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MNI China Press Digest Aug 27: Revenues, Debt, PBOC

MNI picks keys stories from today's China press
Central Bank NewsPolicy NewsPBOCHomepageAPACChinaEM Policy NewsEM Central Bank NewsPeoples Bank of ChinaStoryRegion

MNI (BEIJING) - Highlights from Chinese press reports on Tuesday:

  • Public revenues fell during the first seven months of the year weighed down by sluggish economic growth and a continuous decline of some energy and mineral product prices, according to Luo Zhiheng, chief Economist at Yuekai Securities. China saw the national general public budget revenue decrease by 2.6% y/y during the first seven months, while the national government fund budget revenue went down 18.5% y/y. Authorities can improve land-use revenue, which fell  22.3% y/y, by further lifting purchase restrictions in first tier cities and reducing mortgage interest rates. 
  • Local governments are now strictly prohibited from borrowing funds for municipal infrastructure projects which have little return, as authorities try to curb off-balance-sheet debt, Shanghai Securities News reported, citing a document by the Ministry of Finance and five other departments. Income from infrastructure projects funded by local government special bonds should be used for interest and principal repayment, the statement said.
  • The People’s Bank of China will likely cut the reserve requirement ratio by 0.25-0.5 percentage points in Q3, with a 10-15 basis point policy rate cut likely in Q4, Yicai.com reported, citing Dong Ximiao, chief researcher at the Merchants Union Consumer Finance. Market expectations of a Federal Reserve rate cut in September will help ease yuan depreciation momentum, while further PBOC cuts will alleviate downward pressure on the economy, Dong said. Banks’ liability costs have declined following lower deposit rates, allowing for Loan Prime Rates cuts needed to reduce financing costs.
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MNI (BEIJING) - Highlights from Chinese press reports on Tuesday:

  • Public revenues fell during the first seven months of the year weighed down by sluggish economic growth and a continuous decline of some energy and mineral product prices, according to Luo Zhiheng, chief Economist at Yuekai Securities. China saw the national general public budget revenue decrease by 2.6% y/y during the first seven months, while the national government fund budget revenue went down 18.5% y/y. Authorities can improve land-use revenue, which fell  22.3% y/y, by further lifting purchase restrictions in first tier cities and reducing mortgage interest rates. 
  • Local governments are now strictly prohibited from borrowing funds for municipal infrastructure projects which have little return, as authorities try to curb off-balance-sheet debt, Shanghai Securities News reported, citing a document by the Ministry of Finance and five other departments. Income from infrastructure projects funded by local government special bonds should be used for interest and principal repayment, the statement said.
  • The People’s Bank of China will likely cut the reserve requirement ratio by 0.25-0.5 percentage points in Q3, with a 10-15 basis point policy rate cut likely in Q4, Yicai.com reported, citing Dong Ximiao, chief researcher at the Merchants Union Consumer Finance. Market expectations of a Federal Reserve rate cut in September will help ease yuan depreciation momentum, while further PBOC cuts will alleviate downward pressure on the economy, Dong said. Banks’ liability costs have declined following lower deposit rates, allowing for Loan Prime Rates cuts needed to reduce financing costs.