MNI China Press Digest, Dec 12: Economy, Rate Cuts, Financing

     BEIJING (MNI) - The following lists highlights from Wednesday's China

press:

     The upcoming Central Economic Work Conference is expected to set the tone

for next year's economic planning between "stabilizing growth, structural reform

and risk prevention", China Business News reported Wednesday, citing Huang

Jianhui, director of the research institute of China Minsheng Bank. The

government will adopt a more proactive fiscal policy, continuing to stimulate

demand to prop up growth while deepening the supply-side reform, Huang said.

Huang thinks industrial activity will slow, while the service sector will

rebound and grow at around 7.8% y/y in 2019. M2 is likely to rise to about 8.5%,

as money supply could be further eased to support growth, Huang said, the paper

reported.

     There is no need for the PBOC to cut benchmark deposit rates as it is not

the most effective way to direct funds into the real economy, the Securities

Daily reported Wednesday, citing Xu Gao, chief economist at Everbright

Securities. According to Xu, its not the cost of finance that is making it hard

for businesses to find funding, but policy constraints. To boost further growth

in credit and social financing, an RRR cut is needed, with open market operation

(OMO) rates lowered appropriately, the report added.

     Improving the financing environment is the top priority for policymakers,

the China Securities Journal said Wednesday. Banks' lending capacity are

constrained by relatively low capital adequacy ratio, low appetite of risks, as

well industry regulations, the Journal said. Meanwhile, as downward pressure on

the economy increases, demand for funding is declining from previous levels, the

paper 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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