MNI China Press Digest Jan 18: Money Policy, Yuan, China-US

The following lists highlights from Chinese press reports on Monday:

The PBOC is expected to refrain from major policy changes such as cutting RRRs or monetary tightening before the Mid-February Chinese New Year and instead maintain liquidity through OMO/MLF operations, the China Securities Journal wrote in an editorial. The central bank has had a long period to use normal tools, and recent MLFs proved that there is ample liquidity and funding, the editorial said. Uncertainties from recent local virus outbreaks, the coming tax payment period and higher cash demand during the holidays will prevent the PBOC from tightening, the Journal said.

Chinese enterprises should step up their exchange rate risk management capacity, should be wary of market sentiment and adapt to higher yuan volatilities, the official People's Daily said in an editorial. Companies could consider hedging through FX derivatives or use the yuan as a settlement currency in cross-border transactions, wrote the newspaper. Financial institutions should increase hedging tools and reduce costs, the Daily said.

China hopes to reopen dialogue, build mutual trust and rational relations with the U.S., wrote Wang Yi, China's Minister of Foreign Affairs, in the Communist Party magazine QiuShi published on Saturday. Beijing hops to peacefully co-exist with the U.S. despite the differences in social systems, Wang wrote.

The incoming Biden administration should abolish any diplomatic offences from the last days of the current Trump administration, rather than legitimizing them, the Global Times said in an editorial on Sunday. China and the U.S. are at risk of sliding into a war should the new administration carry out sanctions on Chinese companies and in particular disregard the norms of engaging with Taiwan, the newspaper said.