MNI China Press Digest, April 1: RRR Cut, VAT Cuts, Tariffs

     BEIJING (MNI) - The following lists highlights from China press reports on

Monday:

     The PBOC is likely to cut the reserve requirement ratio in April after the

Q1 data release, or at the end of Q2, said Ming Ming, chief analyst at CITIC

Securities in a report published today. It is also necessary to lower the policy

interest rate to cope with both declining industrial profits and deflation, Ming

said. Monetary policy will continue with a loose bias, though further relaxation

could lead the yield on 10-year China Government Bond to fell below 3% to 2.8%,

Ming added.

     China is set to start VAT tax cuts today, which will benefit industries

such as coal, steel and non-ferrous metals, the Securities Daily said. The cut

will gradually reduce the y/y PPI and CPI over the next 12 months, as the tax

reduction gain will largely benefit consumers by means of price decline.

Therefore, monetary policy need not respond to downward PPI and CPI, said Fan

Lei, researcher at Sealand Securities, the paper reported.

     China will continue to suspend any additional tariffs on U.S. vehicles and

auto parts for now, aiming to create a good atmosphere for the ongoing trade

talks between the two sides, an announcement on the website of the Tariff Bureau

said Sunday. The additional 25% tariffs have been suspended for three months as

trade talks entered a truce phase. The deadline for the delay will be announced

separately, the Bureau said.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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