MNI China Press Digest Sep 20: PBOC, Yuan, Real Estate

Highlights from Chinese press reports on Wednesday:

• The People’s Bank of China may continue to inject liquidity via the 14-day reverse repo, as the excess reserve rate of the banking system remains low and government bond issuance, and credit expansion may lead to a widening funding gap in the second half of September, said Wang Yifeng, analyst at Everbright Securities. The PBOC will likely cut interest rates in Q4 to help further expand domestic demand, boost credit, stabilise expectations and prop up the real-estate sector, said Chen Li, chief economist at Chuancai Securities. Zhang Jun, chief economist at Galaxy Securities, said the central bank may lower the reserve requirement ratio again during the year to increase the counter-cyclical adjustment of monetary policy. (Source: China Securities Journal)
• Policymakers should expand aggregate demand and boost the domestic economy using proactive fiscal and monetary policies in order to stabilise the yuan, according to Tan Xiaofen, professor at the School of Economics and Management, Beihang University. In an article written for Yicai, Tan said authorities need to increase financial subsidies for SMEs and further optimise and extend preferential tax policies. The central government should consider expanding treasury bond issuance to replace some local debt to reduce the burden on local governments. (Source: Yicai)
• Second-tier cities are likely to completely exit from restrictive measures introduced when the housing market was overheating in the past, as 11 cities including Wuxi and Wuhan announced to drop all curbs on home buying so far in September. While the four first-tier cities may relax in accordance with the degree of market recovery, and it is more likely to make district-specific policy adjustments, said Chen Wenjing, market research director of China Index Academy. (Source: Securities Times)