MNI China Press Digest Aug 23: Lower Rates, Jobs, Special Bond

The following lists highlights from Chinese press reports on Monday:

• The costs of business lending in China's economy have further room to fall despite that the PBOC kept the benchmark Loan Prime Rate unchanged for the 16th month on Aug. 20, the Economic Information Daily, owned by Xinhua News Agency, said in a report citing market participants. The rates on DR007, 10-y CGB and 1-y Interbank Deposit have all declined following the July RRR cut by the PBOC, so the Q3 corporate lending rates are also likely to drop as policies pushing for lower borrowing costs take effect, the newspaper said citing analyst Wang Qing of Golden Credit Ratings. The next-stage policies are likely to further fiscal policy measures and ensure ample liquidity on the basis of the so-called cross-cycle adjustment, the newspaper said. MNI notes that in an effort to stress structural reform and more sustainable measures, China has promoted the new expression in place of the previous countercyclical adjustment, seen as a more short-term boost.
• China should focus on stabilizing the job market as a key to its cross-cycle macro policies and boosting domestic demand, wrote Guan Tao, the global chief economist of Bank of China International and a former forex official, on Yicai.com. Unemployment pressure remains high with the number of new urban jobs in the first seven months still 520,000 lower than the same-period average of 2018-2019, Guan said. The youth unemployment rate will rise significantly with the arrival of the graduation season, while the tougher regulations on the tutoring industry will lead to significant job reduction, Guan added. The two-year average rates of growth of disposable income and consumption of urban residents in the first seven months were 1.2 and 3.8 percentage points lower than that of the economic growth, according to Guan.
• At least five Chinese provinces have reserved some of their special bond quotas for issuance in December so that the proceedings can support next year's growth, seen as under more pressure to reach 5.5%, the potential growth expected in a normal Chinese economy, the China Securities Journal reported citing analysts. There could be more than CNY1 trillion of special bonds to be issued in Q4, with about CNY700 billion in December, the newspaper said citing Zhou Yue, chief fixed-income analyst of Zhongtai Securities. The Ministry of Finance may frontload some of 2022's special bond quotas by the end of this year to ensure the strength of investment is sustained through Q2 2022, the newspaper said citing Gao Ruidong, chief analyst with Everbright Securities.