MNI China Press Digest Aug 9: Yields, Car Sales, Fiscal Reform

Highlights from Chinese press reports on Friday:

• Authorities are supporting central bank efforts to maintain a normal sloping yield curve by intensifying investigations into illegal treasury bond trading, Securities Times reported, citing analysts. Employees at small and medium-sized financial institutions conspired to take advantage of expected treasury yield declines, the news outlet noted. Analysts from Minsheng Securities estimate resistance levels for 10 and 30-year treasury yields are currently at 2.1% and 2.3%. The central bank has signed agreements with financial institutions to borrow and sell treasury bonds to ensure market balance, the Times said.
• China's domestic retail car sales hit 1.7 million units in July, down 2.8% y/y and 2.6% m/m, according to the China Association of Automobile Manufacturers. Consumers have purchased 11.5 million cars so far this year, up 2.3%, with conventional fuel vehicles selling 6.5 million units, down 15% y/y, the association said. Retail sales of new energy vehicles in July reached 878,000 units, up 36.9% y/y and 2.8% m/m.
• China needs institutional reforms to help increase central government responsibility for fiscal spending, Yicai.com reported, citing Yuekai Securities' Chief Economist Luo Zhiheng. The central government should directly take on more employees and tasks from local governments rather than relying on transfer payments. Central authorities' expenditure in the national budget over the past decade accounted for around 14%, significantly lower than other countries and creating a fiscal burden on local governments, the newspaper said.