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MNI China Press Digest June 8: Tax Refunds, Bonds, FX Reserves

MNI (Singapore)

The following lists highlights from Chinese press reports on Wednesday:

  • China will extend value-added tax refunds to seven new sectors including wholesale and retail sales, agriculture, accommodation and catering to facilitate the cash flow of enterprises and help stabilise employment, Yicai.com reported citing a statement by the Ministry of Finance on Monday. This new round of tax refunds will total CNY142 billion, starting July 1 and aims to be completed by end-July, Yicai said. China's value-added tax refunds are expected to total CNY1.64 trillion this year.
  • China should consider issuing special treasury bonds or front-load next year’s local government special bond quota in the second half of this year to help fund infrastructure investment, the China Securities Journal reported citing analysts. China aims to issue all CNY3.65 trillion of this year’s special bonds by end-June to help accelerate infrastructure construction, leaving a funding gap in H2, the newspaper said. Other potential policies to fill the gap include increasing the credit lines of policy banks, lowering the reserve requirement ratio, or putting forward pledged supplementary lending (PSL), the newspaper said citing Xiong Yuan, chief economist of Guosheng Securities.
  • China’s foreign exchange reserves are likely to remain stable with less yuan depreciation pressure as supply and demand in the forex market are basically balanced, the China Securities Journal reported citing analysts. China’s forex reserves rose by USD8.1 billion month on month to amount USD3.13 trillion by end-May, the newspaper said citing data by the State Administration of Foreign Exchange. The stability of the forex market and reserves will be supported by a relatively high trade surplus, the recent resumption in net capital inflows as well as a likely falling U.S. dollar index and U.S. Treasury yields in the near term, the newspaper said citing analysts.
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