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New Bond Issuance Will Cause Liquidity Issues

CHINA PRESS

China will face liquidity pressure after the authorities decided to issue CNY1 trillion of additional treasury bonds to support disaster relief and construction, according to Everbright Securities. However the central bank will take action to offset this pressure with liquidity injections using its reserve requirement, MLF, and OMO tools, and therefore the impact is likely to be short term. Guangdong Securities pointed out the additional bonds will allow local governments to better implement proactive fiscal policies to stimulate the economy after a downturn in the property market has impacted their land-sale revenue. (Source: Yicai)

MNI Beijing Bureau | lewis.porylo@marketnews.com
MNI Beijing Bureau | lewis.porylo@marketnews.com

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