MNI China Press Digest Dec 20: Exceptional Result, LPR, Yuan

The following lists highlights from Chinese press reports on Monday:

• China will welcome next year’s CPC 20th Congress with “exceptional result” by upholding a stable and healthy economic environment, peaceful social environment and clean and just political environment, the People’s Daily said in an editorial on its homepage. China has many macroeconomic tools and large policy space at disposal, such as the 0.5 pp RRR cut and CNY1.46 trillion special-purpose bonds introduced since December, said the daily, which also touted the country’s economic achievements this year. China must seek progress while maintaining stability, prevent large economic swings, and ensure different policies are coordinated, said the CPC's official newspaper.
• The PBOC’s benchmark Loan Prime Rate has a significant probability of getting cut, the Securities Times said in a commentary. The central bank has made the signal when it said policies are to be forward-looking and targeted and that it wants to realize the potential of a market-determined loan rate, said the newspaper. Policy loosening and banks’ lower costs of capital will have allowed banks to submit lower LPR bids, serving to reduce companies’ loan costs in place of a policy rate cut, said the newspaper.
• China faces limited impact from the imminent tightening policies by the Federal Reserve even as the two governments’ bond yields continue to narrow, Guan Tao, the global chief economist at Bank of China International, wrote in the 21st Century Business Herald. The yuan continued to surge against the dollar despite two rounds of RRR cuts by the PBOC this year, lending evidence of the currency’s strength, said Guan, a former PBOC official. China has laid political support for faster growth next year, which will allow it to be more resilient to external impact, said Guan. China should allow the yuan’s exchange rate to be more flexible and have freer movement both ways, which helps absorb internal and external impacts, said Guan. To keep the exchange rates more stable, China should develop its forex market and further widen connections with external markets, Guan wrote.