MNI China Press Digest Sep 2: Yuan, Liquidity, Consumption

MNI (BEIJING) - Highlights from Chinese press reports on Tuesday:

• The expected U.S. Federal Reserve rate cut in September and potential positive outcome in China-U.S. trade talks could drive further appreciation of the yuan this year, on top of capital inflows amid the A-share rally, Yicai.com reported citing analysts. The offshore yuan is close to breaking below 7.1 against the U.S. dollar, which may trigger increased foreign exchange settlement by exporters. In July, the proportion of forex settlement by exporters surged from 46.1% to 54.9%, reaching a new high since September 2024, indicating increasing willingness to sell dollars, the newspaper said.
• Inter-bank market liquidity will likely remain stable in September amid fiscal spending and central bank support, despite a large amount of open market maturities, Shanghai Securities News reported citing analysts. Over CNY3.2 trillion of funds will mature in reverse repos and three-month outright reverse repo in the first week, alongside CNY300 billion six-month outright reverse repo and CNY300 one-year medium-term lending facilities later in the month, the newspaper said. However, the issuance of government bonds and the allocation of fiscal funds will add nearly CNY190 billion of excess reserves to the banking system, with regular fiscal revenue and expenditure likely to provide more than CNY1.1 trillion of liquidity support, the newspaper said citing analysts from Sealand Securities.
• Authorities should focus on addressing the shortage of high-quality service supply to boost consumer spending, according to Securities Times in a commentary. It is necessary to expand pilot opening up in the fields of telecommunications, medical care and education to import more mature services, while reducing restrictive measures in the domestic market, including relaxing market access and optimising regulatory models, the newspaper said.