MNI China Press Digest Oct 17: Urban-Rural, Data, Deposits

Highlights from Chinese press reports on Friday:

• China must make substantive progress during the 15th Five-Year Plan to address urban-rural integration by 2035, according to Cai Fang, a senior member of the Chinese Academy of Social Sciences. Cai emphasised that authorities need to remove institutional and systemic barriers that impede common prosperity between urban and rural areas, which requires medium- and long-term planning supported by clear task lists, timelines and roadmaps. Reform of the household registration, or hukou, system, which Cai identifies as the final stronghold of the urban–rural divide, has stalled due to conflicting incentives such as harming local government fiscal resources and dampening real-estate sales, Cai said.
• China’s industrial value-added growth for September is projected at 5.1% year-on-year, slightly below August’s 5.2%, according to the average forecast of economists surveyed by Yicai. Lü Zhengwei, chief economist at Industrial Bank, said industrial output may decline as high-frequency data slowed in several sectors, however, two additional working days compared with last year has provided support. Economists expect retail sales growth to slow to 3.1% in September from 3.4% in August. Funding constraints prompted some regions to suspend car replacement subsidies and cap incentives for scrapping vehicles or purchasing new home appliances, weighing on consumption in those categories, a report from CICC said. The catering sector also showed weakness, with its PMI down nearly 10 percentage points to 41%, the report said.
• China's slowdown in deposit relocation towards the capital markets in September may be related to the weakening wealth effect caused by stock indices fluctuating at high levels, analysts told Yicai. Li Chao, chief economist at Zheshang Securities, said that in September, the government spent more and collected less, thus transferring fiscal funds to household and corporate deposits. Household deposits increased by CNY2.96 trillion, CNY760 billion more than the same period last year, while non-bank deposits fell by CNY1.06 trillion, in sharp contrast to earlier months, when household deposits rose less and non-bank deposits increased significantly, Yicai noted.