MNI China Press Digest May 16: Growth, Monetary Policy, Shanghai

The following lists highlights from Chinese press reports on Monday:

• China should advance and strengthen fiscal and monetary policies, focusing on stabilising employment and prices and spurring domestic growth to offset expected weaker external demand, wrote Guan Tao, former forex official and chief economist at BOC Securities in a blog post. Monetary policy faces challenges when prices rise amid growing imported inflation driven by the Russia-Ukraine conflict, said Guan. The monetary authority should maintain the flexibility of the yuan while keeping it at a reasonable equilibrium level and absorbing internal and external shocks, said Guan.
• A recent yuan correction has not placed constraints on China’s monetary policy options, as the People’s Bank of China will prioritise stabile economic growth and the real economy, the Economic Daily reported citing analysts. A yuan depreciation largely against the U.S. dollar has not been the case against a basket of foreign currencies, indicating the competitiveness of China’s exports and the resilience of the balance of payments, the newspaper said citing Feng Xuming, researcher at Chinese Academy of Social Sciences. The PBOC should consider lowering policy interest rates to lower the real economy’s existing debt burden and financing costs, as quantitative monetary policy tools prove ineffective amid weak borrowing demand by companies, the newspaper cited Feng as saying.
• The resumption of work in Shanghai is improving with the effective control of the spread of Covid-19, the state-owned Science and Technology Daily reported. Over 4,400 out of 9,000 industrial enterprises above designated size have resumed operations. Key industrial sectors such as automobiles, integrated circuits and biomedicine continued to recover, the newspaper said. The city has issued more than 100,000 certificates to enable workers to return to work and is coordinating with neighbouring provinces to resolve logistic difficulties, the newspaper said.