MNI China Press Digest, Feb 1: Sino-U.S., PBOC, Bond Market

     BEIJING (MNI) - The following lists highlights from Friday's China press:

     China and the U.S. have agreed to further strengthen cooperation on

intellectual property protection and technology transfer, Xinhua News Agency

reported today. And China will expand imports of US agricultural products,

energy products, industrial manufactured goods and service products, aiming to

promote a more balanced Sino-US trade. The latest trade talks in Washington have

achieved significant progress, and the two sides also confirmed the timetable

and roadmap for the next consultation, Xinhua said.

     There is no need for China to conduct QE at the moment, said Sun Guofeng, a

director on the PBOC's Monetary Policy Committee, the Securities Daily reported

today. Sun noted the essence of QE is that the monetary authority improves the

transmission of its monetary policy by purchasing assets in the financial

market. It works for countries whose financial system are dominated by the

financial market. However, China is a bank-led financial system and the

transmission of the monetary policy will rely on regulating banks' behaviors,

the newspaper reported. 

--Sun also warned that if the PBOC purchases a large amount of CGBs in the

secondary market, it is equivalent to buying them directly in the primary

market, which could lead to a serious monetized deficit. In the past two

decades, China has experienced three inflations, all related to a monetized

deficit, Sun added.

     An additional $300 billion will likely flow into China's bond market by

2020 following the inclusion of CGBs into the Bloomberg Barclays Global

Aggregate Indices, Securities Daily said today, citing several institutions'

forecasts. By the end of 2018, China's bond market stood at CNY86 trillion, with

overseas investors holding nearly CNY1.8 trillion, a rise of 46% y/y, the

newspaper 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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]