MNI China Press Digest Nov 23: Bond Default, Liquidity, Jobs

The following lists highlights from Chinese press reports on Monday:

Chinese regulators must maintain order in debt markets with a "zero tolerance" approach and severely punish those who evade debt, issue debt with fraudulent information, misappropriate assets or misuse the capital raised, according to a statement following a meeting of the Financial Stability and Development Committee. A statement from the committee, chaired by Vice Premier Liu He, was posted on the government website and addressed the recent increase in bond defaults, attributing them to "cyclical, systemic and behavioral factors". Regulators must observe laws and implement accountability, said the committee. The meeting is the highest-level government response so far following bond market turbulence this month after high-profile defaults by companies including Yongcheng Coal and Electricity Group, a company owned by the central Henan government.

The PBOC is likely to keep liquidity ample to ensure a stable economic recovery and help banks control debt-servicing costs by renewing MLF and reverse repo purchases, the Shanghai Securities News said on Saturday citing Yan Se, an economist from Founder Securities. While the central bank kept the November LPR unchanged, loan-servicing rates for businesses are likely to further decline, the newspaper said citing analyst Wang Qing of Golden Credit Rating. Extraordinary policies introduced through the pandemic will only be withdrawn slowly over the next two years to avoid impacting on the real economy, Yan said. However, there may be some adjustments to rates and liquidity should the first quarter next year see a significant improvement in economic indicators, and if the demand for credit surges due to the risk of a capital market bubble, the newspaper reported citing Yan.

China's local authorities must continue to tackle unemployment, create more jobs, help businesses and promote consumer spending, said Premier Li Keqiang in a video conference with local officials. Li's comments were cited in a statement on the government website on Sunday, and he went on to urge local governments to use public funding to encourage private investment and stabilize market expectations.