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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
--MNI Beijing Bureau; +86 10 85325998; email:
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
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