MNI China Press Digest Oct 20: Yuan, Liquidity, 5G

The following lists highlights from Chinese press reports on Tuesday:

The yuan is likely to fluctuate around the current level after a period of strength, as the dollar index has reached a phasic low and a stronger yuan threatens to pressure exports, the Economic Information Daily reported citing Xu Gao, an economist at BOC International. The yuan has been propelled by China's better prevention and control of the pandemic and widening Sino-U.S. interest rate differentials, Xu said. The PBOC will continue to ensure the yuan's flexibility through macro-policies and the balance of payments, the newspaper said citing recent comments by Sun Guofeng, the head of the PBOC's Monetary Policy Division.

The PBOC may inject additional funds via reverse repo operations this month as tax payments and the large scale of government bond issuance drains liquidity, the China Securities Journal reported citing unidentified market sources. October is the traditional peak season for tax collections, while analysts expect the net supply of both China Government Bonds and local government bonds to exceed CNY700 billion this month, straining liquidity, the newspaper said. As the PBOC previously suspended reverse repo operations there are only CNY100 billion of reverse repos maturing, leaving room for new injections, the Journal said.

China will speed up the construction of high-tech infrastructure including 5G, artificial intelligence and data centers, so to better support the development of the virtual reality industry, the Securities Times reported citing a speech by Vice Premier Liu He. Speaking at the 2020 World Conference on the VR Industry, Liu said the application of 5G+VR technologies should be accelerated in manufacturing, education, medical care, culture and entertainment as well as trade and logistics.