US Money Trea­sury: sup­ply, China credit not growth ma­nip­u­lat­ing­boost sta­bil­ity yuan

China Daily (Canada) - - FRONT PAGE - ByBy HENGCHEN WEILIJIA in New York heng­weili@chen­jia@chi­nadaily.chi­nadai­lyusa.com.cn com

TheChina’sUS Trea­sury,mon­eyin asup­pl­y­semi­an­nual growth ex­ceed­e­dreport­to­ex­pec­ta­tion­sCongress on­lastWed­nes­day,month di­dand­not name­credit Chi­nain­creased,acur­ren­cy­fur­ther­ma­nip­u­la­tor­bol­ster­ing and­sta­ble­saide­co­nomic­more“mar­ket-growth,based”the re­form­s­cen­tral­bankwould­saidlifton­con­fiWed­nes­day. dence in­Wed­nes­day.the ren­minbi.

TheInSeptem­ber, Re­port on Macroe­co­nom­i­can­dFor­eignEx­change the broad money sup­ply, known as M2, Poli­cies in­creased by of 8.3 Ma­jor per­cent Trad­ing from a year Part­ners ear­lier, up of from the United an­nual States growth­con­cludedof8.2 per­cent­thatwhilein theAu­gust,cur­ren­cy­ac­cord­ing­prac­tices­tothePeo­ple’s of sixPeo­ple’scoun­triesBankofChina.“re­quire close at­ten­tion”,Newloansnoin­ma­jor­ren­min­biUS­trad­ingthe

stood at 1.38part­ner­tril­lion­cur­rent­lyyuan($199.2met bil­lion) 2015bil­lion) leg­isla­tiveinSeptem­ber,cri­te­ri­aupfrom­for en­hanced1.28tril­lio­n­anal­y­sis.yuanin Au­gust. TheUSout­stand­ingTrea­surySec­re­taryyuan-de­nom­i­nated Steven Mnuchin­de­nom­i­nat­ed­loan­scalled forhad­mor­ereached­trans­paren­cywe 133.27 tril­lionon­theyuanyuan,by“andthe end willofthe­con­tin­uethirdquar­ter,tomon­i­torayear-an­donyear re­viewonyear­growthChina’sof13.2cur­ren­cyper­cent,prac­tices, throughon­go­ing the PBOCin­clud­in­gre­ported. Thedis­cus­sion­scoun­try’swith­re­altheecon­omy,Peo­ple’s Bank of China”, he said.

The six ma­jor trad­ing part­ners on the Trea­sury mon­i­tor­ing list for cur­rency prac­tices are China, Ja­pan, Repub­lic of Korea, In­dia, Ger­many and Switzer­land.

The Trea­sury said the re­cent de­pre­ci­a­tion of the ren­minbi will likely ex­ac­er­bate China’s trade sur­plus with the US.

“China could pur­sue more mar­ket- based eco­nomic sup­port­e­dreform­sthat­by­would­do­mes­ticbol­ster­non­fi­nan­cial con­fi­dence­con­fi­dence cor­po­ra­tionsintheren­minbi,”and­lo­calthe house­holds,re­port­said. ab­sorbed 2.21 tril­lion“If yuan­they’d from­found the­away­fi­nan­cial­to­la­bel sec­torChina, lastit­would­month,havere­sult­inghurt(mar­ket)said in the monthl­y­sen­ti­mentin­cre­ment­fur­ther,”in to­tal so­cialSha­hab­fi­nanc­ing.Jali­noos, Credit Suisse GroupSeptem­berAG’sglob­al­wasthe­head­firstof­timeFX thetrad­ing­cen­tral­strat­egy.bank“Buthadthis­in­clud­ed­be­ing lo­calayawn,gov­ern­men­tifany­thingspe­cial-it­should­pur­pose of to­tal so­cial­with fi­nanc­ing.emerg­ing The spe­cial­risk.bonds were is­sued mainly to raiseYiGang,fund­sPBOC­forin­fras­truc­ture­gov­er­nor, con­struc­tion,said­last­weekasthattheChi­na­coun­try’swill fixed-con­tin­ue­as­setto in­vest­mentlet­the­mar­ket­slowed “play ina de­ci­sivetheyear’srole”firsthalf. in the RMB ex­change“Theis­suancer­ate. of lo­cal gov­ern­ment“Wewill ac­cel­er­ated­de­val­u­a­tion, since and Au­gust,” will spe­cial not en­gage bonds in­com­pet­i­tive has which­no­tuse­has­the­hadex­changeno­tabler­ate in­flu­ence as lend­ing­with­trade­and­fric­tions,” cor­po­rate Yi bonds, said at a said meet­ing Zhang of Wen­hong,theIn­ter­na­tional deputy Mon­e­tary di­rec­tor and of theFi­nan­cial­cen­tralCom­mit­tee.bank’ssur­veys and statis­tic­sYi­has depart­ment. said that “China will con­tin­ueInSeptem­ber,to­pushlo­cala­head­gov­ern­ments with is­sued spe­cial re­forms bonds of amounting­in­ter­e­strate and to ex­change-rate 738.9 bil­lion yuan, regimes,al­mo­stand keep dou­bling the RMB the Au­gus­tex­change­fig­ur­erate broadlyan­dac­count­ing stable at fo­ran adap­tive33.5per­cente­qui­lib­ri­u­mofthe­monthly level.” in­creaseMarkusin Rod­lauer,to­tal­so­cialdeputy­fi­nanc­ing,di­rec­torthe­cen­traloftheAsi­a­bankand­said. Pa­cific Depart­men­tTooff­set­do­mes­ti­cattheIn­ter­na­tionale­co­nomic down­sid­eMone­tary Fund risks (IMF), and be­lieved ex­ter­nal head­wind­sthattheRMB amid ex­change trade rate ten­sions, is the in PBOC line” with has en­acted China’s four eco­nomi­cre­duc­tions­fun­da­men­tals. of re­serve re­quire­ment“Ac­cord­ing ra­tios­toourframe­work, for fi­nan­cial in­sti­tu­tion­s­the­ex­changeth­is­rateyear,ofwith the theren­min­bi­lat­est­takingis­not­ef­fectout onof Mon­day. line. broadly The cuts in have line with in­jected the some­fun­da­men­tals,”1.85tril­lionRod­laueryuanin­to­toldthe fi­nan­cialBloomberg­sec­tor­last week.since April. con­cerns­datathat­showed­fastertha­t­ex­pan­sion SomeOnTues­day,economist­sTrea­sury­ex­pressedDepart­ment China’s ofhold­ings­the­money­ofUS­sup­plyTrea­suriesand­credit fell might­fo­rathir­dadd straight in­fla­tion month— pres­sure, to though$1.165tril­lion mon­e­tary in Au­gust au­thor­i­ties from have$1.171re­it­er­at­edtril­lion­inthatJu­lythere—their­will be­low­est­nochange­to­talin mor­einthethan“pru­dent a year. andIn­neu­tral”Au­gust, with­pol­i­cythes­tance. US-China tradeOverdis­puteth­e­week­end,es­ca­lat­ing,YiGang, there the­was­cen­tral­con­cern­bank­inthe­gov­er­nor,USthatChina, the largest non-US holder said of the cur­rent quan­tity and growthTrea­suries,rate of­would­moneyre­tal­i­ate­and­credit by “ap­pro­pri­ate”But­level­sJo­nandHill,would­in­ter­est­main­tain rates sta­blestrate­gist­prices.atBMOHe fore­castCap­i­talMar­kets there that has the in an­nual New York, in­fla­tion said level would­been­nobeev­i­dences­lightly high­erofthat.than 2 per­cent. “This was prob­a­bly just to sup­port“De­spiteChina’sa­less­cur­ren­cy­be­nign­in­fla­tion­ary and han­dle en­vi­ron­ment,day-to- day we ex­pect­flows,”thatHill sta­bi­liz­ing­said­ofthe­growthTrea­sury will be­sales.the­most im­por­tant goal for mon­e­tary pol­icy in the near fu­ture,” Bloomberg, said Li Xin­hua Zhen­nan, and an econ­o­mist Reuters con­trib­uted with Gold­man to this Sachs story. (Asia).

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