MNI China Press Digest, Aug 21: LPR, Property Curbs, Demand

The following lists highlights from Chinese press reports on Friday:

The spread between China's 1-year LPR and 1-year MLF is expected to narrow, driving down LPR quotations even as the MLF interest rate remains unchanged, the Economic Information Daily reported citing Wang Qing, chief analyst at Golden Credit Rating. Even if the MLF rate is lowered, the range will be significantly lower than that in the first half of the year, Wang told the Daily. The PBOC is still expected to increase lending support for private and small companies and manufacturers in H2, even as the central bank left LPR unchanged for four months, the newspaper said citing analysts.

China is likely to further tighten regulations on real estate financing for developers, particularly in cities with increasing home prices, the China Securities Journal reported citing analysts. Restrictions on financing can help curb expansion by developers and prevent accumulating debt risks, the Journal's report said. With a total of CNY253.6 billion in real estate bonds set to mature from August to December, developers' short term cash flows will come under pressure if more financing restrictions apply, the newspaper said citing Yang Yewei, analyst at Guosheng Securities.

China needs to push for more structural reforms such as lowering taxes for middle-income earners, reforming value-added taxes, and building its digital economy, according to an article in the People's Daily by Peng Wensheng, the chief economist at China International Capital Corp. Writing in the Daily on Friday, Peng said these reforms would successfully boost internal demand, counter a weakened global economy and build China's so-called "internal circulation," or internal market driven model. China should shun short-term stimulus such as a housing boom which could create potential instability in the future, Peng said.