China Press Digest Nov 1:  Offshore Deposits, Global Yuan, GDP

The following lists highlights from Chinese press reports on Monday:

• Offshore yuan deposits are expected to further increase due to the currency's recent appreciation and China maintaining interest rates, the 21st Century Business Herald reported citing Lin Junhong, a research head at the Shanghai Commercial Bank. In September, yuan deposits in Hong Kong increased by 1.6% m/m to CNY855.9 billion, the highest in six years. The further deepening of cross-border linkages such as those for stocks and bonds also drove demand for offshore yuan, though it is only the first stage of yuan internationalization as funds are still under closed-loop management, the newspaper said citing Ba Shusong, the chief China economist of the Hong Kong Stock Exchange. Ba suggested more cross-border transactions in yuan or keeping the funds after assets get sold in Hong Kong in the future, according to the newspaper.
• China should expand the issuance of yuan-denominated treasury bonds as "safe-haven assets" for foreign investors to raise the country's status in the global financial system, the China Daily reported citing Zhang Ping, the deputy director of the National Institution for Finance and Development. To promote yuan usage, China should allow more foreign investors to hold yuan assets, either under the capital account or through the opened yuan-denominated financial product trading, the newspaper said citing Zhou Chengjun, director of the PBOC's Financial Research Institute. China's internationalization of the RMB is not to challenge the U.S. dollar but to reduce yuan volatility, the newspaper cited Zhou as saying.
• Promoting more infrastructure investment will be significant for China countering the economic slowdown and improving economic efficiency, the official newspaper Economic Daily said in an editorial. As more projects get approved, infrastructure spending is expected to provide a more significant boost to the economy in the fourth quarter, the newspaper said. Authorities should properly use local government special bonds, REITs and other policy tools to create more funding for infrastructure, said the newspaper. Separately, the newspaper said China has accelerated the issuances of local government bonds, with Q3 local debt amounting to CNY1.4 trillion, providing funding for "strategic projects" such as transportation and social programs, and many local governments have begun to plan applications for special-purpose bonds next year.