MNI China Press Digest June 13: Bonds, Fiscal, HK Connect

Highlights from Chinese press reports on Tuesday:

• China should speed up the issuance of local government special bonds in Q3 and Q4 to stabilise the macro economy, according to experts interviewed by Yicai. The news agency said the economy has began to show weakness and experts advised fiscal policy should be stepped up to improve efficiency and increase overall workload. Local governments will issue all CNY3.8 trillion of special bonds by the end of Q3, with major projects to receive funding, including municipal administration, industrial parks, transportation, and shantytown renovation, experts said. (Source: Yicai)
• Policymakers should maintain a proactive fiscal-policy stance in H2 to boost the economy, which currently operates at 73% of utilisation capacity, according to Guan Tao, a former director at the State Administration of Foreign Exchange. Guan said leaders in Beijing should focus on repairing household balance sheets, in particular for lower income groups who had suffered the most from Covid-19 disruption. Guan noted household’s had not translated their Covid-era savings pool into consumption as hoped, because lower income families had depleted their savings during the pandemic era and higher income households had directed a large portion of "revenge" spending abroad. Banks saw an increase in deposit savings in Q1 as lower income groups re-establish their firewall savings.
• Mainland and Hong Kong authorities will expand and deepen their cross-border connect programmes, according to the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission. During a recent high-level meeting, both sides agreed to strengthen cross border wealth management connections and deepen cooperation in the derivatives and asset management industry. (Source: Yicai)