MNI China Press Digest Feb 21: Yuan Rally, RRR Cut, Investment

The following lists highlights from Chinese press reports on Monday:

• The yuan, which traded near a four-year high against the dollar last week, may lose some steam pressured by liquidity tightening measures outside China, a rising U.S. dollar index, and the narrowing China-U.S. interest spread, the China Securities Journal reported citing analysts. Support from exports and forex settlement could also be weakening, and the currency will again be close-related to the dollar index movement, the newspaper said. However, a strong inventory of the dollar inside China and businesses' needs to convert their forex to yuan could help lessen the yuan's depreciation, the newspaper said. The Chinese currency surged past 6.33 last week.
• The People’s Bank of China could make small cuts to the reserve requirement ratios in Q1 to achieve a desirable level of growth in credit and aggregate finance throughout the year, so as to meet the funding demand of rising infrastructure investment, Lian Ping, the chief economist of Zhixin Investment Research Institute, wrote in an article published by news service Yicai.com. By Lian’s calculation, there could be about CNY1.3 trillion extra funds from local government special bonds to be invested in infrastructure projects this year when compared to 2021, which may create as much as CNY5.2 trillion social financing needs. Failing to meet these needs may reduce fiscal policy's pro-growth impact, Lian said.
• China’s newest project to build eight national computing hubs and 10 data centers is expected to create over CNY400 billion yuan of investments each year, the China Securities Journal reported. The project aims to channel more computing resources from the country's eastern regions to the less-developed west. This will better empower the development of the digital economy, as the demand for computing power is growing by more than 20% annually, the newspaper said.