SHANGHAI, Jan 5 (Reuters) - China"s yuan is facing depreciation pressure this year after booking two straight years of gains, a central bank-backed publication said late on Wednesday. A string of factors including shrinking yield advantages, a strengthening dollar, a narrowing trade surplus and uncertainties in global markets could bring downward pressure on the Chinese currency this year, the Financial News, a newspaper co-founded by the People"s Bank of China (PBOC), said in a commentary. The yuan gained about 2.7% against the dollar in 2021 to become the best-performing emerging market currency, underpinned by robust exports, a growing trade surplus, steady capital inflows into Chinese assets and ample dollar liquidity onshore. However, some of these factors will be less supportive this year as the Federal Reserve is poised to tighten monetary policy, a move that is expected to affect global fund flows to boost the dollar and pressure EM currencies. "Global financial markets and risk appetite have not fully priced in the Fed"s interest rate hikes," the newspaper said. "Once the Fed raises interest rates significantly beyond expectations, it will inevitably push up Treasury yields to squeeze the yield gap and prompt cross-border capital flows out of emerging markets including China." The newspaper urged companies, especially importers and those who have issued foreign debt, to establish "risk-neutral" and effectively hedge FX risks. It also asked financial institutions to actively provide FX hedging services and reduce such costs for small- and medium-size enterprises. China"s central bank twice directed financial institutions to hold more foreign exchange reserves in 2021 in a bid to slow down a recent rapid appreciation of the yuan. read more