MNI China Press Digest July 26:  Yuan, Debt Risks, Tough on US

The following lists highlights from Chinese press reports on Monday:

• China can boost the international acceptance of the yuan given that the currency makes up only 2% of global strategic foreign exchange reserves, while its weighting in the IMF SDR is 10.9%, Guan Tao, the global chief economist at BOC International, said in a speech on Saturday, according to a blog post on his WeChat account. This low percentage isn't proportionate to China's large economy, trade and investment potential, Guan said. China should further develop more sophisticated and liquid financial markets to become more stable and predictable so as to gain foreign investors' confidence, Guan wrote. China should also stick with a normal monetary policy to ensure positive returns while its price-taker exporters need to upgrade, increase bargaining leverage and increase yuan-based settlements, Guan said.
• China's financial institutions are working more closely with regulators to enhance monitoring systems to control the risks of local government funding vehicles, and they must check with the management platform before lending to risky borrowers, the Securities Times said citing unidentified industry participants. Some projects have been called off by the funding institutions after the investors were found to have hidden debt, the newspaper said. While China's listed government debts amount to 45.8% GDP, some of the debt raised by the local governments remain hidden and unaccounted and continues to rise to record, the newspaper said. China is still raising debt this year, though through more regulated channels, including plans to issue almost CNY3 trillion local bonds in H2, the newspaper said.
• China's sanctions of the U.S., including former Secretary of Commerce Wilbur Ross, announced before an official's visit, may be the "new normal" in bilateral relations, the Global Times said ahead of Deputy Secretary of State Wendy Sherman's trip starting Sunday. The tough stance was a departure from the past when China often released a goodwill gesture before meeting the U.S., the newspaper said. The Biden administration's heavy pressure and cold way of dealing with China have been less effective, while the U.S. increasingly needs China's support and coordination on issues including Iran and climate change and trade, the newspaper said. Still, the two sides may be setting the stage for higher-level dialogues and issues including trade and commerce, the Global Times said.