MNI China Press Digest Jan 5: Growth, Deposit Rates, Housing

Highlights from Chinese press reports on Friday:

• Final consumption and net export will contribute less to GDP growth in 2024 than 2023, and will require double-digit growth in infrastructure investment to help achieve a 5% GDP, said Yu Yongding, an academic at the Chinese Academy of Social Sciences. Macro policy should aim to raise the fiscal deficit ratio significantly and increase the scale of China Government Bond issuance to provide sufficient funds for infrastructure construction, said Yu. The deficit rate should rise to 4-5% given low inflation, if enough project reserves exist, Yu added. Authorities can ease monetary policy further to stimulate demand and support government bond sales. (Source: China Finance 40 Forum)
• Banks will likely continue to lower the deposit rates to offset the squeeze on asset-side pricing caused by reductions in existing mortgage rates and resolving local-government implicit debts, said Wang Yifeng, chief banking analyst at Everbright Securities. The latest round of deposit interest-rate cuts will have limited impact on bank liability costs in 2024 and the upper limit of deposit rate self-discipline may be lowered in Q1, Wang said. Many small- and medium-sized banks have begun to follow major state-owned bank deposit-rate cuts, ranging from 5-45bp, since 2024. (Source: Yicai.com)
• First-tier cities still have considerable room to relax housing policies including purchase restrictions and loan limits, and new home sales will continue to increase steadily in 2024 with increasing high-quality housing supply providing some support, according to the China Index Academy. Some second-tier cities may see the housing markets stabilise at the bottom, but new home sales in third- and fourth-tier cities are likely to keep falling amid bearish sentiment and the lack of effective policies. (Source: Yicai.com)