MNI China Press Digest Dec 23: GDP, Evergrande, Real Estate

Highlights from Chinese press reports on Friday:

• China’s economy will rebound next year, but the strength of recovery is uncertain said experts at the 4th Bund Finance Summit, co-hosted by the China Finance 40 Forum (CF40). The impact of Covid-19 “scarring” on household and small business finances, as well as continued lack of confidence in the real estate sector were unknown factors impacting next year's growth outlook. Experts said the yuan may face depreciation pressure next year due to a risk of dollar shortages, widening Sino-US interest rate differentials, and service trade deficit expansion. As the economy is in the early stage of bottoming out, fiscal policy should be more vigorous, and monetary policy should be more accommodative to support the recovery.
• Debt-laden developer Evergrande said disagreements are narrowing in its offshore debt restructuring plan, though it also admitted great uncertainty on repayment given the company’s massive debts and challenging business situation, Caixin reported. The major disagreement in the restructuring negotiation is that the current size of Evergrande’s overseas debt is out of proportion to its overseas executable assets, and creditors receive limited protection, said Caixin citing an unnamed dollar bond investor. Creditors’ expectations have already been lowered, but they still hope to obtain debt repayment protection from physical division of property, the newspaper said.
• Upper tier-2 cities in China have taken steps to increase demand for property purchases, according to Yicai.com. The city of Nanjing has lowered down payment ratios for purchasing two properties to 40%, and in Zhengzhou new citizens will enjoy the same treatment as local residents in terms of credit policy, deed tax subsidy, and house price preferences. The paper said the impact of these measures will be small in the short term, as the recovery of the sector next year is more reliant on the stabilisation of the economy and the return of home buyer confidence.