MNI China Press Digest Nov 24: A-shares, PBOC, Fiscal Spending

MNI (BEIJING) - Highlights from Chinese press reports on Monday:

• China’s stock market still has fundamental support to rally further despite short-term adjustments driven by external volatility amid the decline in expectations of a U.S. Federal Reserve rate cut and talk of an "AI bubble", Shanghai Securities News reported citing analysts. Chinese assets are expected to recover based on the country’s steady economic recovery, improved global competitiveness of its advantageous industries, higher strategic positioning of the capital market and increased inflow from household savings, analysts from GF Securities said. The market correction may end after November, providing opportunity to prepare for a spring rally, analysts from Dongwu Securities said, citing ample liquidity and further policy emphasis on technological innovation and a modern industrial system in H1 2026.
• The People’s Bank of China will sell CNY45 billion worth of yuan-denominated bills in Hong Kong on Monday, including CNY30 billion of three-month bills and another CNY15 billion of one-year bills, marking the sixth issuance this year, Shanghai Securities News reported. This can tighten offshore yuan liquidity, increase the cost of short selling, as well as stabilise exchange rate expectations to prevent the formation of a consensus on unilateral depreciation, said Ming Ming, chief economist of CITIC Securities.
• The proportion of central government spending should be increased to 30-40% by 2030 to help improve governance efficiency, which will require a top-down reform to adjust the responsibilities and powers of various central government departments, Yicai.com reported citing Liu Shangxi, former director of the Chinese Academy of Fiscal Sciences. This proportion has remained around 14% since 2016, with local governments receiving only about half of the national public budget revenue bearing more than 80% of the spending, which has led to the proliferation of off-balance-sheet debt, said Luo Zhiheng, chief economist of Yuekai Securities. Luo said spending responsibilities such as public safety, food and drug supervision, and pension insurance should be transferred to the central government as soon as possible.