MNI China Press Digest Sep 22:Growth, Eco Upgrade, Panda Bonds

Highlights from Chinese press reports on Friday:

• China’s economy still faces strong challenges and needs further policy support to restore confidence despite improvement in August, according to Guan Qingyou, president at the Institute of Financial Studies. In an article published by Yicai, Guan said households still show relative weakness in demand for medium and long-term loans which demonstrates low confidence. China cannot rely on real estate to become a core driver of economic growth and needs to shift focus into new emerging sectors for future prosperity, he said. Monetary policymakers should prioritise working with finance departments to resolve local government debt issues above stimulating the economy with further monetary loosening. (Source: Yicai)
• Policymakers will promote the upgrading of key industries to create a "ballast stone" for the macroeconomy and a core driver of stable growth, expert attendees at a recent State Council executive meeting have said. Wu Sa, deputy director of the Economic Research Institute said the government needs to support leading enterprises to become bigger and stronger, and also cultivate specialized SMEs. Zhong Huiyong, associate professor at the School of Finance at Shanghai University mentioned authorities are currently using digital technology to transform and upgrade traditional industries which was key to developing advanced manufacturing and enhancing the core competitiveness of the economy.
• The issuance of panda bonds reached CNY115.7 billion as of Sept 21 this year, a rise of over 60% y/y, according to Wind Information. Interest-rate cuts and loose liquidity provided by the People’s Bank of China amid the U.S. rate hike cycle has helped lower bond financing costs, while improved management of panda bond funds to facilitate domestic financing for overseas institutions has also made the asset class more attractive, said Li Xifeng, a researcher at CSI Pengyuan. The National Association of Financial Market Institutional Investors said this week that it will continue to promote panda-bond price discovery, enriching the number and types of investors, and improving secondary liquidity. (Source: 21st Century Business Herald)