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MNI China Press Digest June 27:Q2 GDP, Flexible Yuan, Shanghai

MNI picks key stories from today's China press.

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The following lists highlights from Chinese press reports on Monday:

  • The Chinese economy may grow 1% to 2% y/y in Q2, likely bringing H1 growth to around 3%, the Securities Daily reported citing economists. This means the growth in Q3 and Q4 must reach 7% to ensure meeting the annual growth target of 5.5%, the newspaper said citing Qiu Xiaohua, chief economist of Jufeng Investment. Possible incremental policy in H2 can be the issuance of special treasury bonds or front-loading next year’s local government special bonds to help boost infrastructure investment, the newspaper said citing Zhang Jun, chief economist of Morgan Stanley Huaxin Securities. Meanwhile, the central bank can further guide down the Loan Prime Rate and keep liquidity ample to promote credit expansion, the newspaper said citing economists.
  • China should keep yuan flexibility to help ease outflow pressures and facilitate the balancing of cross-border capital flows, wrote Guan Tao, former forex official and chief economist at BOC Securities in a blog post. The net outflows under the stock and bond connect schemes totaled CNY132.4 billion in May, rising 19.4% m/m, but the deficit under securities investment only decreased 5.9% m/m due to a 4.2% depreciation in the yuan against the U.S. dollar, Guan said. Foreign investors are worrying about the "non-tradable" risk that may be induced by a rigid exchange rate, instead of the rise and fall in the currency, Guan added.
  • Shanghai will allow restaurants in some areas of the city with lower Covid-19 risks to resume dine-in services starting from Wednesday, Quanshang China reported citing the municipal government’s Sunday briefing. The specific areas for resumption will be determined by the district government after comprehensive assessment, and the areas should report no local infections in the past week, the newspaper said. MNI noted that Shanghai’s Communist Party chief Li Qiang declared victory in defending the city against Covid-19 at a local party congress on Saturday after the city reported zero local cases for the first time since February.
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The following lists highlights from Chinese press reports on Monday:

  • The Chinese economy may grow 1% to 2% y/y in Q2, likely bringing H1 growth to around 3%, the Securities Daily reported citing economists. This means the growth in Q3 and Q4 must reach 7% to ensure meeting the annual growth target of 5.5%, the newspaper said citing Qiu Xiaohua, chief economist of Jufeng Investment. Possible incremental policy in H2 can be the issuance of special treasury bonds or front-loading next year’s local government special bonds to help boost infrastructure investment, the newspaper said citing Zhang Jun, chief economist of Morgan Stanley Huaxin Securities. Meanwhile, the central bank can further guide down the Loan Prime Rate and keep liquidity ample to promote credit expansion, the newspaper said citing economists.
  • China should keep yuan flexibility to help ease outflow pressures and facilitate the balancing of cross-border capital flows, wrote Guan Tao, former forex official and chief economist at BOC Securities in a blog post. The net outflows under the stock and bond connect schemes totaled CNY132.4 billion in May, rising 19.4% m/m, but the deficit under securities investment only decreased 5.9% m/m due to a 4.2% depreciation in the yuan against the U.S. dollar, Guan said. Foreign investors are worrying about the "non-tradable" risk that may be induced by a rigid exchange rate, instead of the rise and fall in the currency, Guan added.
  • Shanghai will allow restaurants in some areas of the city with lower Covid-19 risks to resume dine-in services starting from Wednesday, Quanshang China reported citing the municipal government’s Sunday briefing. The specific areas for resumption will be determined by the district government after comprehensive assessment, and the areas should report no local infections in the past week, the newspaper said. MNI noted that Shanghai’s Communist Party chief Li Qiang declared victory in defending the city against Covid-19 at a local party congress on Saturday after the city reported zero local cases for the first time since February.