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MNI China Press Digest July 2: PBOC, FDI, Land Revenue

MNI (BEIJING)
BEIJING (MNI)

MNI picks keys stories from today's China press

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Highlights from Chinese press reports on Tuesday:

  • The People’s Bank of China may start selling treasury bonds after deciding to borrow from selected primary dealers, in a bid to increase bond supply and curb falling yields of medium- and long-term bonds, Shanghai Securities News reported citing analysts. The central bank has repeatedly warned of maturity mismatch and interest rate risk from holding large amounts of longer-term bonds, the newspaper said. The PBOC’s holdings of government bonds are mostly three years or less, and treasury borrowing operations may pave the way for bond sales, said Zhou Guannan, chief fixed income analyst of Huachuang Securities.
  • Authorities issuing additional local government special refinancing bonds for resolving hidden debtsin H2 cannot be ruled out, given the 14% y/y decline in land revenue from January to May, according to Wang Qing, chief macro analyst at Golden Credit Rating. Wang noted that broad fiscal expenditure, which combines general public and government fund budget expenditure, fell by 2.2% year-on-year during January to May, which was not conducive to the counter-cyclical role of current fiscal policy. (Source: 21st Century Business Herald)
  • Authorities must support foreign funded firms to participate in large-scale equipment renewal and government procurement projects in order to attract more investment, Vice Premier He Lifeng has said. Speaking at a symposium in Beijing, He said China will further relax market access and transform China’s large market into real investment opportunities. He called on provinces to open free trade pilot zones, comprehensive bonded zones, expand the opening of the service industry, and actively explore new models for attracting foreign investment. (Source: 21st Century Business Herald)
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Highlights from Chinese press reports on Tuesday:

  • The People’s Bank of China may start selling treasury bonds after deciding to borrow from selected primary dealers, in a bid to increase bond supply and curb falling yields of medium- and long-term bonds, Shanghai Securities News reported citing analysts. The central bank has repeatedly warned of maturity mismatch and interest rate risk from holding large amounts of longer-term bonds, the newspaper said. The PBOC’s holdings of government bonds are mostly three years or less, and treasury borrowing operations may pave the way for bond sales, said Zhou Guannan, chief fixed income analyst of Huachuang Securities.
  • Authorities issuing additional local government special refinancing bonds for resolving hidden debtsin H2 cannot be ruled out, given the 14% y/y decline in land revenue from January to May, according to Wang Qing, chief macro analyst at Golden Credit Rating. Wang noted that broad fiscal expenditure, which combines general public and government fund budget expenditure, fell by 2.2% year-on-year during January to May, which was not conducive to the counter-cyclical role of current fiscal policy. (Source: 21st Century Business Herald)
  • Authorities must support foreign funded firms to participate in large-scale equipment renewal and government procurement projects in order to attract more investment, Vice Premier He Lifeng has said. Speaking at a symposium in Beijing, He said China will further relax market access and transform China’s large market into real investment opportunities. He called on provinces to open free trade pilot zones, comprehensive bonded zones, expand the opening of the service industry, and actively explore new models for attracting foreign investment. (Source: 21st Century Business Herald)