MNI China Press Digest Dec 9: US Sanction, Gov Bond, Yuan

The following lists highlights from Chinese press reports on Wednesday:

The U.S. government should expect China to take countermeasures after it applied sanctions on 14 officials in China's legislative body after the passage of Hong Kong's National Security Law, said the Global Times. The Times, which is owned by the Government controlled People's Daily, did not specify what actions China may take. The sanctions were not likely to have a real impact on the 14 officials, who are not involved in U.S. affairs, the Times said. The current U.S. administration should not assume that its malicious moves can be repeated without any retaliation, according to the newspaper.

China needs a more liquid market for its Government bonds to help participants hedge against volatilities created by the increasing openness of its financial system, with measures such as issuing bonds to purchase a portion of the PBOC's foreign reserves, former Minster of Finance Lou Jiwei said. The PBOC could use government bonds to adjust base currency investments and prevent foreign exchange reserves from affecting monetary policy, Lou said.

China should manage inflation caused by higher prices of imports while containing prices of assets chased higher by inbound capital, the 21st Century Business Herald wrote in an editorial. The higher yuan and the raw material costs may drive down exports and hurt the manufacturing industry, wrote the Herald. China should also be aware that the incoming Biden administration may make the exchange rate an issue of contention, the editorial said.