MNI China Press Digest April 24: Politburo Meeting, RRR Cut

     BEIJING (MNI) - The following lists highlights from the Chinese press for

Tuesday:

     China needs to implement the recently-announced measures to open up the

country to foreign investment, stressed the CPC Politburo, comprising the 25

most powerful Chinese communist party leaders, according to Xinhua News Agency.

China needs to further advance the healthy development of credit growth, as well

as the stock market, bond market, FX market and property market, with timely

supervision and risk controls, stated the Politburo. China should stick to its

proactive fiscal policy and maintain a prudent and neutral monetary policy, the

Politburo said. The Politburo also stressed the importance of high-quality

growth in the country.

     The PBOC's RRR cut earlier this month confirms that monetary policy has

been slightly adjusted to a neutral status or even neutral-leaning loose status,

China Securities Journal reported, even though it allowed the use of capital

released by the cut to replace banks' borrowing from the central bank. As the

overall monetary policy is still prudent and neutral in order to avoid

overleveraging in the financial sector, money supply will not be too loose -

though this year's liquidity could be better than last year. Liquidity in the

market has been very tight recently, partly due to the peak of tax payments; the

PBOC also drained a total CNY570 billion liquidity via open market operations in

the four weeks before last week, the newspaper said. As the RRR cut will be

effective as of Wednesday and fiscal expense will increase at the end of this

month, the tightness of money supply will ease.

     Rules regulating illegal financing will be one of China's main regulatory

tasks this year, Economic Information Daily reported, citing Chinese officials.

The rules would further define illegal financing, list specific responsibilities

for regulators, and strengthen supervision on illegal financing. China's illegal

financing cases were down 16.5%, and the amount of money involved in such cases

dropped 42.3% in the first quarter, according to the regulatory body (led by the

CBRC) which is responsible for supervising illegal financing. Illegal financing

was found in almost all industries, with fintech, property and agriculture

sectors seeing the most of it, the newspaper said. 

***Comments: A key task for the PBOC will be to clamp down on illegal financing,

especially those in the name of fintech, PBOC Governor Yi Gang said in

Washington last week. More regulations on illegal financing will be introduced

this year to reduce their risks to the overall financial and economic systems.

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

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

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