MNI China Press Digest Sept 25: Mortgages, CNY, Japanification

Highlights from Chinese press reports on Monday:

• Chinese commercial banks will lower the existing mortgage rate for first-home buyers in batches on Sept 25, with an average reduction of 80bp nationwide. Lenders will not have to make any application and the new interest rate level will take effect on Monday. If this fails to curb the mortgage prepayment wave, authorities may make deeper adjustments, such as allowing new interest rates to break through the lower limit of pricing when contracts were signed, as well as including second-time home buyers to the scheme, said Xue Hongyan, vice president at Star Atlas Institute of Finance. (Source: Yicai)
• The yuan still has support to remain stable with the Chinese economy continuing to recover, though a likely strong U.S. dollar could tame any significant appreciation. A stronger central parity quotation of the yuan shows regulators’ determination to stabilise the currency, while offshore yuan liquidity continues to tighten with major Chinese banks absorbing USD from the swaps market and release them in the domestic spot market, said an unnamed foreign exchange trader. The yuan may fluctuate around 7.3 against USD. (Source: China Securities Journal)
• China can avoid a Japan-style balance-sheet recession by developing new growth drivers, according to Liu Shijin, former deputy director at the Development Research Center of the State Council. Speaking at the Bund Financial Summit, Liu said policymakers should implement supply-side measures to upgrade the value chain of existing industries and develop future industries driven by new technology. Entrepreneurs hold the key to innovation and China should boost the private sector by correcting ownership discrimination between state-owned and private enterprises, and allow platform companies, and large-scale tech companies to make bold investments. (Source: Yicai)