MNI China Press Digest March 1: Mortgages, Growth Target, Yuan

Highlights from Chinese press reports on Wednesday:

• Under pressure from regulators, banks have begun accelerating the administration of mortgage prepayments and opened up previously “hidden” application channels, according to Yicai.com. The Banking and Insurance Regulatory Commission (CBRC) and the People's Bank of China (PBOC) warned banks in February to adhere to contractual rights of buyers to pre-pay mortgages. With the steady recovery of the economy and the improvement of the rate of return on residents' assets, the issue of prepayment is expected to be alleviated. However, with the transformation of the real estate market to a new development model, banks who have become over-reliant on real estate loans will face challenges, the news outlet said.
• Experts expect the government to announce a GDP growth target of "above 5%" at the National People’s Congress starting this week, according to Yicai.com. The congress should send signals aimed at restoring market confidence in the economy from a policy perspective, and support SMEs through financial and policy support. Experts told the news outlet that fiscal policy would be the main focus of macroeconomic policy, while monetary policy is expected to remain precise and effective. The fiscal deficit rate is expected to reach 3.1%, close to the level of 2021, Yicai.com said.
• Market sentiment towards the yuan remains strong despite the currency recently pushing up to 7 against the U.S. dollar, according to The 21st Century Herald. The outlook for the yuan remains good due to China’s strong economic fundamentals, with northbound capital pouring into A-shares. Guan Tao, former director of the State Administration of Foreign Exchange, said recently 7 should not be seen as an important indicator, and focus should be on maintaining a flexible exchange rate that mediates volatile capital flows, thus giving monetary policy autonomy, which is a positive aspect of China's financial opening.