MNI China Press Digest Jan 17: Bonds, Pork Prices, Yuan

Highlights from Chinese press reports on Tuesday:

• China should issue about CNY1.5 trillion of special treasury bonds to support the economic recovery after pandemic controls eased, reported Financial News, which is run by the People’s Bank of China. Citing advisors, it said there is policy room for the issuance as the government leverage ratio is not high, and the funds could be used to subside consumption via handing out consumption coupons and to help small businesses and key sectors. The economy will still face headwinds this year since household confidence is still soft, dragging on consumption and house buying, while geopolitical risk is lingering, industrial chains are moving abroad, and virus mutations may trigger new infection waves, advisors said.
• The Chinese yuan is expected to rally and may jump to 6.3 against the dollar by the end of the year, China Business Network reported. Analysts attributed the recent rally of the yuan to improved market sentiment on signs of economic recovery supported by the reopening, a series of measures shoring up the property sector, capital inflows, increasing dollar sales at year-end, and a weaker dollar index. But a narrower trade surplus may restrain yuan appreciation in the second half of the year when the currency could see two-way volatility, analysts said.
• Measures are needed to increase pork prices to a reasonable and stable level as soon as possible, as weak demand and increases in supply have seen prices fall from CNY26.01/kg on January 3 to CNY23.12/kg on January 13, the National Development and Reform Commission (NDRC) told hog producers during a recent meeting, according to China Securities News. The commission said it expects that with a further recovery in consumption, hog prices can gradually return to a reasonable range, and price fluctuations in 2023 will be smaller than in 2022.