MNI China Press Digest Dec 6: Ratings, Local Debts, Commodity

Highlights from Chinese press reports on Wednesday:

• Moody's downgrade of China’s rating outlook over concerns about economic growth prospects and fiscal sustainability was unnecessary, according to officials from the Ministry of Finance. In an interview with 21st Century Business Herald, authorities emphasised China’s long-term fundamentals have not changed and will remain an important global economic growth engine in future. The ministry noted effects from the pandemic are beginning to fade and new growth drivers are taking effect.
• Authorities have asked local governments to report their demand for refinancing bonds to roll over maturing statutory debts, with the scale of maturity expected to reach close to CNY3 trillion in 2024, 21st Century Business Herald reported citing unnamed local officials. The upper limit for refinancing in debt-laden provinces is set at 80%. Compared to past experience, about 86% of the due principal of local government bonds can be repaid by issuing refinancing bonds. This aims to properly control local debt risks in high-risk provinces by reducing their debt balance, the newspaper said.
• China Bulk Merchandise Index fell by 1.5 percentage points to 101.3% in November from October, the second consecutive monthly drop, indicating insufficient upward momentum in demand, Securities Daily reported citing data by the China Logistics Information Center (CLIC). The commodity inventory sub-index rebounded for the second month to 101.7% to hit a nine-month high. Inventory pressure will continue to rise as the scope of construction shutdowns in the northern region expands as temperature drops over December, said CLIC Analyst Li Dawei. But limited room exists for price adjustments against the backdrop of favourable pro-growth policies and an expected decline in commodity supply, Li added.