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MNI China Press Digest Sep 5: Yuan, Covid Lockdowns, Credit

MNI summarises the key stories from the Chinese press.

True

The following lists highlights from Chinese press reports on Monday:

  • Market participants should not over-interpret or over-react to the depreciation in the yuan against the U.S. dollar, wrote former State Administration of Foreign Exchange official Guan Tao in an article published by Yicai.com on Monday. He argued a robust balance of payments surplus and more stable external liabilities in the private sector increased resilience to capital flow shocks and exchange rate fluctuations. The fall in the yuan may have limited impact as the current correction has been mainly driven by the offshore market, while domestic FX trading volumes remained tame in the second half of August amid relatively stable market expectations, wrote Guan, now chief economist at BOC Securities. Previous sharp depreciations of the yuan often coincided with falls in Chinese stocks, but northbound trading on the cross-border Stock Connect saw net purchases in the second half of August, Guan added.
  • The latest wave of Covid-19 has spread to around 100 cities in 23 provinces, with 33 cities, including eight major ones, implementing partial or city-wide lockdowns, Caixin reported on Saturday. The lockdowns affect over 65 million residents. Shenzhen, one of China's big four cities, has seen different districts announce travel restrictions and curbs on public activities from Sept 2, according to the newspaper. The Shenzhen lockdown comes after Chengdu, a mega city of over 20 million people, implemented a full lockdown on Sept 1.
  • Major state-owned banks have pledged to increase credit supply in the second half of the year, especially to fund infrastructure investment, as they seek to deliver a year-on-year increase of lending throughout the year, the 21st Century Business Herald reported. Due to weak credit demand, regulatory authorities have repeatedly urged major state-owned banks to take the lead in stabilizing credit growth. New loans this year may exceed CNY20 trillion, compared to the CNY19.95 trillion in 2021, should these banks achieve the goal, the newspaper said. The weaker-than-expected July credit data was temporarily affected by cooling expectations for the real estate market, while investment and consumption demand will gradually increase with pro-growth policies kicking in, the newspaper said citing Gu Shu, chairman of Agricultural Bank of China.
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The following lists highlights from Chinese press reports on Monday:

  • Market participants should not over-interpret or over-react to the depreciation in the yuan against the U.S. dollar, wrote former State Administration of Foreign Exchange official Guan Tao in an article published by Yicai.com on Monday. He argued a robust balance of payments surplus and more stable external liabilities in the private sector increased resilience to capital flow shocks and exchange rate fluctuations. The fall in the yuan may have limited impact as the current correction has been mainly driven by the offshore market, while domestic FX trading volumes remained tame in the second half of August amid relatively stable market expectations, wrote Guan, now chief economist at BOC Securities. Previous sharp depreciations of the yuan often coincided with falls in Chinese stocks, but northbound trading on the cross-border Stock Connect saw net purchases in the second half of August, Guan added.
  • The latest wave of Covid-19 has spread to around 100 cities in 23 provinces, with 33 cities, including eight major ones, implementing partial or city-wide lockdowns, Caixin reported on Saturday. The lockdowns affect over 65 million residents. Shenzhen, one of China's big four cities, has seen different districts announce travel restrictions and curbs on public activities from Sept 2, according to the newspaper. The Shenzhen lockdown comes after Chengdu, a mega city of over 20 million people, implemented a full lockdown on Sept 1.
  • Major state-owned banks have pledged to increase credit supply in the second half of the year, especially to fund infrastructure investment, as they seek to deliver a year-on-year increase of lending throughout the year, the 21st Century Business Herald reported. Due to weak credit demand, regulatory authorities have repeatedly urged major state-owned banks to take the lead in stabilizing credit growth. New loans this year may exceed CNY20 trillion, compared to the CNY19.95 trillion in 2021, should these banks achieve the goal, the newspaper said. The weaker-than-expected July credit data was temporarily affected by cooling expectations for the real estate market, while investment and consumption demand will gradually increase with pro-growth policies kicking in, the newspaper said citing Gu Shu, chairman of Agricultural Bank of China.