MNI China Press Digest Mar 1: Stronger Yuan, GDP, PBOC

The following lists highlights from Chinese press reports on Tuesday:

• More institutional investors raise the short-term outlook of yuan against the U.S. dollar to around 6.25, or even above 6.2, with global risk aversion rising amid the Russia-Ukraine conflict, the 21st Century Business Herald reported. The onshore yuan hit a record intraday high of 6.3025 since May 2018 on Monday, the newspaper said. The yuan may continue to hit new highs with the help of safe-haven capital inflows should geopolitical risks keep escalating and global financing markets decline, as the market believes China’s central bank has more flexible monetary policy space to stabilize its economic growth amid rising global commodity prices and inflationary pressures, the newspaper said citing an unnamed market source.
• China should ensure a more than 5% economic growth in 2022, and make sure its new GDP exceeds that of the U.S., so to cope with rising risks of global stagflation and geopolitical conflicts, wrote Xu Hongcai, deputy director of the Economic Policy Commission of the China Associate of Policy Science at a blog post. A marginally looser monetary policy is necessary for the short term, but more efforts should be made to unblock the transmission mechanism and improve the efficiency of the use of funds, said Xu. Xu noted the first-ever negative growth in M1 in January may indicate companies have turned their loan funds into long-term fixed deposits, and funds returned to the banking system instead of flowing to stock, real estate markets nor the real economy.
• China has the ability and conditions to effectively respond to external shocks and domestic downward pressure, stabilizing the economy and inflation, and continue to be a bright spot in the global economy, said the People’s Bank of China in an article post on its social media account. The prudent monetary policy will be flexible on its intensity and focus, aiming to maintain stability before seeking progress as well as guide banks to vigorously expand credit issuance, optimize credit structure and promote lower financing costs, the statement said.