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MNI China Press Digest Dec 8: Fiscal Policy, Property, FX

MNI (Singapore)
MNI (Beijing)

Highlights from Chinese press reports on Thursday:

  • China may maintain relatively large deficits and debt next year to cope with weakening external demand and insufficient domestic demand, as the Politburo meeting this week called for a step up in proactive fiscal policy for 2023, Yicai.com reported. Analysts predict the budget deficit-to-GDP ratio could be raised to 3% or slightly above from 2.8% in 2022, the newspaper said. Fiscal pressure remains given less surplus funds are available, though setting the deficit rate at 3.1% will unleash over CNY4 trillion in funds, the newspaper said citing Gao Ruidong, chief macro economist of Everbright Securities. Gao expects the scale of new local government special bonds to be around CNY4 trillion, and sees a growing urgency for the issuance of special Treasury bonds, the newspaper said.
  • Leading property developers saw home sales recover in November amid intensive policy support to ease funding pressures, China Securities Journal reported. Though home sales of top 100 developers dropped by 0.3% m/m, nearly 40% of them achieved month-on-month growth, with some including Greenland Holdings and Wanda Group reporting growth in over 40% of their developments, the newspaper said citing data by China Real Estate Information Center. Many cities continue to optimise housing market regulations, which will boost market confidence, but home sales will take time to bottom out, the newspaper said.
  • China’s FX reserves increased 2.13% m/m in November to USD3.11 trillion, and are expected to remain stable in the near term, according to the Securities Daily. November's increase reflected changes in asset prices and favorable conversion of non-USD reserves into USD. Reserves are expected to remain stable as the Fed slows its rate hikes, growth is supported by Chinese government policies, and China’s trade balance remains resilient. Seasonal factors such as exporters' payment collection at the end of the year will also support stability.
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