MNI China Press Digest, Feb 25: PBOC, Rate Cut, Housing, Bonds

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

on Tuesday:

     The PBOC will make good use of existing financial support policies and

introduce new measures to offset the impact of the coronavirus epidemic, said

PBOC governor Yi Gang at an internal meeting on Monday. In comments reported on

the PBOC website, Yi said prudential monetary policy should be more flexible and

should prioritize the recovery of the real economy. As the next step, the PBOC

would support financial institutions to provide special credit lines for

industries and private and small companies which have been most affected by the

epidemic. Other policies would support an increase in loan renewals and

appropriately reduce, or exempt, loan interest for small firms, Yi said. 

     The PBOC should be cautious in lowering the benchmark for deposit interest

rates as any cuts would change prudential monetary policy, according to the

Securities Times. In a front page commentary, the newspaper said China's banks

should optimize their business models to keep themselves profitable as loan

rates have been guided down by the central bank. Banks have also cut their

short-term profit projections and stepped up supports to the real economy, with

a focus on small and medium enterprises, the newspaper added. 

     China should not relax controls over the real estate market even though the

coronavirus epidemic has delayed house construction and sales, according to the

Economic Information Daily. In a commentary published on the front page, the

Daily said aggregate demand for houses had not been impacted by the epidemic.

Experience had shown that even very small relaxations of policy in the real

estate sector could result in speculative activity, the Daily added. 

     Policy banks in China should make up for shortfalls in infrastructure

investment as the central government keeps a tight lid on the debts of local

government bodies and regulates financial institutions, according to China

Securities Journal. In a commentary, the Journal said the government should also

consider selling Special China Government Bonds, setting up a Special

Construction Fund and another fund for small and medium enterprises. 

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

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

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