MNI China Press Digest March 21: Decoupling, Trade, MOF

Highlights from Chinese press reports on Tuesday:

• The pace of US willingness to decouple from China may slow down in order to ease inflationary pressures exacerbated by the SVB collapse restricting the Fed’s ability to raise interest rates, according to Liu Yuhui, Professor at the Chinese Academy of Social Sciences and a member of the China Chief Economist Forum. Liu also said that China is facing the risk of deflation if domestic demand did not return sufficiently, and therefore macro policy needed to be bolder. In the past 3 years, China's residential, corporate, and local government balance sheets have declined, which will take time to recover, he said.
• China’s trade environment is grim and complex but opportunities remain, while Beijing's competitive advantage remains unchanged, according to Yu Jianhua, Director of the General Administration of Customs. Speaking at a press conference, Yu said moves by some countries to promote decoupling, and financial market volatility in some western nations, had presented a challenge for China to promote stability and quality in foreign trade. The government will “go all out to promote trade” and help enterprises make full use of agreements such as Regional Comprehensive Economic Partnership. The momentum of foreign trade in the first two months is expected to continue this year, Yu said.
• Curbing systemic financial risk and enforcing discipline are priorities for 2023, according to a report released by the Ministry of Finance. Yicai news said recent fines imposed on Deloitte shows the ministry is serious about enforcing laws and regulations to prevent accounting irregularities. Strict supervision of local government debt is needed, especially to identify and manage debt with short maturities and high interest rates. In the face of declining local fiscal revenues, the central government will need to increase financial support to local governments, Yicai said.