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MNI China Press Digest Jan 2: Domestic Demand, Debt, Housing

MNI picks key stories from today's China press.
Central Bank NewsPolicy NewsPBOCHomepageAPACChinaEM Policy NewsChinaEM Central Bank NewsPeoples Bank of ChinaGlobalStoryRegion

MNI (BEIJING) - Highlights from Chinese press reports on Thursday:

  • Beijing must increase spending by borrowing, and ensure the growth rate of expenditure exceeding nominal GDP growth to effectively drive demand, 21st Century Business Herald reported citing Zhang Bin, deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. Meanwhile, the real interest rate must be significantly lowered which means the reduction in nominal interest rate must be much greater than the reduction in inflation, said Zhang. He added that a restructuring of real estate developers is also necessary to stabilise the housing sector, the newspaper said.
  • China’s debt expansion could touch CNY15.4 trillion in 2025, significantly higher than in 2024, Securities Daily reported citing Wang Qing, analysts from Golden Credit Rating. Wang expects Beijing to raise the deficit-to-GDP ratio to 4% from 2024’s 3%, releasing CNY1.3 trillion government spending. While the scale of local government special bonds, including the quota for resolving off-balance-sheet debts, may be expanded to CNY6.5 trillion from 2024’s CNY3.9 trillion. Additional special treasuries could be CNY2.5-3 trillion, including CNY1 trillion for major state-owned banks to replenish core tier 1 capital, Wang added.
  • China's housing mortgage rates are expected to fall further in 2025, China Fund News reported citing analysts. The 5-year Loan Prime Rate which many lenders based their mortgage rates on, may see a downward move of 60-100 bps next year, as the People’s Bank of China may cut the policy interest rate further by 40-60 bps, the newspaper said citing Zhang Jun, chief economist of China Galaxy Securities. 
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MNI (BEIJING) - Highlights from Chinese press reports on Thursday:

  • Beijing must increase spending by borrowing, and ensure the growth rate of expenditure exceeding nominal GDP growth to effectively drive demand, 21st Century Business Herald reported citing Zhang Bin, deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. Meanwhile, the real interest rate must be significantly lowered which means the reduction in nominal interest rate must be much greater than the reduction in inflation, said Zhang. He added that a restructuring of real estate developers is also necessary to stabilise the housing sector, the newspaper said.
  • China’s debt expansion could touch CNY15.4 trillion in 2025, significantly higher than in 2024, Securities Daily reported citing Wang Qing, analysts from Golden Credit Rating. Wang expects Beijing to raise the deficit-to-GDP ratio to 4% from 2024’s 3%, releasing CNY1.3 trillion government spending. While the scale of local government special bonds, including the quota for resolving off-balance-sheet debts, may be expanded to CNY6.5 trillion from 2024’s CNY3.9 trillion. Additional special treasuries could be CNY2.5-3 trillion, including CNY1 trillion for major state-owned banks to replenish core tier 1 capital, Wang added.
  • China's housing mortgage rates are expected to fall further in 2025, China Fund News reported citing analysts. The 5-year Loan Prime Rate which many lenders based their mortgage rates on, may see a downward move of 60-100 bps next year, as the People’s Bank of China may cut the policy interest rate further by 40-60 bps, the newspaper said citing Zhang Jun, chief economist of China Galaxy Securities.