MNI China Press Digest, Jul 30: Fiscal, Rate Cut, Foreign Debt

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

on Tuesday:

     China's central government will allocate CNY2 billion each year to pilot

cities to explore effective financial services models to support private and

small companies, officials from the Ministry of Finance said in a briefing

Monday, the Securities Daily reported today. Pilot cities in the eastern,

central and western China will be assigned CNY30, 40 and 50 million,

respectively, the report said, adding that the scheme was tentatively set to run

for 3 years until 2021.

     The Fed's possible 25 bps rate cut should only be a preemptive one to deal

with the U.S.'s current low inflation and uncertainties over the external

environment and not the start of a rate cutting cycle, the China Securities

Journal said in a commentary today, noting some ammunition may be needed at a

future date. From China's perspective, there was no need for the PBOC to follow

with a cut, as economic fundamentals, as well as both monetary and FX policies,

are relatively stable, the paper said. A widening of the rate differential would

also help stabilize the yuan, even if the dollar index is inflated.

     China's short-term external debt stood at $1.27 trillion by end-2018,

accounting for 41.4% of the foreign exchange reserves -- the highest level since

1994, -- the 21st Century Business Herald reported today, citing data from SAFE.

This was mainly a reflection of foreign investors' buying large amounts of

China's yuan bond since 2017, when Bond Connect was launched, the paper

reported, citing an unnamed FX analyst. Although there are no great concerns

over external debt risks, the authorities should take preventive measures with

debt levels at historic highs, 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

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