MNI China Press Digest October 14: Yuan, Special Bonds, Covid

The following lists highlights from Chinese press reports on Friday:

• There is no reason for the yuan to continue to depreciate against the U.S. dollar over the longer term given the steady recovery of the Chinese economy, the Securities Daily reported, citing analysts after both the onshore and offshore yuan breached 7.19 on Thursday. The U.S. Dollar Index is likely to remain high in the short term on expectations of further rate hikes by the Federal Reserve, though the index may have limited upside, the newspaper said citing Zhao Qingming, vice president of the China Foreign Exchange Investment Research Institute. The yuan may fluctuate in a narrow range around 7.1 by the end of the year, the Daily said citing Pan Zhongning, head of International Business at China Asset Management.
• China is likely to front-load a portion of the quota of next year’s infrastructure-back local government special bonds in Q4 to boost investment and stabilise economic growth, the China Securities Journal reported citing analysts. The allocation, most likely in November, could amount to CNY1.4-1.8 trillion given that front-loaded quotas all exceeded CNY1 trillion in previous years, the newspaper said citing Wang Yunjin, senior researcher of Zhixin Investment Research Institute. The fiscal boost may be directed into areas including transportation and logistics, water conservancy, municipal facilities and industrial parks, Wang was cited as saying. In the first three quarters of this year, the issuance of new special bonds exceeded CNY3.54 trillion, the newspaper added.
• China must insist on its dynamic “zero-Covid” policy as there is no way to completely eliminate the virus and no guarantee of zero cases, Caixin reported citing Liang Wannian, head of an expert panel on the Covid-19 response affiliated with the National Health Commission speaking at a Thursday press conference. If Covid restrictions were relaxed it would inevitably cause a large number of infections, which could threaten the life of 267 million elderly people and a large number of patients with underlying diseases, said Liang. China still has the conditions to prevent any outbreaks, as current infections are mainly imported from overseas and China has strong organisational capabilities to carry out controls, said Liang.