MNI China Press Digest Jan 4: Fiscal, Investment, Red Sea

Highlights from Chinese press reports on Thursday:

• China will ensure larger fiscal spending in 2024 to stimulate domestic demand better, mainly by targeting a certain deficit size and transferring some funds from the budget stabilisation fund, said Finance Minister Lan Foan in an interview. China will continue to arrange appropriate scale of local government special bonds to drive investment, under the principle of keeping the government’s overall leverage ratio stable, Lan noted. The central government will maintain a certain scale of transfer payments and tilt toward underdeveloped areas, and the Ministry will implement structural tax and fee cuts to mainly support technological innovation and manufacturing development. (Source: People’s Daily)
• China’s fixed-asset investment growth may rebound moderately in 2024 amid the narrowing decline in real-estate investment and favourable policies recently introduced by some provinces, 21st Century Business Herald reported citing analysts. Economic powerhouses including Guangdong, Zhejiang and Jiangsu provinces have kickstarted major projects in the first week of 2024. Jiangsu province plans to begin 2,710 projects each worth over CNY100 million covering information technology, biomedicine, high-end equipment, artificial intelligence, new energy and new materials, launching 561 more projects compared to the same period last year. Fixed-asset investment grew by 2.9% y/y in the first 11 months of 2023.
• The Red Sea crisis may trigger container shortages, which could spread to Asian ports by mid-to-late January, and port congestion as large ships have already found it hard to dock at domestic ports, pushing up shipping costs, Yicai.com reported, citing market insiders. The space on the China-Europe freight trains for January were fully booked as an alternative, with freight rates rising 10-20% m/m. A Chinese supplier in Ningbo city said they had to accept price reduction requests from North African customers due to rising shipping costs, which would lose 20% of their net profit.