MNI China Press Digest, Aug 16: China-U.S., Economy, T-bonds

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

on Friday:

     China will respond to provocations and definitely take countermeasures if

the U.S. rolls out new tariffs on the remaining Chinese imports, People's Daily

said in a commentary. The U.S. action in backing off from the September 1

deadline to hike tariffs showed that the country was unable to handle the impact

of more taxes on Chinese imports, the newspaper said. China will never give in

on major issues of principle, no matter how much the U.S. exerted "extreme

pressures" on China, the Daily said. 

     China is likely to focus more on promoting supply-side reform rather than

rolling out more fiscal policies such as more cuts to taxes and fees, according

to an article published in the PBOC-operated Financial News. Guan Tao, a former

official at the State Administration of Foreign Exchange, wrote that if external

shocks were greater than expected, China would be more passive in adjusting

macro policies given to a longer policy lag. 

     The first yield curve inversion between 10-year and 2-year U.S. Treasury

bonds since 2007 does not signal a recession, but indicates the market is

expecting a further loosening in monetary policy, China Securities Journal

reported citing analysts. As this scenario plays out, foreign investors are keen

to invest in the Chinese stock market in the long run as they are encouraged by

the Chinese government's economic growth policies, the Journal said. 

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

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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