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MNI China Press Digest Oct 14: Fiscal, CPI, Local Governments

MNI picks key stories from today's China press.
Central Bank NewsPolicy NewsPBOCHomepageAPACChinaEM Policy NewsChinaEM Central Bank NewsPeoples Bank of ChinaGlobalStoryRegion

MNI (BEIJING) - Highlights from Chinese press reports on Monday:

  • China is expected to issue over CNY2 trillion in government bonds to swap out local government off-balance sheet debt, Yicai.com reported, citing analysts following the Finance Ministry press conference on Saturday. The newspaper expects the standing committee of the National People's Congress will announce the exact figure later this month, and clarify if the central government would take over some existing local implicit debt. However, analysts were unclear if this year's deficit-to-GDP ratio would rise under the current government spending target, as authorities could raise additional income through other methods, the newspaper said citing analysts.
  • China’s CPI will rise 0.6% in October, up from September’s 0.4%, as authorities use fiscal policy to provide large scale subsidies for consumption, predicted Feng Lin, director of Research and Development at Dongfang Jincheng Securities. September’s CPI fell below the market forecast due to the rapid decline in services prices such as travel and energy. Pang Ming, chief economist at JLL Greater China, said the latest CPI data showed demand remained weak but would recover once incremental policies took effect. (Source: Securities Daily)
  • China needs reforms to break the cyclical relationship between local governments, local investment, financing platforms, local small and medium-sized financial institutions, and local state-owned enterprises, according to Liu Yuanchun, president of Shanghai University of Finance and Economics. Speaking at a recent seminar, Liu said non-central authorities should shift focus from economic growth to balanced economic and social development. Local SOE firms can be downsized, opened up to market forces, or consolidated with central enterprises, while some local financial institutions should merge or restructure to prevent the excessive expansion of regional authorities' power in the financial sector, Liu added.
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MNI (BEIJING) - Highlights from Chinese press reports on Monday:

  • China is expected to issue over CNY2 trillion in government bonds to swap out local government off-balance sheet debt, Yicai.com reported, citing analysts following the Finance Ministry press conference on Saturday. The newspaper expects the standing committee of the National People's Congress will announce the exact figure later this month, and clarify if the central government would take over some existing local implicit debt. However, analysts were unclear if this year's deficit-to-GDP ratio would rise under the current government spending target, as authorities could raise additional income through other methods, the newspaper said citing analysts.
  • China’s CPI will rise 0.6% in October, up from September’s 0.4%, as authorities use fiscal policy to provide large scale subsidies for consumption, predicted Feng Lin, director of Research and Development at Dongfang Jincheng Securities. September’s CPI fell below the market forecast due to the rapid decline in services prices such as travel and energy. Pang Ming, chief economist at JLL Greater China, said the latest CPI data showed demand remained weak but would recover once incremental policies took effect. (Source: Securities Daily)
  • China needs reforms to break the cyclical relationship between local governments, local investment, financing platforms, local small and medium-sized financial institutions, and local state-owned enterprises, according to Liu Yuanchun, president of Shanghai University of Finance and Economics. Speaking at a recent seminar, Liu said non-central authorities should shift focus from economic growth to balanced economic and social development. Local SOE firms can be downsized, opened up to market forces, or consolidated with central enterprises, while some local financial institutions should merge or restructure to prevent the excessive expansion of regional authorities' power in the financial sector, Liu added.