MNI China Press Digest Jan 21: Yuan, Implicit Debt, Mortgages

The following lists highlights from Chinese press reports on Friday:

• The Chinese yuan is expected to remain stable in H1 2022 supported by continued high exports growth, while the impact from narrowing China-U.S. interest spread and the Federal Reserve’s upcoming tightening will be limited, the Securities Daily reported citing Ming Ming, deputy research head of CITIC Securities. Though the yuan may face depreciation pressure in H2 as overseas production capacity recovers and the Fed hikes rates further, the risk of capital outflow will remain limited given China's controls over capital accounts, said Ming. The offshore yuan has increased by 0.21% against the dollar so far this year, despite China-U.S. interest spread falling back within 100 bps for the first time since May 2019, the newspaper said.
• China’s Guangdong province said it has cleaned up off-balance-sheet implicit debts, three months after launching China's pilot “zero implicit debt” program, Caixin reported. The provincial government has offered more financial support to cities and counties, halted some projects, converted some implicit debt to corporate debt, and issued refinancing bonds to roll over some maturing implicit debts, the newspaper said. Currently, Shanghai and Beijing are also carrying out this pilot program to eliminate implicit debt risks, known as “grey rhinoceros” that endanger the Chinese economy, the newspaper said.
• Chinese commercial banks in major cities have accelerated mortgage lending, with rates in Guangzhou and Shenzhen declining, the China Securities Journal reported. Real estate markets in China's largest cities have stabilized following the 5-bp cut to the five-year benchmark Loan Prime Rate, on which lenders base their mortgage lending, the newspaper said citing Zhang Dawei, chief analyst of Centaline Property. Compared to the 10 bps cut to one-year LPR, the smaller cut to the rate of longer-term lending signals policymakers’ intention of not stoking the property market, the newspaper cited Zhang as saying.