BEIJING- China will step up measures to boost demand and stabilize employment and prices in the second half of the year to optimize economic outcomes, the country’s finance ministry said on Tuesday, as policymakers strive to prop up faltering growth.
The pledge came after a package of new economic stimulus measures announced by China’s cabinet last week, including billions of dollars worth of policy financing.
“China will make good use of local government special bonds, and support the implementation of policy bank financing tools” in the second half of the year, said the ministry in a statement published on its website.
The ministry also said that it will strictly curb new local government hidden debt, which refers to off-balance sheet debt financing by local governments.
China’s fiscal revenue rose in June due to easing COVID-19 restrictions with 25 provinces seeing growth in revenue, after a decline in April and May due to value-added tax credit rebates, the ministry said.
“China will strengthen macro economic policy adjustment and plan incremental policy tools to keep economic operation within a reasonable range,” the ministry added.
On top of the raft of policy support measure, China is also stepping up infrastructure spending to spur the flagging economy which narrowly escaped a contraction in June quarter.
Meanwhile, China’s securities association has drafted rules to set up a firewall between investment bankers and analysts in deals to ensure unbiased pricing of initial public offerings (IPOs), the official Shanghai Securities News reported on Tuesday.
Bankers in an IPO deal are barred from discussing profit forecasts and valuations with analysts, who should make conclusions independently, the newspaper said, citing rules drafted by the Securities Association of China.
Brokerages should also regularly check on their internal firewall systems, according to the rules, which were distributed to brokerages for their opinions, the newspaper said.
Such rules will prevent distortion of IPO pricing, protect investor interest in a market crucial to funding innovation and growth in the world’s second-biggest economy.
China has adopted a US-style, registration-based IPO system in some parts of its stock market to make pricing of shares more market-oriented, with plans to soon expand the reform to the entire market.
A company’s valuation report is increasingly important under such an IPO system, but analysts have inadequate levels of independence in writing such reports, some of which are grossly inaccurate in their projections, the newspaper said, citing China’s securities association.
To avoid conflict of interest, investment bankers will be barred by the rules from discussing earnings estimates and valuations with analysts in an IPO deal, though they can communicate on the basics of the issuer in the presence of compliance officers, the paper said.
The rules also ban issuers, investment bankers and salespeople from exerting pressure on analysts to skew their research conclusions, the newspaper said. — Reuters
