MNI China Press Digest July 22: Housing, PBOC Cut, Bonds

Highlights from Chinese press reports on Monday:

• First-tier cities will further relax housing policies to boost demand following the Third Plenum’s decision to “give cities full autonomy in regulating the real-estate market and reducing home purchase restrictions,” the Paper reported citing analysts. The government will retain adherence to the "housing for living, not for speculation" concept, and reform developer financing and the pre-sale system to make housing a normal commodity more accessible to consumers, said Chen Jie, professor at Shanghai Jiao Tong University. The authorities' decision to abolish classification standards between ordinary and luxury residential buildings will help reduce taxes and fees which will boost demand for upgrades, said Wang Yeqiang, researcher at the Chinese Academy of Social Sciences.
• The PBOC’s decision to cut the 7-day reverse repurchase rate by 10 basis points aims to support the real economy without promoting a further decline in long-term bond yields, persons close to the PBOC have told the Securities Times. Authoritative experts said the real economy will gradually benefit from lower policy interest rates, reducing comprehensive financing costs and breaking the negative cycle between falling long-term bond yields and weakening economic expectations. The PBOC’s move increases countercyclical regulation, while medium and long-end bond yields reflect long-term trends over a cross-cycle perspective, the experts added.
• China has expanded the scope of ultra long-term special treasury bonds to promote equipment upgrades and trade-in of consumer goods to further boost consumption, Shanghai Securities News has reported following a State Council executive meeting. Consumption will remain the largest contributor and driving force for economic growth, said Lian Ping, chairman at the China Chief Economist Forum. Central and local governments should increase subsidies for the trade-in of durable consumer goods, and cooperate with banks to boost consumer loans to form policy synergies, said Wang Qing, analyst at Golden Credit Rating.