MNI China Press Digest Jan 11:More Infra, Yuan Bond, Spillover

The following lists highlights from Chinese press reports on Tuesday:

• China will quicken 102 major government projects announced and the use of CNY1.2 trillion local government special bonds issued in Q4 to counter the current slowdown, the Shanghai Securities News reported citing a State Council executive meeting on Monday. These measures may boost the infrastructure investment growth to more than 7% in Q1, with annual growth projected around 5% to adhere to strict controls of local debt, the newspaper said citing analysts. However, infrastructure investments will lend limited support to an economy and a quick rebound remains difficult, the newspaper said.
• Foreign investors still favor Chinese yuan bonds even as the U.S. Federal Reserve accelerated tapering and potential rate hikes, as foreign holdings of yuan bonds rose CNY78 billion in December to total CNY3.68 trillion by the end of 2021, the 21st Century Business Herald reported citing data by China Central Depository & Clearing. The Fed’s tightening ahead of schedule may increase the volatility of the global financial market, which drives global investors to increase asset diversification with yuan bonds becoming their first choice for safe-haven investment due to its low correlation with the global financial market, the newspaper said. The appreciation of the yuan supported by China’s robust exports also attracted investors, the newspaper added.
• Major economies should strengthen cooperation to avoid negative spillover impact on each other as they unwind the ultra-loose monetary policies and fiscal stimulants in the post-pandemic era, the PBOC-run newspaper Financial News reported citing Xiao Yuanqi, vice chairman of China Banking and Insurance Regulatory Commission. Countries should also act to bring inflation back into an acceptable range, as it is likely to cause serious social unrest should the income growth fails to keep up with price gains, Xiao was cited as saying.