MNI China Press Digest Dec 16: LPR, Q1 Growth, SME Support

The following lists highlights from Chinese press reports on Thursday:

• China’s Loan Prime Rates, the benchmark lending rates, are likely to be lowered by 5 basis points next Monday, given that banks’ borrowing costs have dropped significantly after two RRR cuts and partial refinancing interest rate cuts, the China Securities Journal reported citing Zhang Jiqiang, chief fixed income analyst at Huatai Securities. The central bank kept the rate of medium-term lending facility, the anchor of LPR, unchanged on Wednesday as it intends to signal prudent monetary policy stance has not changed. PBOC is still likely to cut MLF rate in the first half of next year to revive growth, the newspaper said citing Wang Qing, chief macro analyst with Golden Credit Rating.
• China is expected to see greater and concerted efforts in the first quarter to boost growth and implement its goal of stability, after November indicators showed slowing demand and output, Yicai.com reported. The annual local government special bonds are expected to be kept above CNY3 trillion, and several provinces have received quotas early, which will facilitate early issuances next year to be used to boost investment and consumption, Yicai said. Several ministries are also taking measures to address weakening demand and some industrial output, reflected in slowing Nov retail sales and auto production. China is actively pushing for building large-scale solar and wind electricity bases, investing in transportation and upgrading manufacturing, logistics and digital communication, it said.
• China announced new measures to boost support for small businesses, with the central bank guaranteeing more loans and discounted credits. The PBOC will inject more funding to local lenders, amounting to 1% of the outstanding loans they hold, the State Council said following a meeting on Wednesday. China will turn a CNY400 billion SME refinancing program onto a rolling basis and will increase the amount if necessary, the government said. China will also increase support for manufacturing through further cutting taxes and fees, including bigger research cost deductions and more VAT rebates, it said. China will also increase support for foreign firms setting up high-end production and research centres, it said.