MNI China Press Digest: Friday, Dec. 29

     BEIJING (MNI) - The following are highlights from the China press for

Friday, Dec. 29:  

     The Fiscal Work Conference this week determined that China will deepen tax

reforms next year to better distribute income between the central government and

local governments, the Economic Information Daily reported Friday, citing

unidentified officials in the Ministry of Finance. The conference also

emphasized that China will continue to cut taxes and lower government fees.

Fiscal policies will remain active for the 11th consecutive year, and government

expenditure will be more sustainable. Local governments' debt risk needs to be

countered. The conference also determined that China will improve its fiscal

policies to support people who used to live in the countryside in acquiring

official residency when they move into cities. (Economic Information Daily)

     The campaign to reduce overcapacity in the steel industry has been

effective, the Economic Information Daily reported Friday. Production capacity

has been cut by 115 million tons, which exceeds the target of 100 million tons

to 150 million tons in reductions before 2020. The campaign will continue in

2018, with a prohibition on adding new capacity. (Economic Information Daily)

     Nonbank financial institutions have been under pressure to borrow to make

it through the end of the year, while liquidity conditions have been better for

banks, the China Securities Journal reported Friday. The People's Bank of China

has reiterated that overall liquidity conditions are at a relatively high level,

meaning that any tightness is structural, caused by regulatory and funding

pressures. Liquidity conditions might improve in the first quarter of 2018, when

a set of favorable factors is expected. Fiscal spending, targeted cuts to

required reserve ratios and banks' greater willingness to lend will likely

offset tax payments, higher cash demand for the Lunar New Year holiday and

maturing reverse repos. (China Securities Journal)

     The State Council has sent a signal that changes to the local government

tax system have begun and more are on the way, the Securities Daily reported

Friday. The council has determined that an environmental protection tax that

begins Jan. 1 will be fully included in local governments' income. In the

future, some consumption taxes might be allocated to local governments, which

will also benefit from the establishment of real estate taxes, the newspaper

said, citing unidentified people with knowledge of the tax plans. (Securities

Journal)

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: rich.dirks@marketnews.com

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