shanghai.
• China could consider piloting a property tax in Shenzhen city as well as Zhejiang and Hainan provinces while promoting the legislation of property tax law, The Paper reported citing Jia Kang, head of China Academy of New Supply-side Economics. Analysts believe the process will be accelerated after senior policymakers said in an article last week published on the CPC party-run magazine Qiushi mentioning implementing property tax pilots, the newspaper said. A property tax can promote social fairness as well as make up for the lack of land sales revenue for local governments amid a rapidly cooling housing market, the newspaper said citing Luo Zhiheng, deputy dean of Yuekai Securities Research Institute.