MNI China Press Digest July 14: Employment, Yuan, FX Market

The following lists highlights from Chinese press reports on Thursday:

• China will continue to prioritise promoting employment to support a faster economic recovery, and shore up the consumption of green and intelligent home appliances, CCTV News reported citing the State Council executive meeting chaired by Premier Li Keqiang late on Wednesday. Local governments and departments should keep implementing rescue policies to help enterprises including deferring their payments of social securities, as well as support entrepreneurship by providing up to CNY200,000 entrepreneurial guaranteed loans to eligible startups with interest discounted by the government, the meeting said. China will promote the replacement of old appliances and boost the sales in countryside across the country, the meeting said.
• The yuan is likely to maintain a narrow range of two-way fluctuations against the U.S. dollar, with no basis for a sharp depreciation, supported by a high trade surplus and limited upward space for the dollar index, wrote Wen Bin, chief economist of China Minsheng Bank in an article run by 21st Century Business Herald. Though China-U.S. interest rates have inverted, the range has narrowed significantly since mid-June, said Wen. Global investors are still keen on domestic financial markets with the capital inflows under Shanghai-Hong Kong Stock Connect increasing, said Wen.
• China’s foreign exchange market has shown greater resilience and foundation to resist external shocks, with generally stable FX reserves and increased cross-border transactions, said the central bank-run newspaper Financial News citing analysts. A flexible yuan is the key to a wider opening of financial markets as it helps release pressure in a timely manner, the newspaper said citing Guan Tao, a former FX official. The yuan is more robust than other non-U.S. currencies, depreciating only 5.4% as of July 12 this year against the backdrop of a sharp 13% rise in the dollar index, significantly lower than the depreciations of the euro, yen and pound, which are 11.9%, 16.1% and 12.6% weaker, respectively, the newspaper said.