MNI China Press Digest Aug 9: FX Reserve, Lockdown, Panda Bond

The following lists highlights from Chinese press reports on Monday:

• China's foreign exchange reserves will remain stable after recording a new high since 2016 by end-July, as supported by stable economic recovery and strong exports, the China Securities Journal reported citing analysts. China's FX reserves rose by 0.68% m/m to USD3.2359 trillion, as the fall of the U.S. dollar index led to the appreciation of non-dollar assets, accounting for about onethird of China's FX reserves, the newspaper said citing Xie Yaxuan, analyst with Merchants Securities. The U.S. dollar may lack of continued upward momentum in the next few months, which could lead to a slight increase in the FX reserves, analysts were cited as saying. Chinese yuan will gradually appreciate against the dollar in the medium and long term as China's labor factor has a slight advantage over the American technology and capital factors, the newspaper said citing Wen Bin, chief researcher at Mingsheng Bank.
• Resurging cases of the Covid-19 virus and the austere measures imposed by regional authorities may hurt consumption and service sectors of China's economy in the near term, reduce employment and slow logistics, Yicai.com said citing Wu Chaoming, the chief economist of Chasing Securities. About 200 areas in more than a dozen provinces have been classified as medium or high-risk zones as of Aug. 8, while 31 provinces issued warnings against long-distance travel, which will severely damage tourism, the newspaper said. Some cities such as central Zhengzhou are imposing restrictions unseen even during last year's worst period of the outbreak, the newspaper said. China's exports may play a reduced role in aiding recovery this time as western nations have adopted looser restrictions, which boost service consumption and may reduce the demand for Chinese goods, the newspaper said citing analyst Wang Jingwen with China Minsheng Bank. The government may need to increase policy support, led with fiscal measures including greater investments and bond issuances, the newspaper said citing Wu.
• China may accelerate the opening of its interbank bond market while further allowing the issuance of bonds by overseas institutions in the exchange bond market, which will help boost the issuance of panda bonds, the Shanghai Securities News reported citing analysts. Total 45 panda bonds worth CNY67.9 billion were issued this year as of early August, an increase of 35% from last year, the newspaper said. The PBOC proposed to promote the reform of foreign debt registration and improve the management of domestic bond issuance by foreign institutions in its recent H2 work conference, the newspaper added.