MNI China Press Digest July 22: Gov Debt, Housing, Mortgage Rate

The following lists highlights from Chinese press reports on Friday:

• China should expand government debt financing in the second half of 2022 to fill a funding gap of not less than CNY3 trillion to help boost infrastructure investment and support economic growth, as local governments with falling land sales and tax revenues are finding it hard to meet their spending targets, according to a report by China Finance 40 Forum. Issuing special treasury bonds, fiscal discount bonds and policy financial loans can be considered. Meanwhile, the central bank should cut the policy rate by 25 basis points, and should continue until the economy revives with high vitality for more than two consecutive quarters, as rate cuts will greatly help improve corporate cash flow and increase demand, the report said.
• China’s top banking regulator said it will support local governments to ensure the delivery of unfinished property projects, guide banks to actively help resolve funding gaps, and provide credit to qualified developers, the Securities Daily reported citing the China Banking and Insurance Regulatory Commission. The CBIRC will maintain the continuity and stability of real estate financial policies, the newspaper said. MNI notes that a wave of disgruntled homebuyers vowed to stop making mortgage payments on stalled projects has spread across the country starting in July.
• Chinese cities may continue to lower mortgage interest rates to lure buyers to shore up the still bleak housing market, including big cities with relatively high rates and smaller cities with poor transaction data, the Securities Daily reported citing Yan Yuejin, director of E-house China Research and Development Institution. The average rates of first- and second-home mortgages in 103 key cities were 4.35% and 5.07% in June, respectively, down 139 and 93 basis points from the high point in September 2021, hitting a new low since 2019, according to Beike Research Institute. Among them, 74 cities have reached the lower limit of 4.25% for the first and 5.05% for the second housing, the newspaper said.