MNI China Press Digest Dec 18: Special Bond, Yuan Bond, Payment

Highlights from Chinese press reports on Monday:

• China will optimise the investment direction and quota allocation of local government special bonds and reasonably expand the scope of using such bonds as capital funds for infrastructure projects, Xinhua New Agency reported, citing the Office of the Central Financial Commission. Price level is an important monetary-policy target necessary to make good use of aggregate and structural tools and to promote a steady decrease of social financing costs. Authorities will also vigorously develop new types of digital, green and healthy consumption, and actively promote spending on smart homes, entertainment and tourism, and sports events to drive related investments.
• Foreign investors have continued to increase their holdings of yuan bonds since Q3, with the inflows of USD33 billion in November recording the second-highest monthly increase in history. China-U.S. interest spread narrowing by about 60 bps by end-November from the October high amid increasing expectations for Fed rate cuts, alongside an 2.6% appreciation in the yuan against dollar, which supported the purchase of yuan bonds, said Yu Lifeng, senior analyst of Golden Credit Rating. The foreign allocation of yuan bonds is likely to keep rising as the end of Fed rate hikes will drive more funds to emerging markets, said Yu. The recovery of the Chinese economy will also play an increasingly supportive role in stabilizing cross-border capital flows, said Wang Chunying, spokesperson of the State Administration of Foreign Exchange. (Source: Shanghai Securities News)
• China will implement stronger regulation that targets the management of the non-banking payment industry to promote standardised and healthy development, according to the State Council. The document, signed by Premier Li Qiang, clarified the definition and permissions of non-bank payment firms and strengthened customer protection against misuse of personal information or unspecified fees. Amongst other regulations, authorities will establish effective due diligence, strengthen risk management and stipulate legal liability. The State Council also said it would stop disguised forms of non-bank payments. (Source: 21st Century Business Herald)