MNI China Press Digest May 13: Recovery, Rebounding Yuan, NPLs

The following lists highlights from Chinese press reports on Friday:

• The Chinese economy is expected to move to an economic recovery inflection point with the Covid-19 outbreaks effectively controlled in Shanghai and Jilin province, with some leading indicators such as electricity consumption showing positive changes, the China News Service reported citing Sheng Laiyun, deputy director of the National Bureau of Statistics. China will stick to its dynamic zero-Covid policy, while expanding infrastructure investment, stablising employment and ensuring supply and price stability in food and energy, the newspaper said citing Sheng.
• A yuan dip may be temporary, as the forex market generally expects Chinese regulators have sufficient tools to stabilise the currency, the 21st Century Business Herald reported citing an unnamed FX trader at a large state-owned bank. Some large asset management institutions have established long positions in the yuan between 6.81 and 6.83 against the U.S. dollar, looking for trading opportunities, the newspaper cited the trader as saying. After the yuan weakened by more than 5% in the past three weeks, institutions have begun to buy, as they believe speculation has driven the yuan below the equilibrium level. But the currency will soon usher in a return of value as the Chinese economy resumes steady growth, the newspaper said citing another unnamed trader at a large European asset management institution.
• Most Chinese banks saw the ratio of non-performing real estate loans rise to varying degrees in 2021, the China Securities Journal reported citing annual reports from listed banks. The rate of non-performing real estate loans in ICBC, one of the big four state-owned banks, rose by 2.47 percentage points to 4.79% from 2020 to 2021, while that of smaller banks such as Bank of Suzhou had rose by 5 pps to above 5%, the newspaper said. Though the risk is generally controllable, banks will respond by conducting stress tests, strengthening list management, and increasing credit loss reserves, while meeting reasonable financing needs in real estate, the Journal said.