MNI China Press Digest Dec 7: CPI, Real Estate, Yuan

The following lists highlights from Chinese press reports on Wednesday:

• China’s inflation rate is expected to remain moderate, with economists’ median forecast for November CPI sitting at 1.65% y/y, compared to October’s 2.1% y/y, Yicai.com reported. The PPI is expected to decline 1.53% y/y in November compared to October's 1.3% y/y fall, Yicai said. Pork prices are the main driver of CPI, but core inflation - which excludes food and energy prices - remains tame below 1%, while PPI has fallen on lower prices for commodities such as crude oil, the newspaper said citing Xu Sitao, chief economist at Deloitte China. China’s stable inflation expectations will provide a suitable liquidity environment for stabilising economic growth, the newspaper said. China is set to release its November inflation data on Friday.
• The recent measures taken to allow real-estate equity financing and merger activity by the China Securities Regulatory Commission (CSRC) will significantly improve credit risk in the sector, according to the Economic Information Daily. The latest measures constitute the final part of the “three arrows” support package to improve credit, bond and equity financing conditions for developers. Equity financing is beneficial compared to debt, as it doesn't carry repayment obligations and will improve the balance sheet without affecting the “three red lines”, the newspaper said. The “three arrows” will be help state-owned enterprises and high-quality private real estate enterprises, boosting industry confidence.
• The rise and fall of the yuan depend on China’s economic fundamentals, and is not dependent on the strength of the U.S. dollar nor the China-U.S. interest rate spread, wrote Guan Tao, a former senior State Administration of Foreign Exchange official in a blog post. Though the market generally expects a better economic outlook next year, with some predicting a strong rebound in yuan, there will still be many uncertainties, said Guan. With external demand likely to weaken, relaxing Covid controls may not quickly lead to the rebound in consumption and investment given damage to balance sheets of companies and the household sector. It remains to be seen whether the property market can recover as expected amid declining social purchasing power and strong wait-and-see sentiment in the market, said Guan.