MNI China Press Digest Dec 10: Yuan Curb, 5% Growth, Gov Bonds

The following lists highlights from Chinese press reports on Friday:

• The PBOC signaled its intention to correct the market's bullish expectation on the yuan on concerns that of risk of the currency deviating from economic fundamentals, the Economic Information Daily reported citing Guan Tao, chief global economist of BoC International and a former forex official. The PBOC’s hike of banks' forex reserve ratio by 2 percentage points on Thursday will help soak up U.S. dollar liquidity in China and narrow domestic yuan-dollar interest spreads, Guan was cited as saying. Hiking up reserve ratio can reduce speculative trading as well as avoid impacting exports with a stronger yuan, the newspaper said citing analysts. Offshore yuan quickly retreated to around 6.38 against the dollar from the previous 6.35 after the move, the newspaper said.
• The Chinese economy should grow just over 5% in 2022 given that the two-year average growth of this year is around 5%, 21st Century Business Herald reported citing analysts. China should further expand domestic demand as exports may slow with the recovery of global supply, including promoting consumption, investment and upgrading manufacturing, the newspaper said. China may need a significant effort to keep growth above 5% next year given the current "relatively big" downward momentum, the newspaper said citing Yang Weimin, a high-ranked advisor and the deputy director of the economy of the Chinese People's Political Consultative Committee.
• Foreign investors continue to snap up Chinese bonds with holdings rising for the 36th month to over CNY3.6 trillion, a sign of confidence in China’s economic prospects, the China Securities Journal reported citing data by China Central Depository & Clearing. China's sovereign bonds were the major component, up by CNY513.7 billion in November and totaling CNY2.39 trillion so far, the newspaper said. The pace of gain may slow though and investors may focus on long-term and diversified assets with the recovery of the global economy and nations' normalization of liquidity and interest rates, the newspaper said.