MNI China Press Digest Dec 21: Yuan, Bonds, Policies, Fintech

The following lists highlights from Chinese press reports on Monday:

China may increase the flexibility of the yuan and allow more capital outflow and controlled inflow in a combined approach to stabilizing the yuan next year, Guan Tao, the chief economist of BOC International wrote in an article published by Yicai.com. Guan, a former director of the international payments department at the State Administration of Foreign Exchange, emphasized one policy tool cannot be expected to solve all problems. The Central Economic Work Conference last week talked of "maintaining the stability of the yuan at a reasonable and equilibrium level" for the first time in two years, Guan said.

The interbank bond market is essential to China's bond market, the Financial News reported on Sunday citing industry experts from the PBOC. In what appeared to be a response to critics blaming the central bank for the recent string of SOE bond defaults, the report cited PBOC sources who said the main trading subject of credit bonds should be institutional investors rather than individual investors. Recent cases of credit bond default were due to inadequate corporate management unrelated to the credit bond market, and the authorities should focus on improving regulation mechanisms and credit ratings, the report said.

China is likely to keep its monetary and fiscal policies moderate next year with targeted measures, the China Securities Journal said in a commentary following the Central Economic Work Conference last week. There will be no excess liquidity injection and the macro-leverage ratio will be maintained, the commentary said. Fiscal policy will largely maintain its strength and the preference for key areas, Support for private and small companies may be retained while tax and fee reductions are likely to be more precise, the Journal said.

China should be aware of systemic risks from the rapid development of fintech firms, Beijing Business Daily reported citing former Minister of Finance Lou Jiwei. Some fintech companies have insufficient risk retention and unclear data ownership and their data collection and risk assessment process may be skewed, Lou said. He said that China should avoid a "too big to fail" approach and encourage competition by limiting the number of banks a single platform can work with at the same time.