20230725-招银国际-China_Policy__Politburo_signals_more_active_credit___property_easing_3页_415kb

China Policy - Politburo Signals More Active Credit & Property Easing

The Politburo meeting highlighted further credit and property policy loosening in the second half of 2023, indicating potential PBOC actions like RRR cuts and encouraging banks to support innovation, manufacturing, SMEs, and resolve property developer debt and local government contingent debt.

For property policy, adjustments are expected due to shifts in supply-demand dynamics. This includes potentially lifting purchase restrictions and decreasing down-payment ratios, with Tier-1 cities likely to lag. Additionally, accelerating urban village renovations and increasing subsidized housing supply in the 21 largest cities are mentioned.

The agenda also includes activating the capital market and boosting durable and service consumption by increasing household income, stimulating car, electronic product, and home goods consumption, and promoting services like sports and cultural tourism.

Measures to restore private business confidence involve establishing communication mechanisms with entrepreneurs, encouraging private sector risk-taking, stabilizing foreign capital, and increasing international flights.

The Politburo also pledged to resolve local government debt risks and risks in high-risk financial institutions through auditing and potential funding rollovers.

While delivering exciting policy goals, specific implementation plans are lacking, affecting policy credibility and market reaction.

CMBIGM Ratings: BUY