MNI China Press Digest Nov 24: Yuan, Defaults, Appreciation

The following lists highlights from Chinese press reports on Tuesday:

The yuan's recent surge against the dollar shouldn't be considered excessive as its appreciation across multiple currencies is more representative of the strength of China's exports, the Economic Information Daily said. China needs to follow a more flexible exchange pricing system and allow for independent quotes from market participants. while also managing the risks brought by exchange rate movements, the Daily wrote. It said that China needed to attract more outside capital and increase the efficiency of cross-border resource allocations.China's recent corporate bond defaults should have a limited impact on the asset quality of banks, as these bonds account for only a small portion of banks' proprietary bond investments which are mainly issued by the government and policy lenders, the PBOC-run newspaper Financial News reported on Tuesday citing analysts. Corporate bonds on banks' balance sheets amount to about CNY6 trillion, about 3% of their total bond investments, and those off-balance sheet bonds are worth about CNY10 trillion, the newspaper said citing calculations by Zhongtai Securities.

The impact of a stronger yuan on exporters may be lowered through changing settlement currencies with purchasers and increasing the efficiency of upstream supply chains, Peng Bo, a researcher at the Chinese Academy of International Trade and Economic Cooperation, wrote in a commentary for the 21st Business Herald. The yuan's current round of gains is due to inelastic demand for essential goods exported from China as the pandemic halted production in other countries, wrote Peng. The cycle will likely end with the development and distribution of future COVID-19 vaccines, he said.