MNI China Press Digest Oct 30: Liquidity, Sino-U.S., PBOC

Highlights from Chinese press reports on Monday:

• Authorities must use monetary policy in Q4 to deal with tighter liquidity caused by the planned CNY1 trillion treasury bond issuance, according to Zhong Zhengsheng, chief economist at Ping An Securities. The central bank will likely increase liquidity injections and reduce the reserve requirement in line with the issuance of the bonds, Zhong noted. Additionally, the government must act to bring real interest rates down to avoid the potential crowding-out effect of public investment on private sector investment. (Source: Yicai)
• China and the US must return to the 2022 Bali consensus to secure a meeting between Presidents Xi Jinping and Joe Biden later this year, according to Wang Yi, China’s foreign minister. Wang said China wants to expand positive bilateral relations with the US and hoped the US business community can engage with China’s continued opening policy. China’s implementation of high-quality development brings opportunities for US business and can act as the ballast stone for economic and trade cooperation between the two countries. Senior representatives from US business said they looked forward to expanding bilateral cooperation with China in the economy, trade, science and technology, innovation, and climate change.
• The People's Bank of China will promote the internationalisation of the yuan based on market drive and independent choices of enterprises, according to a report published on its website. It will further improve systems and infrastructure arrangements for RMB cross-border investment, financing and transaction settlement, accelerate the institutional opening of financial markets, deepen bilateral currency cooperation and support the healthy development of the offshore yuan market, the PBOC said. Offshore yuan market transactions have become more active and the balance of yuan deposits in major offshore markets was about CNY1.5 trillion by end-2022, a return to historical high levels.