MNI China Press Digest, Jan 31: Premier Li, Credit, SAFE

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

     Newly issued local government bonds should be used to first repay arrears,

and wage arrears of migrant workers must be cleaned before the Chinese New Year,

Premier Li Keqiang told a State Council executive meeting on Wednesday, urging

local governments and large state-owned enterprises to repay the arrears to

private and small enterprises, People's Daily reported today. At present, the

government and SOEs have settled accounts of more than CNY160 billion, the

newspaper said.

     The scale of new credit in January is expected to exceed CNY3 trillion,

boosted by a number of policies introduced to support credit expansion, along

with the PBOC's intention to keep liquidity ample over the Chinese New Year,

said Securities Daily today citing analysts. While Zhang Jun, chief economist at

Morgan Stanley Huaxin Securities remains concerned whether credit growth will

stabilize after January, as weaker employment and income may discourage

residents from increased borrowing, while firms have low appetite to expand

production due to poor cash flow and profitability, the Daily said.

     China's State Administration of Foreign Exchange (SAFE) is looking to

deepen China's FX market, bringing in new trading tools, boosting liquidity,

open up to more market players, improve market infrastructure and strengthen

international competitiveness -- all to better meet hedging need of firms and

residents, said SAFE's Wang Chunying, China Forex, a magazine run by SAFE

reported late Wednesday.

--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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