China Press Digest: Wednesday, December 6

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

Wednesday, December 6:

     The spillover effects on China from U.S. tax reform should not be

exaggerated, the Financial News, a newspaper managed by the People's Bank of

China, said Wednesday. The expected passage of the Trump administration's tax

reform plan will result in global tax cut competition, with the U.K., France and

India having announced they will cut their taxes, while the Japanese government

is said to be looking at reducing some taxes, too, the newspaper said. Liao

Tizhong, director of the International Taxation Department of the State

Administration of Taxation, said the Chinese government does not develop

policies without thinking about the impact they would have on other countries,

saying it would be wrong to do so, the newspaper reported. Liao stressed China

opposes tax cut competition. China has preferential tax rates for high-tech and

foreign companies and taxes are not the only factor affecting companies'

decisions on where to build their factories. The newspaper noted China still

needs to take precautions and plan ahead to tackle possible headwinds from the

U.S. tax plan. (Financial News)

     Advocates of a trade war between China and the United States should not be

allowed to harm the interests of the people of China and the U.S., Chinese

Ambassador to the U.S. Cui Tiankai said Monday, the official Xinhua News Agency

reported late Tuesday. Sino-U.S. trade is a win-win situation, Cui said. A trade

war, no matter its duration, would directly harm the economies of the two

countries and dampen future development of the global economy, he stressed.

Cultural exchanges between the two nations have a unique role in helping the

consistent growth of the Sino-U.S. relations, he added. (Xinhua News Agency)

     China should not relax its capital controls at present, Yu Yongding, a

researcher with the Chinese Academy of Social Sciences and a former member of

the Monetary Policy Committee, said Tuesday at a financial summit hosted by the

China Business News. One lesson China should learn from the Southeast Asia

financial crisis is that the control of capital flows should not be lifted

prematurely, Yu noted. Monetary policy should not be too tight in 2018 so as to

maintain the economic growth rate at around 6.5%. The government will rely more

on fiscal policy rather than  monetary policy to support economic growth next

year, while investment in the property sector will slow further and

infrastructure investment will decelerate, Yu argued. China should launch a

residential property tax as soon as possible, Yu said. (China Business News)

     A new global central bank monetary policy framework that emphasizes

financial risk prevention is being formed, and so national monetary policies

will need to coordinate with macro-prudential policies to deal with the impact

of financial cycles in asset prices, bank lending and interest rates, Sun

Guofeng, the director general of the Research Institute of the People's Bank of

China, said on Tuesday at a financial forum hosted by the China Business News,

the newspaper reported. Global central banks must not only control short-term

interest rates but also long-term interest rates, possibly through changes in

their balance sheets, Sun argued. Central banks need to prevent commercial banks

from operating risky businesses and need to maintain their policy credibility to

keep financial markets stable. Emerging economies need to normalize their

monetary policies, pulling back from easy monetary policies adopted to tackle

the effects of financial crisis, so as to keep the global economy and global

finance balanced as developed countries continue to normalize their monetary

policies in 2018, Sun said. (China Business News)

     The China Banking Regulatory Commission (CBRC) will clamp down on

irregularities in the financial market, Wang Zhaoxing, vice chairman of the CBRC

said, the official Xinhua News Agency reported Wednesday. Illegal financing will

be curbed and financial market transactions will be strictly regulated, Wang

said, according to the newspaper. Wang warned at a forum last month that at the

current time, and for some period to come, financial risks are large and can

occur frequently, stressing that financial institutions, the market and

regulators must pay greater attention to controlling these risks, the newspaper

said. Wang also warned that regulation would be stricter and punishment for

illegal activities would be heavier. (Xinhua News Agency)

     This year's Central Economic Work Conference, which will set economic

policy goals for next year, will be held this month and must pay particular

attention to the slowing of investment growth, the Economic Information Daily, a

newspaper under the Xinhua News Agency, reported Wednesday. The key to

stabilizing growth next year is stabilizing investment, Liu Yuanchun, managing

director of the National Academy of Development and Strategy (NADS) and deputy

principal of Renmin University, was cited as saying. Economic growth this year

is likely to reach 6.7%, the report said, citing the Bank of China International

Finance Research Institute and the (NADS) at Renmin University predicting that

this year's GDP will be 6.7% while the Xiamen University Macro-economy Research

Center is projecting 6.65%. (Economic Information Daily)

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

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

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