MNI China Press Digest June 1: PBOC, REITs, Birth Rates

The following lists highlights from Chinese press reports on Tuesday:

The PBOC's announcement on Monday raising financial institutions' FX reserve requirement ratios to 7% from 5% will tighten U.S. dollar supply in the domestic FX market by about USD20 billion, not a large amount considering the average daily trading volume was around USD41.1 billion last week, CICC said in a report. The move conveyed the PBOC's intention to maintain two-way fluctuations of the yuan. Previous similar moves to reduce the expectation for yuan's gain usually followed by the dollar gaining as much as 0.4% within a week, the report said. As of April, the balance of foreign exchange deposits in financial institutions is approximately US$1 trillion, the report added.

China's first batch of nine REIT products ranged from CNY2.3 to CNY13.38 per share, with expected dividend yields from 4% to 12%, said Quanshang Zhongguo, a WeChat blog run by Securities Times. They were sold out in half a day yesterday in a public offering, with some more than 40 times oversubscribed, the newspaper said. These REIT products focus on high-quality infrastructure projects in key areas, with five to be invested in industrial parks, warehouses, and logistics, the newspaper said.

China should consider cutting taxes and lower high housing and education costs to encourage the younger generations to have more children, said the 21st Century Business Herald in an editorial after the government endorsed having three children. Family with two or more children should be taxed as a whole, not individually, and enjoy some tax reduction, which will encourage middle-income urban residents to have children, the newspaper said. China's declining fertility rate has a strong correlation with rising housing prices while having three children requires larger housing that is difficult to achieve in big cities, the newspaper said.