MNI China Press Digest Aug 10: Investment, Special Bonds, Yuan

The following lists highlights from Chinese press reports on Tuesday:

• China should promote investments on major infrastructure projects as well as stimulating private capital participation through tax and fee cuts, so to stabilize the economic growth in the next step, given the resurgence of the epidemic will continue to slow the recovery of consumption and services, wrote Guan Tao, chief economist of BOC International and a former FX regulatory official in an article run by Yicai.com. The sales of local government special bonds should accelerate in the rest of this year, with the average monthly issuance up to about CNY460 billion if to use up the annual quota, said Guan. This is 1.37 times higher than the average monthly issuance in the first seven months, and the central bank is expected to make timely and precise injections to keep liquidity ample, wrote Guan.
• China's financial regulators are asking regional governments to delay some of their special-purpose bonds, often used to fund infrastructure, to December, in order to help boost investments that would show up early next year, the 21st Century Business Herald reported citing unidentified government sources. Regional authorities then must use up the remaining quotas for this year by September, including on urban revivals and roads, the newspaper said. China is expected to issue more special-purpose bonds in the second half than the same time last year. It has sold CNY1 trillion special bonds in H1, which was slower than last year, the newspaper said citing an internal meeting by the authorities. MNI noted that China has signaled growth this year is almost certain to hit the earlier set targets and is leaving the ammunition to deal with the more uncertain next year.
• The Chinese yuan will remain resilient as supported by China's increased economic power, and the value of yuan assets will further increase with the country's foreign exchange reserves and interest spread with the U.S. remaining stable, the China Securities Journal reported citing Ming Ming, deputy research head at CITIC Securities. The currency has become more flexible and informative in reflecting the changes in international markets as well as FX supply and demand, the newspaper cited Ming as saying. The annualized volatility of yuan against the U.S. dollar was 3.5% in the first half of this year, while the monthly change of the central parity of yuan against the dollar was only 0.2% back in 2005 to 2015, the newspaper said.