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The following lists highlights from Chinese press reports on Tuesday:

China should begin to loosen macroeconomic policies from the tightness experienced in the first half, including possibly cutting interest rates and boosting incentives for loaning to private businesses, given an expected slowdown that may stretch into next year, wrote Zhang Ming, deputy director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences in the 21st Century Business Herald. Zhang commented while interpreting the official statement following the politburo meeting on the economy last Friday. The government needs to stabilize investment through infrastructure spending as real estate and manufacturing investments may both weaken, Zhang said. The government must boost funding to rescue struggling small businesses, which will help raise consumption, Zhang said. Inflation may ease in H2 while the authorities may also tolerate a moderate depreciation, allowing more room for loosening, Zhang said. GDP may slow to 6-7% and 5-6% in Q3 and Q4, respectively, after jumping 12.7% in the first half, largely due to the pandemic lockdown last year, according to Zhang.

The People's Bank of China may shift the focus of monetary policy back to stabilizing growth on the basis of prudence but with more flexibility and accuracy after having tilted to tightening in H1, the Securities Times said in a front-page commentary. The policies may be further loosened marginally should growth faces more pressure at the end of the year, the newspaper said. Fiscal policies may become the leading force promoting growth in the second half as suggested by the Minister of Finance in recent comments. The system of direct fiscal funding channels has been established and local government hidden debt risks have eased, giving more room for speeding up funding through local government special bonds, the newspaper said.

China's financial authorities are expected to allow local governments to accelerate the sales of special bonds to back infrastructure projects and support economic growth from H2 to next year, the China Securities Journal reported citing analysts. Local governments may be able to use up the annual issuance quota of such bonds totaling CNY3.65 trillion, and this could deliver about CNY2.75 trillion yuan to infrastructure investment and add 3.9 pp in infra growth in 2021, the newspaper said citing Luo Zhiheng, the chief analyst at Yuekai Securities. With less than half of the annual quotas used in the first seven months, analysts expect new special bonds to peak in Q3, and continue with CNY1 trillion issued in Q4, the newspaper said.