MNI China Press Digest Aug 6: Trade, Yuan, Deleveraging

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

Monday:

     China has been "rational and restrained" in its countermeasures against the

U.S's "blackmail," Xinhua News Agency said in a commentary, after China

announced retaliatory tariffs ranging from 5% to 25% on U.S. goods worth USD60

billion on Friday. Differentiated tariff rates were taken out of consideration

for the interests of both Chinese people and the global industrial chain, Xinhua

said. China will not rush to compete with U.S. numbers, but it is ready to take

"quantitative and qualitative measures" against the U.S.'s next move, Xinhua

added. China welcomes negotiations with the U.S. on the basis of mutual respect,

equality and benefit, Xinhua said.

     The PBOC's maximum level of tolerance for yuan depreciation may be 7.0, the

Economic Observer reported, after the PBOC announced a 20% reverse requirement

ratio on the trading of foreign-exchange forward contracts. However, the

authorities would like the market to take a dominant role in deciding the yuan's

exchange rate, the newspaper said, citing Guan Tao, former director-general of

Balance of Payments at the State Administration of Foreign Exchange (SAFE). 

Regulating and stabilizing market expectations are currently key for the PBOC to

ensure there is enough room for policy implementation, the newspaper said,

citing a source close to the PBOC.

     China should stay rational and calm in the face of credit defaults, as they

are inevitable in the process of deleveraging, China Securities Journal stated,

citing Sheng Songcheng, counsellor to the PBOC. Bank loans cannot satisfy all

the enterprises' demand for financing, and other channels have not been used

efficiently, Sheng said. Shadow-banking is neutral under this background, as it

serves the financial requirements of the real economy while exposing potential

risks, Sheng added, according to the newspaper. China should funnel funds into

the real economy and enhance the monetary policy's transmission mechanism to

balance preventing financial risks and serving the real economy, Sheng said.

--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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