MNI China Press Digest July 27:Investment, Fiscal, Housing

The following lists highlights from Chinese press reports on Wednesday:

• China’s infrastructure investment may grow over 10% y/y in Q3, supported by the expected use of over CNY2 trillion local government special bonds, CNY800 billion credit line of policy banks and CNY300 billion financial bonds by policy banks, the Securities Times reported citing analysts. The issuance of a planned CNY3.65 trillion special bonds this year has basically been completed, much earlier than in previous years, which help to offset the decline in land sales revenue for local governments, the newspaper said citing analysts. As of June, local governments have issued CNY3.41 trillion of special bonds, with the issuance in June peaking at CNY1.37 trillion, the newspaper said citing data by the Ministry of Finance.
• China should increase fiscal policy intensity to maintain recovery momentum in the second half of the year, including issuing special treasury bonds or front-loading next year’s quota of local government special bonds, Yicai.com reported citing analysts. If without additional fiscal policy to help fill local governments’ funding gap caused by lower land sales revenues and increased spending on pandemic controls, infrastructure investment and economic growth may decelerate in Q4, Yicai said citing Luo Zhiheng, chief economist of Yuekai Securities. Zhu Baoliang, chief economist of the State Information Center believes it requires additional quotas of special bonds from 2023 and CNY1 trillion special treasury bonds to fill the gap in H2, said Yicai.
• China’s real estate market may see a soft landing in H2 as it accelerates recovery, according to a commentary on 21st Century Business Herald written by Pang Ming, chief economist at JLL Greater China. Major indicators, such as land acquisition, new project starts and construction are expected to bottom out around end-Q3 with further policy support, Pang said. Housing hotspots, even first- and second-tier cities are expected to further relax purchase and loan restrictions, as well as lower transaction taxes and fees, while developers will receive necessary credit support, said Pang.