MNI Press Digest Feb 8: Liquidity, FX Reserve, US-China

The following lists highlights from Chinese press reports on Monday:

• The People's Bank of China is likely to maintain ample liquidity during the Chinse New Year beginning this week as fiscal spending and liquidity controls ease, the China Securities Journal wrote in a commentary. Interbank liquidity conditions should also improve as pre-holiday injections mature, the newspaper wrote. The PBOC is likely to refrain from raising OMO rates in H1 to support the credit bond market after nearly CNY50 billion in planned issuances of credit bonds were canceled, wrote the newspaper. Short-term market rates may still rise due to rising asset prices, the weakening dollar and higher consumer demand, the Journal said.
• China's foreign exchange reserves are likely to rise given the weakening U.S. dollar index and a stronger yuan, the Securities Times reported citing Zheng Houcheng, head of research at Yingda Securities. The dollar index may weaken given the Federal Reserve's low-rate policies and record high U.S. trade and fiscal deficits, while China-U.S. interest rate spreads and China's robust trade surplus favor the yuan, Zheng was cited saying. China's FX reserves stood at USD3.21 trillion at the end-Jan, down USD5.9 billion from end-Dec, the newspaper said.
• China and the U.S. can form better relations if the U.S. wants to pursue common interests, deepen economic and trade cooperation despite tough rhetoric, the China Daily said in an editorial following a phone call between the two nations' top diplomats. The official newspaper noted that President Biden had said he would work with Beijing when it is in the U.S. interest, a marked difference from the Trump administration's "maximum pressure" approach, the Daily said. This is notable despite Secretary of the State Anthony Blinken signaling the administration would continue its predecessor's policies of "stirring up trouble" in China's regions, including Xinjiang and Hong Kong, the Daily said.