MNI China Press Digest Oct 28: Yuan, Tax Incentive, Small Bank

The following lists highlights from Chinese press reports on Thursday:

• The Chinese yuan may not maintain its strength seen in October, but will likely fluctuate under the longer-term prospect of higher U.S. interest rate and China losing its export dominance, the China Securities Journal reported citing analysts including Guan Tao, the chief global economist of BOC International. China's export advantage may not continue as the pandemic-hit global supply chain recovers and diverts some orders to other economies, reducing its trade surplus, Guan was cited saying. The Federal Reserve may slow the pace of its balance sheet expansion by year-end, pushing up interest rates and drawing funds back to the U.S. from emerging markets, the newspaper said citing Cheng Qiang, the chief analyst at CITIC Securities.
• China's move to defer some tax payments for small manufacturing firms for three months will help stabilize the economy, ease companies' capital shortages and stabilize employment, The Paper said following a State Council measure to postpone CNY200 billion tax payments. With rising commodity prices, SMEs face operational difficulties operating, the newspaper said. Coal and heating companies can also enjoy deferred tax payments worth CNY17 billion in Q4 to help resolve operational difficulties, the newspaper said. Separately, China also extended tax exemptions on bond interests for foreign investors until the end of 2025, a move to stabilize foreign investment amid the Evergrande Group's debt crisis.
• The China Banking and Insurance Regulatory Commission approved Bank of Liaoshen to merge with Yingkou Coastal Bank and Bank of Liaoyang, and to assume their effective assets, all liabilities, business, branches and employees as more smaller banks are being merged and reorganized, the Economic Daily reported. In this way, smaller banks can use bond issuance, private placement, equity reorganization, asset securitization, as well as the introduction of strategic investors and new management to fully expose risks, and vigorously reduce non-performing assets, the newspaper said. It can also reduce the cost of competition among multiple banking entities in the region, the newspaper added.