MNI China Press Digest Jan 26: Yuan, 5.5% Growth,Weak Spending

The following lists highlights from Chinese press reports on Wednesday:

• The Chinese yuan may face periodic depreciation pressure when domestic companies' strong seasonal demand for forex settlement eases, the Shanghai Securities News reported citing analysts. The yuan may remain strong against the U.S. dollar in Q1, as the market has already priced in China’s rate cut and U.S.’s expected rate hike, the newspaper said citing Wang Dan, the chief economist at Hang Seng China. The PBOC may increase counter-cyclical tools around the Spring Festival in February should the yuan still appreciates excessively after FX settlement demand is fully met, the newspaper said citing CIB Research. On Tuesday, the onshore yuan once strengthened to as high as 6.3235 against the dollar, hitting a new high since April 2018, the newspaper added.
• China's economy can grow 5.5% in 2022, and policymakers could set a higher economic growth target as long as inflation and systemic financial risks are under control, wrote Yu Yongding, a former member of PBOC’s monetary policy committee at a blog post run by China Finance 40 Forum. Boosting growth relies on infrastructure investment given the continuing economic downturn and weak expectations, so as to further drive manufacturing investment and lift consumption, said Yu. China should consider expanding the issuance of treasury bonds to raise funds for infrastructure projects, as local governments are short of funds to undertake investment tasks, said Yu.
• Local governments in China are trying to raise weak consumer spending by promoting purchases of new energy vehicles and smart home appliance sales in the countryside, the Securities Times reported. Most local governments showed cautious expectations towards consumer spending by maintaining or even lowering annual targets of retail sales growth from last year given to severe employment situation, high inflation pressure and insufficient consumer confidence amid epidemic uncertainty and income pressure, the newspaper said.