MNI China Press Digest Aug 12: July Forecast, PBOC, Corp Loans

The following lists highlights from Chinese press reports on Thursday:

• China's July manufacturing investment is likely to have kept a strong momentum, while infrastructure investment may also have improved, the Economic Information Daily reported citing forecasts by securities firms and banks. Industrial output may have expanded 7.8% y/y in July, or 6.3% when compounded over the last two years compared with 2019, the newspaper said citing Chief Economist Li Chao of Zheshang Securities. July's retail sales are forecast to grow 11.9%, or 5.2% if averaged over the last two years, the daily cited Chief Analyst Zhang Yu of Huachuang Securities Research. The impact from the Covid-19 outbreaks in July was likely to be limited, Zhang was cited as saying.
• The PBOC's trial policy announced on Tuesday, which cancels the mandatory ratings on offering debt instruments by the non-financial companies starting Aug. 11, showed the central bank's resolve in reining in unqualified external rating agencies, widely criticized by the financial industry for inaccuracies, the 21st Century Business Herald reported citing industry insiders. Regulatory authorities have issued a series of policies to make credit rating agencies accountable to the market, which may cause the agencies to lose as much as 40% of their revenues, the newspaper said citing an industry insider. Normally, debt financing instruments issued by non-financial enterprises have to be rated by a bond rating agency registered in China.
• A slowdown in Chinese companies' longer-term loans for the first time this year signaled a weakening demand for financing by the manufacturing sector, even as the government continued to pump more credit to sustain the economy, the Securities Times reported citing analysts. The increase in new corporate medium and long-term loans in July was CNY103.1 billion less than that in the same period last year, the newspaper said. Aggregate financing in July dropped, reflecting a crackdown on off-balance sheet financing and weaker government bond financing, the newspaper said citing Wen Bin, the chief researcher with Minsheng Bank. However, China's money supply, credit, and social financing data may rebound in August due to the boost from the PBOC's RRR cut announced in July, and as macro policies tilt to easing to stabilize growth, the newspaper said citing analyst Wang Qing of Golden Credit Rating.