MNI China Press Digest July 28: Recovery, Yuan, Party Congress

The following lists highlights from Chinese press reports on Thursday:

• China’s economic recovery is not a smooth path as consumption will continue to be under pressure with anti-pandemic measures becoming more stringent, and the real estate sector is still in a negative cycle with record-high developers’ default risks and low appetite for home purchases, wrote Wu Ge, chief economist of Changjiang Securities. Infrastructure investment, seen as the main growth driver this year, may play a weaker role without the help of a robust housing market, as the substantial reduction in land sales revenues has dampened the source of infrastructure funds, said Wu.
• China should allow the yuan to make adequate adjustments in response to changes in a basket of currencies including the euro, the yen and the Korean won to maintain its export competitiveness, according to an article published by China Finance 40 Forum citing Sun Mingchun, chief economist of Haitong International. Currently, the yuan only weakens limitedly against the U.S. dollar when many non-U.S. currencies are depreciating sharply against the dollar, said Sun. This could pose challenges to Chinese exporters should the euro depreciate further amid possible recession in the euro zone in the next six months to a year, Sun was cited as saying.
• Chinese President Xi Jinping has addressed provincial chiefs and central government ministers at a two-day study session in Beijing emphasizing the upcoming 20th National Congress of the Communist Party of China is a very important event at a critical moment, Xinhua News Agency reported late Wednesday. The Congress will focus on deploying strategic tasks and major measures for the next five years which will be the start of building a socialist modernized country, Xinhua cited Xi as saying. It is necessary to solve the problems of unbalanced and insufficient development, focus on making up for shortcomings and weaknesses and propose new ideas to solve the problem, Xinhua said citing Xi. MNI noted that the Congress expected to be held in autumn, will announce major leadership changes.