MNI China Press Digest, Dec 17: Government Bond, Monetary, RMB

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

on Tuesday:

     China's former Finance Minister Lou Jiiwei has suggested the country issue

CNY10 trillion in special government bonds to provide the central bank with

additional tools for monetary policy, according to China Securities Times.

Speaking at a conference on Monday, Lou said these bonds could be used to

purchase half of the foreign reserves of the central bank. The current

mechanisms for monetary policy are less flexible because they are less

transparent and costly, Lou said.

     The market expects the central bank to cut interest rates in January due to

the liquidity demands of Chinese New Year and the issuance of government bonds,

Shanghai Securities News reports. Citing Yan Se, Chief Economist with Founder

Securities, the report says January is also a peak period for bank lending.

     The RMB-USD exchange rate may remain volatile in a range between 6.9 and 7

yuan in the future, according to a report in the China Securities Journal. The

Journal's report, which cited estimates from various market participants, said

the current valuation of RMB assets is generally low and therefore attractive to

foreign investors. Wen Bin, the Chief Analyst with Minsheng Securities, expected

the RMB to appreciate slightly, the report said.

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

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

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