MNI China Press Digest August 18: Yuan, Investment, NPL

Highlights from Chinese press reports on Friday:

• China’s central bank will support the Yuan's basic FX stability at a reasonable level, and will utilise the advantages of a managed float based on market mechanisms, according to the People’s Bank of China Q2 Monetary Policy Implementation Report. Authorities will closely monitor policy developments of other major central banks, and will correct pro-cyclical and unilateral behaviour in the FX market, the report said. On property, the PBOC will adapt policy to suit new supply and demand conditions and will increase financial support for leasing, urban-village renovation, and affordable housing construction. (Source: Yicai)
• China may see a rebound in fixed-asset investment in Q3 as infrastructure construction accelerates and offsets declines in real estate investment, said Wang Qing, chief analyst of Golden Credit Rating. The country’s rapid drop in fixed-asset investment to 3.4% y/y during January to July, down from 3.8% in H1, was mainly attributed to a deep drop in real estate investment, said Wang Qing. Authorities should implement stronger easing policies and fiscal support to ensure property sales and investment did not weaken further, said Wang Tao, chief economist at UBS China. She noted consumer demand would remain limited without more counter-cyclical support to hedge against low levels of property construction. (Source: Yicai)
• Provinces across China said the banking industry accelerated the clearance of non-performing assets in H1, with 18 of 22 provinces releasing data showing NPL declined during the first half of this year. Bucking the trend was Beijing, Shanghai and Guangdong who showed a slight increase from last year, when banks underwent a clearance of risky real estate assets, said Liao Zhiming, chief banking analyst at China Merchants Securities. Shanghai's NPL rate hit 0.98% by end of June, up 0.19 pp on previous, which was the largest increase among the disclosed regions so far, though remaining at a low level. (Source: Quanshang China)