MNI China Press Digest, Sep 17: Yuan, RRR, Taiwan

MNI (Beijing) - The following lists highlights from Chinese press reports on Tuesday:

The yuan's surge past 6.76 against the dollar should draw more foreign capital to China's bond market supported by stable liquidity, higher returns and the fast-recovering economy, the China Securities Journal reported on Thursday citing a report by investment bank CICC. As the fundamentals strengthen and businesses accelerate forex settlements, the yuan may continue to appreciate in the near term, the Journal reported citing market sources.

The PBOC is more likely to use open market tools and lending facilities to boost banks' current low excess reserves, while refraining from RRR cuts, the 21st Century Business Herald reported citing Zhou Zhijun, an analyst with GF Securities. As the recovery accelerates, policymakers are likely to curb the growth of total social financing and the expansion of banks' balance sheets, Zhou said.

U.S. Undersecretary of State Keith Krach's visit and possible U.S. arms sales to Taiwan may "plant torpedoes in the water of the Taiwan Strait", commented the Global Times on Thursday. Taiwan shouldn't interject itself into the China-U.S. game as any upgrade to official U.S.-Taiwan ties will only create tension and damage the security and well-being of the people of Taiwan, the newspaper said. Any U.S. arms sales are extortion in disguise, and all the equipment purchased from the U.S. will be useless should China launch its force on Taiwan, the tabloid said.