MNI China Press Digest Jan 30: PBOC, Yuan, Consumption

Highlights from Chinese press reports on Monday:

• The People’s Bank of China will extend three relending policy tools in a bid to provide cheap funding for key sectors, the central bank said in a statement on Sunday. The bank will roll over the tool targeting carbon emissions reduction until the end of 2024, include some local and foreign financial institutions in the project, and enhance international cooperation in green finance, it said. The tool for clean-coal use will be extended to the end of 2023. China will push the green transition of its economy while ensuring security of energy supply, according to the statement. The tool for the logistics sector will remain to the end of June. The PBOC will focus on key and weak sectors of the economy, including green growth, scientific innovations, infrastructure, it said.
• The optimistic market sentiment on the accelerated restart of China's economy, boosted by the lifting of pandemic controls and relaxed real estate regulation, will provide favorable conditions for a yuan rally in 2023, Global Times reported citing Guan Tao, the global chief economist at BOC International (China).The yuan may come under rising pressure should the Dollar Index turn weak as the Federal Reserve starts to cut rates gradually later this year, Guan warned, suggesting China's central bank maintain the flexibility of the yuan to against external shocks. China's economic fundamentals will be more important to the trend of the yuan compared with the performance of the dollar and China-US interest rate differentials, and the three major indicators of growth, employment, and inflation will be references for accurately judging the strength of China's economic fundamentals, Guan pointed out.
• Chinese Premier Li Keqiang called for efforts to accelerate the recovery of consumption as the main driver of the economy, while continuously promoting opening-up and stabilising foreign trade, according to a State Council executive meeting last Saturday. More supportive measures will be unveiled to promote the fast restart of enterprises after Chinese New Year, boost car buying, and increase bank credit for consumption. China will keep the yuan exchange rate steady at a reasonable and balanced level to ensure foreign trade, and encourage Chinese firms to participate in domestic and international exhibitions and expand businesses via the Regional Comprehensive Economic Partnership.