MNI China Press Digest, Aug 17: PBOC, Yuan, Investment

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

Friday:

     The Shanghai branch of the People's Bank of China has banned banks in the

Shanghai Free Trade Zone from depositing or lending yuan offshore through

interbank accounts, China Securities Journal reported, citing an unidentified

person close to the PBOC. This ban will not affect cross-border capital flows

that reflect real demand, the newspaper added. This move is aimed at tightening

offshore liquidity of the yuan and making it more expensive to short the Chinese

currency, the newspaper said, citing an anonymous market analyst. This notice

sends a clear signal that the PBOC is preventing capital outflow and is

stabilising the yuan's fluctuations, the analyst said, according to the

newspaper.

     The yuan is not likely to rebound as it did in the fourth quarter of 2016,

China Securities Journal reported, after onshore yuan slipped below 6.9

yesterday. The surge of the U.S. dollar this round was supported by the U.S's

strong economic fundamentals, the rise in interest rate, and its efforts to

lower trade deficit, the newspaper said. The yuan, seeing both appreciation and

depreciation this year, has appropriately released both internal and external

pressures and has enhanced its flexibility, said Xie Yaxuan, chief economist of

Merchants Securities, according to the newspaper. The PBOC may soon implement

counter-cyclical measures to stabilise the forex market once the yuan reaches

the 7.0 level, the newspaper said, citing market participants.

     China will substantially support private capital investments to stabilise

investment and boost the vitality of China's economy, the State Council said at

its executive meeting yesterday, according to Shanghai Securities News. China

will significantly lower the bar for private capital to enter key industries,

including railway, telecommunications and civil aviation, to expand domestic

demand and improve employment, the newspaper said. China will further cut taxes

and fees to lower financing costs of private enterprises and enhance the

transmission mechanisms to serve the real economy, the newspaper added.

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

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

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