MNI China Press Digest Oct 31: Housing, Liquidity, Insurance

Highlights from Chinese press reports on Tuesday:

• Guangzhou, one of the four first-tier cities, will offer housing vouchers for resettlement amid urban village transformation. This will allow villagers to deduct a certain amount of payment if they choose to buy commercial housing elsewhere, which will help lower housing stock and help alleviate financing pressure in the initial stage, said Li Yujia, chief research fellow at Guangdong Urban & Rural Planning and Design Institute. Other first-tier cities will likely follow given the oversupply in the housing market, said Li.
• China must carefully coordinate monetary and fiscal policy to avoid liquidity tightening in Q4 following the government’s decision to issue an additional CNY1 trillion in treasury bonds, according to Guan Tao, former director at China's State Administration of Foreign Exchange. Guan expects authorities to actively use quantitative and structural monetary tools, such as reserve requirement ratio cuts and open market operations, to alleviate funding pressure and maintain reasonable liquidity. Overall, Guan believes the new treasury bonds will alleviate local-government debt pressure while increasing expenditure intensity and boosting domestic aggregate demand.
• China will encourage state-owned insurance companies to play a stronger role to stabilise the medium and long-term capital market, according to the Ministry of Finance. In a policy note, the MoF said SOE firms will have new management rules to guide long-term stable market operation better and prevent short-term behaviour, such as end of year targeting. Specifically, the MoF has adjusted the various operating and financial indicators used to assess SOEs to promote long-term behaviour. (Source: Yicai)