MNI China Press Digest Jan 13: Yuan,Token Injection,2020 Loans

The following lists highlights from Chinese press reports on Wednesday:

The Chinese yuan may continue to stay strong as China keeps its normal monetary policy, including policy rates that increase the interest rate spreads against other countries which are maintaining negative or zero rates, said Li Yang, the head of National Institute for Finance and Development, a state-owned think tank. In a speech transcript carried by Sina.com, Li said that China was likely to see an increase in the flow of global capital entering its bond and stock markets. Chinese interest rates may trend lower in the years to come, narrowing the net interest margins of commercial banks. China should be more selective about inbound capital, and should require good environmental and credit standards, Li said.

The PBOC's CNY5 billion net OMO injection yesterday, an unusually small amount, was a gesture to the market that the central bank stands to supply more credit if needed, the China Securities Journal said. The central bank's normal starting amount of injection is CNY10 billion, and so far China's money market is well supplied with liquidity, the Journal said. However, liquidity may tighten in the days before the February Lunar New Year due to tax payments, maturing MLF and higher cash demand, according to the official securities newspaper.

Bond issuance and credit financing were the major drivers behind China's countercyclical efforts last year, while off-balance sheet financing such as entrusted and trusted loans declined, according to an article in Securities Daily. These drivers were evidence that the pandemic had not caused regulators to ease curbs, the Daily said. Yuan-denominated loans surged to CNY 19.63 trillion in 2020, up CNY 2.82 trillion from the previous year, while total new social financing recorded CNY 34.86 trillion, up CNY 9.19 trillion from 2019, the Daily reported citing PBOC data.