MNI China Press Digest Nov 26: Yuan, Consumption, New Drivers

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

• The yuan will likely remain relatively strong in the short term but it is unlikely to appreciate rapidly to above 7.0 against the U.S. dollar by year-end, 21st Century Business Herald reported citing Wang Qing, analyst with Golden Credit Rating. The central parity rate of the yuan will continue to be relatively strong, and the economic fundamentals supported by ample additional policy space will also help, said Wang. Both the offshore and onshore yuan broke through the 7.09 mark on Tuesday, hitting new intraday highs in over a year.
• Raising the consumption rate from 2024’s 39.6% level will require fiscal and tax system reforms, stabilization of the housing and capital markets, and urbanization of migrant workers, Yicai.com reported, citing Luo Zhiheng, dean of the Research Institute at Yuekai Securities. Authorities should promote a transformation of the value-added tax system from a production-based sharing rule to a consumption-based one, thereby incentivizing local governments to more actively boost consumption growth. Meanwhile, most of the 300 million migrant workers have been unable to migrate with their families, resulting in insufficient demand for services such as education and healthcare, and hindering the upgrading of major consumer goods, including home appliances and furniture, Luo noted.
• China’s development of “new quality productive forces” are accelerating as indicated by value-added tax invoice data, Securities Daily reported. Sales revenue of high-tech service industry and high-tech manufacturing industry increased by 16.1% and 10.1% y/y in October, data by the State Taxation Administration showed. With the accelerated implementation of the "AI+" initiative, the sales revenue of integrated circuits, industrial robots, and drones increased by 32.5%, 41.7%, and 38.4% y/y.