MNI China Press Digest Aug 26: Yuan, Infrastructure, Housing

The following lists highlights from Chinese press reports on Friday:

• China’s foreign exchange regulator said market players are acting in a rational manner and continue to sell forex on rallies, with stable expectations surrounding the yuan evident, Xinhua news agency reported. The regulator suggested this will help stabilize the yuan at a balanced level. Since the start of August both banks’ forex settlement and sales and foreign-related receipts and payments have shown a surplus, the newspaper wrote, citing an unnamed official from the State Administration of Foreign Exchange. With a relatively high surplus in goods trading, the actual utilization of foreign capital continued to grow and foreign investors have bought Chinese securities on a net basis since the start of the month, reflecting the long-term investment value of yuan assets, Xinhua said.
• China’s infrastructure investment may grow by as much as 10-15% in 2022, which is expected to boost overall GDP growth by ~1.0-1.5 percentage points, with analysts looking for infrastructure construction to accelerate in Q3 aided by increased support for funding, the Securities Daily reported. This comes after this week's State Council meeting saw an additional CNY300 billion in financial instruments allotted to policy banks, which they can invest in infrastructure projects. The State Council also allocated an additional CNY500 billion in project-backed special bonds.
• Second-tier and smaller Chinese cities will up the pace of a wider relaxation of home purchase and loan restrictions, in addition to lowering down payments following the State Council’s call to better meet housing demand by allowing cities to implement differentiated loan policies, Yicai.com reported, citing Tao Chuan, analyst at Soochow Securities. While policymakers remain cautious about relaxing housing market regulations in first-tier cities under the principle of “housing is for living not speculating”, Du Haomin, analyst at Sinolink Securities, believes this round of easing may need to be led by major cities as many smaller cities have already relaxed restrictions to a certain degree, Yicai noted.