MNI China Press Digest Dec 16: LPR, Real Estate, Covid

Highlights from Chinese press reports on Friday:

• The 5-year Loan Prime Rate could be lowered at the December 20th fixing, according to the Securities Daily. The recent lowering of deposit rates by banks, coupled with a cut to the reserve requirement ratio last month, may lead to a lower 5-year LPR, the newspaper said. The 1-year LPR is likely to remain stable this month, given the current corporate loan rate is lower than housing loan rates, and various structural support policy tools have provided abundant liquidity. The People's Bank of China's Medium-Term Lending Facility injection in December, coupled with the use of tools such as Pledged Supplementary Lending, will help control banks’ marginal capital costs and support an increase in credit to the real economy, the paper said.
• China is considering new measures to support the real estate sector, aiming to improve the balance sheets of the industry and boost market expectations and confidence, Xinhua News Agency reported late Thursday citing Vice Premier Liu He. Real estate is a pillar industry of the national economy, and there is enough demand to support its stable development as China’s urbanisation is still in a relatively rapid development stage, Liu was cited as saying. Liu also said he’s very confident that the Chinese economy will improve next year.
• China’s economy could remain weak until the end of Q1 next year, as disruption from Covid-reopening will suppress demand and business activity in the short term, according to the 21st Century Business Herald. The sudden reopening might lead to labor shortages and reduced levels of consumption from people going out less, but analysts remain divided on how long the disruption will last. The paper cites the government's recent Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035) as evidence policy will be focused on boosting consumption and investment in the near term. The economy is predicted to grow by 3% this year before rebounding to above 5% next year, the paper said.