MNI China Press Digest Sep 1: PBOC, Pro-growth, Fiscal Gap

The following lists highlights from Chinese press reports on Thursday:

• The People's Bank of China is unlikely to further lower its policy interest rates, as excessive liquidity could lead to arbitrage as the Federal Reserve may still hike rates significantly, China Chief Economist Forum wrote in a blog post citing Sheng Songcheng, a former director of the Statistics and Analysis Department of the PBOC. Due to weak credit demand, more funds flow into the financial system rather than the real economy, and banks complete their lending requirement through bill discounting, said Sheng, noting that bill financing in July increased by CNY313.6 billion, accounting for 46.2% of the new yuan loans in the month.
• Local governments should look to roll out detailed pro-growth measures in the first half of September to boost demand and underpin the recovery, according to a statement on the government website published late Wednesday following the State Council executive meeting. Local authorities should utilize the additional CNY300 billion financial instruments from policy banks to support more projects, including community renovation and provincial highways, alongside looking to boost private investment, the statement said. Cities should also meet housing demand with flexible mortgage policies and promote car sales, the statement added.
• Local governments have stepped up efforts to sell state-owned resources and assets, including disposal of idle public housing and transferring mining rights, to plug the fiscal gap from reduced tax revenue, Caixin reported. In H1, the non-tax income of the Xinjiang autonomous region has increased by 107%, mainly due to the sales of oil and gas blocks, Caixin added.