MNI China Press Digest Nov 18: Yuan, Infra Investment, NPL

The following lists highlights from Chinese press reports on Wednesday:

The signing of the Regional Comprehensive Economic Partnership between China and 14 other Asia-Pacific countries has fuelled the appreciation of the yuan against the U.S. dollar as many foreign investors believe the deal will boost the yuan's acceptance in the Asia Pacific region, the 21st Century Business Herald reported. With the amount of trade between China and Southeast Asian countries set to further increase, foreign trading companies need to have more yuan for commodity purchases and settlements, while dollar settlements are seen as risker due to the depreciation pressure, the newspaper said, citing an unnamed head of a Southeast Asian foreign trade company. Some investors projected the yuan to trade at 6.45-6.55 to the dollar, the newspaper added.

China's infrastructure investments may grow 7% y/y each month in November and December due to surging fiscal expenditure, the China Securities Journal reported, citing Zhu Jianfang, an economist from CITIC Securities. In the first 10 months, newly issued special-purpose local government bonds totalled 3.5 trillion yuan, a sharp rise from 2.1 trillion yuan a year ago, the newspaper said, citing Ministry of Finance data. In September, the government relaxed its policy and allowed some of the proceeds to be used as working capital for existing infrastructure projects, leading to a jump in such spending, the journal cited Li Qilin, a member of the China Chief Economist Forum, as saying. Such momentum will likely be carried into November and December, the journal said, citing Jin Yi, an analyst from Sealand Securities.

Chinese banks will boost the disposal of non-performing assets in Q4 by CNY1.67 trillion, the Economic Information Daily reported. Regulators will supervise banks to categorize assets, expose non-performing assets and reserve full provision for loan losses. Banks have disposed a total of CNY1.73 trillion of non-performing loans in the first three quarters, and the NPL rate was 1.96% by end-September, a rise of 0.02 percentage point from the previous quarter, the newspaper said.

China sees challenges in optimising economic structure and switching growth drivers, including the threat of a prolonged global recession from the pandemic and the backlash against globalisation, which could have an uncertain impact on global industrial and supply chains, Premier Li Keqiang wrote in the People's Daily commenting on the 2021-2025 plan. China must tackle lopsided development, boost innovation, address employment and income and increase environmental protection, Li said. The country must stick to its dual-circulation strategy boosting domestic demand as well as deepening its opening up and global cooperation, Li wrote.