China Press Digest: Monday, Oct. 9

     BEIJING (MNI) - The following are highlights from the China press for

Monday, Oct. 9:

     The selective reduction in banks' reserve requirement ratios (RRR)

announced by the People's Bank of China on Sept. 30, to be implemented as of

Jan. 1, is just a fine-tuning of current monetary policy, not a broad-based RRR

cut, the Financial News, a journal run by the PBOC reported Monday, citing

analysts. Monetary policy will be more targeted and focused on structural

adjustments, the report said. The proportion of wholesale funding in financial

institutions' liabilities has risen because small and medium-sized banks and

non-bank institutions have to get liquidity from big banks in an indirect

manner, the report noted, so this RRR cut will effectively guide banks to

optimize their liability structures. But the move will not inject as much

liquidity as expected, the report stated. According to the PBOC statement, there

will be two levels of RRR cut: at present, 98% of financial institutions will

qualify for the 50 basis-point reduction, the report said, and will release

hardly any new liquidity. The additional 100 basis-point reduction for qualified

banks will only apply to a few institutions, the report said. (Financial News)

     China will continue to increase purchases of the U.S. treasury securities

at a modest pace given the rising bilateral trade surplus, the slowing of

Chinese overseas investment and expectations of U.S dollar appreciation, the

official People's Daily reported Monday. Currently, Chinese investment in U.S

Treasuries accounts for over one third of total Chinese foreign exchange

reserves assets after six consecutive months of growth in the U.S treasury

holdings, the report said. This is an appropriate ratio, it added. Increasing or

reducing U.S treasury holdings is normal investment behavior based on changes in

Chinese international payments and foreign exchange reserves, the report noted.

(People's Daily)

     The growth rate of real GDP in China is expected to reach 6.8% in the third

quarter given the sharp rise in the official PMI for October and the

acceleration of industrial profits reported in September, the Shanghai

Securities News reported Monday. Although exports, inventory restocking, and

infrastructure investment have slowed down in the period from July to September,

real estate investment was better than expected. In combination with the

stability in consumption and services, the performance of the economy will

continue to be strong, the report argued. However, the fourth quarter would

suffer headwinds, given the higher comparison base in the same period of last

year and weak property sales, the report said, adding real GDP could decelerate

to 6.6% for the October-December quarter. (Shanghai Securities News)

     Property sales during "Golden Week" -- which are usually robust during the

week-long holiday -- were sluggish this year, as regulations aimed at curbing

rising property prices had an impact, the Economic Informational Daily reported

in its front page on Monday. Sales volumes in larger Tier 1 and Tier 2 cities

dropped to the lowest levels since 2014, while sales in smaller Tier 3 and Tier

4 cities remained robust due to the continued property inventory destocking

process, the report said. Although house prices have peaked this year, buyers'

willingness to purchase properties has not abated. Authorities maintain strict

property market controls, particularly in smaller cities, to remove the

expectation of higher housing prices in future, the report suggested. (Economic

Information Daily)

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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