MNI China Press Digest May 12: Yuan, NEV, PBOC

Highlights from Chinese press reports on Tuesday:

• Industry participants expect the yuan to retain upward momentum, though they see limited scope for sustained one-way appreciation and anticipate broadly stable trading overall, Yicai reported. The yuan could strengthen toward 6.6 per dollar, although the scope for further appreciation is likely to be limited, said Zhao Qingming, vice president of the Institute for Foreign Exchange Management Research. Wang Qing, chief macro analyst at Golden Credit Rating International, said the yuan is likely to maintain a stable-to-firm trajectory as China’s external trade environment continues to stabilise and exports sustain relatively strong growth despite sharp swings in the U.S. Dollar Index.
• China needs to address monopolistic practices in the new energy vehicle repair market as the country’s NEV fleet moves out of warranty coverage, Yicai reported. Many NEV brands require specialised diagnostic systems to match vehicle data after repairs, effectively giving automakers a technical monopoly over aftermarket servicing, an industry insider told Yicai. China’s interim measures on battery recycling took effect on April 1, but their impact will hinge on regulators’ ability to enforce the rules and on whether third-party repair firms can obtain the necessary access permissions.
• China faces growing pressure from changes in the external environment, while supply shocks and imported inflation pressures have begun to emerge, the People’s Bank of China said in its first-quarter Monetary Policy Implementation Report. The central bank said it will continue implementing a moderately accommodative monetary policy and will calibrate the intensity, pace and timing of policy measures in line with domestic and global economic and financial conditions, as well as developments in financial markets.