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MNI China Press Digest Oct 29: Yuan, Special Bonds, Growth

MNI (Sydney)

The following lists highlights from Chinese press reports on Thursday:

The yuan is set for a strong trend with two-way fluctuations after regulators removed so-called countercyclical factors, the Chinese Securities Journal said in an editorial. The removal reflects the intention for a market-based approach allowing the flexibility of yuan exchange rates and monetary policy autonomy, the Journal said. The drop in depreciation risk will promote inbound capital and the opening up of the financial sector, and the neutral approach of multiple macroprudential policy tools will support outbound capital and the acquisition of overseas assets. A steady yuan exchange rate and high interest spreads between China and other economies will promote the acceptability and internationalization of the currency, the Journal wrote.

China is likely to reduce the issuance quotas for local government special bonds next year given the accelerating recovery and rising pressure for local debt repayments, the China Securities Journal reported citing analysts. Around 95% of the quotas for the CNY3.75 trillion infrastructure project special bonds have been used this year while some infrastructure projects have failed to take off, delaying the use of funds, the newspaper said citing Pan Helin, a professor at Zhongnan University of Economics and Law. The government is unlikely to ramp up infrastructure investments next year as consumption and manufacturing investments recover, the newspaper said citing analysts.

China can maintain 6%-8% yearly growth until 2030 while contributing around a third of global growth through pursuing the dual circulation model, the Securities Journal reported citing Lin Yifu, an economist and a former senior vice president of the World Bank. The service sector will increasingly support China's economy as the role of exports wanes, Lin told the Journal. China's advantage in traditional industries, advancement in AI, cloud computing, and 5G, and its large market will help expand its world leadership, Lin said.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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