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MNI China Press Digest Dec 11: Deficit, Exports, SMEs

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

Highlights from Chinese press reports on Wednesday:

  • Beijing is likely to raise its deficit-to-GDP ratio to around 4% next year, after the Politburo meeting called for implementing a more proactive fiscal policy and strengthening extraordinary countercyclical adjustment this week, Yicai.com reported, citing analysts. Luo Zhiheng, chief economist at Yuekai Securities said a 4% deficit rate sends a strong signal to stabilise expectations, which directly boosts the capital market and allows the government to increase spending and alleviate local fiscal pressure quicker than issuing special treasury bonds.
  • China’s export growth slowed sharply in November to 6.7% y/y, due to base effects and diminished short-term factors behind October’s 12.7% y/y increase, according to Feng Lin, executive director of research at Orient Jincheng. November in-bound shipments fell 3.9% y/y, widening from October’s 2.3% decline, as domestic demand remained weak and firms' reluctance to increase inventory, said Zhou Maohua, researcher at Everbright Bank. However, the domestic economy continued to improve given import growth of electronic components, electromechanical products, minerals and energy was positive, Zhou noted.
  • China’s SME Development Index reached 89.2 for November, up 0.2 points from October and marking the second month of consecutive increase, the China Association of Small and Medium Enterprises (CASME) said. SME confidence continued to improve and market demand has rebounded, however policymakers must continue expanding demand and revitalizing consumption to help enterprises grow and stabilise orders, Ma Bin, executive vice-president at CASME noted.
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Highlights from Chinese press reports on Wednesday:

  • Beijing is likely to raise its deficit-to-GDP ratio to around 4% next year, after the Politburo meeting called for implementing a more proactive fiscal policy and strengthening extraordinary countercyclical adjustment this week, Yicai.com reported, citing analysts. Luo Zhiheng, chief economist at Yuekai Securities said a 4% deficit rate sends a strong signal to stabilise expectations, which directly boosts the capital market and allows the government to increase spending and alleviate local fiscal pressure quicker than issuing special treasury bonds.
  • China’s export growth slowed sharply in November to 6.7% y/y, due to base effects and diminished short-term factors behind October’s 12.7% y/y increase, according to Feng Lin, executive director of research at Orient Jincheng. November in-bound shipments fell 3.9% y/y, widening from October’s 2.3% decline, as domestic demand remained weak and firms' reluctance to increase inventory, said Zhou Maohua, researcher at Everbright Bank. However, the domestic economy continued to improve given import growth of electronic components, electromechanical products, minerals and energy was positive, Zhou noted.
  • China’s SME Development Index reached 89.2 for November, up 0.2 points from October and marking the second month of consecutive increase, the China Association of Small and Medium Enterprises (CASME) said. SME confidence continued to improve and market demand has rebounded, however policymakers must continue expanding demand and revitalizing consumption to help enterprises grow and stabilise orders, Ma Bin, executive vice-president at CASME noted.