MNI China Press Digest June 28: H2 Support, Belt & Road, SOEs

Highlights from Chinese press reports on Wednesday:

• Experts expect the government to increase the intensity and expand fiscal support in H2 following Minister of Finance Liu Kun’s recent report to the State Council. Tian Lihui, dean at Nankai University, expects authorities to use fiscal support to stabilise growth and employment in H2 and improve household incomes. Another expert mentioned the government will accelerate the use of special bonds in Q3 and might increase the yearly quota in efforts to stabilise demand. Beijing may also increase the use of quasi-fiscal tools, such as subsidised loans for industries with spillover public welfare effects, like technological innovation. (Source: Securitise Daily)
• China plans to use more equity to finance Belt and Road (BRI) projects in the future, according to Zhou Xiaochuan, former governor at the People’s Bank of China. Speaking at Fudan University, Zhou said authorities must do more to manage debt, including debt reductions and extensions, as well as expanding the scope of bond subscription and using more regional and development banks. Zhou rejected foreign criticism that BRI was a sovereign debt trap, saying loans were closer to commercial and corporate investment than sovereign debt. (Source: Caixin)
• The State Council will accelerate SOE reforms to stabilise China’s economic development, according to Zhang Yuzhuo, director at the State-owned Assets Supervision and Administration Commission. Zhang, speaking at the World Economic Forum, said SOEs can play an active role in strategic emerging industries and lead technological research. Authorities should implement policy to improve SOE market mechanisms and corporate governance and make effort to boost internationalisation of state firms through the Belt and Road Initiative, Zhang said. (Source: Securities Daily)