MNI China Press Digest Dec 1: PMI, Yuan, Fiscal Policy

Highlights from Chinese press reports on Monday: 

• China’s official manufacturing PMI rose to 49.2% in November, an increase of 0.2 percentage points from October, though it remained below the expansion-contraction threshold for the eighth consecutive month, according to Yicai. Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing, noted that policymakers should further reinforce counter-cyclical macroeconomic measures, significantly expand investment in public goods and services to promptly reverse the demand contraction. Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing, noted that despite the slight improvement, the manufacturing PMI remains weak due to elevated external uncertainties and the ongoing adjustment in China’s property market, both of which continue to weigh on manufacturing demand. 
• Investors should avoid making one-way bets on the yuan’s exchange rate, warned Guan Tao, former senior official at the State Administration of Foreign Exchange. Although supportive factors currently dominate and the yuan may break below the 7.0 level, Guan argued the currency's ability to stabilise below that level remains uncertain. Should the year-end Central Economic Work Conference communiqué not emphasise exchange-rate stability, authorities may be signalling greater tolerance for volatility, which would open the door to wider fluctuations, he noted. Rather than assume a new appreciation cycle, Guan encouraged investors to adapt to the “new normal” of two-way volatility in the foreign-exchange market. 
• The scale of newly issued special bonds nationwide reached approximately CNY492 billion in November, 71% higher than October, Securities Daily reports. Ming Ming, chief economist at CITIC Securities, told the newspaper that the sharp expansion provided strong funding support for project construction across many regions. Song Xiangqing, vice president at the China Society of Commercial Economy, said the larger scale delivers immediate effects in stabilising investment and would help manage economic fluctuations. In addition to traditional infrastructure, issuance designated for “land reserve” purposes has reached roughly CNY503 billion in H2, the news outlet reported. Meanwhile, many regions have also begun directing special bond funds toward patient capital, allocating them to government investment funds.