MNI China Press Digest Dec 13: M2, Yuan Bonds, Petro-Yuan

Highlights from Chinese press reports on Tuesday:

• M2 money supply growth quickened in November due to stable economic growth, an acceleration of credit delivery to the real economy, and a decrease in fiscal deposits of 368.1 billion yuan, according to the Securities Daily. The balance of broad money (M2) increased by 12.4% year-on-year in November. Commercial banks continued to increase medium to long term loans as measures to support the real estate sector helped increase confidence, and the issuance of special bonds accelerated in October. With more growth policies ahead, authorities need to continue to promote credit expansion into key areas such as infrastructure, manufacturing and real estate, to help the economy grow at a reasonable level, the newspaper said.
• Regulators need to accelerate the introduction of financial derivatives to offer more risk hedging tools and improve policy transparency to dispel concerns about China’s opening up, and in order to attract foreign investors to increase their holdings of yuan bonds, 21st Century Business Herald reported. Overseas investors have increased holdings of yuan bonds since September as China-U.S. interest spreads have narrowed and worries about recession in Europe and the U.S. have increased. Regulators clarified capital management requirements for foreign institutional investors investing in China's bond market in mid-November, boosting market confidence as investors feel yuan bond trading rules are further aligned with international practices, the newspaper said citing industry insiders.
• The recent deepening of China and Saudi Arabia relations presents an opportunity to develop the petro-yuan, according to Yicai.com. The need for an alternative to petro-dollars has increased following sanctions imposed on Russia and many countries have been seeking alternatives for many years, the newspaper reported. China should promote the petro-yuan by opening up its futures market and increasing the scale of offshore yuan asset pools. The development of the petro-yuan would be an important catalyst for the internationalisation of the yuan, the paper said.