MNI China Press Digest Mar 18: Strong Yuan, Easing, Zero-Covid

The following lists highlights from Chinese press reports on Friday:

• The yuan is likely to remain relatively strong and trade 6.3-6.5 against the dollar even after the U.S. Federal Reserve has begun its cycle of interest rate hikes, Yicai.com said citing analysts. Foreign investors may continue to see China market's potential, and more capital is still forecast to be entering China's bond market though at a slower pace, said the news service. China has more policy space to support economic growth while overseas central banks are entering rate-hike cycles, Yicai said. As China adjusts its approach toward managing Covid-19 outbreaks and the government took measures to ease investors' concerns on issues including the real estate industry, more overseas capital is expected to flow into China, it said.
• China must allow the yuan to be flexible and let the exchange rate be the first barrier to absorb external shocks and ensure greater autonomy of its monetary policy in the face of the Federal Reserve’s tightening, China Finance 40, a prominent think tank, said in a blog post. China should cut rates and banks' reserve requirement ratios to stimulate the credit demand of the private sector, lower domestic financing costs and help the real economy repair the balance sheets as soon as possible, it said. China must also steadily open its capital account and financial markets to attract more medium and long-term capital, it added.
• Chinese President Xi Jinping asked the government to adhere to the country’s zero-Covid policy to curb the “worst outbreaks” in two years caused by the Omicron variant, the Global Times said. Xi, speaking at Thursday’s meeting of the Standing Committee of the Politburo of the CPC Central Committee, urged the government to prepare for difficulty in Covid-19 response and urged officials to be vigilant, the newspaper said. Cases in China have nosedived, with 1,860 confirmed cases recorded on Tuesday, compared with 3,500 on Monday, the newspaper said.