MNI China Press Digest Aug 1: Monetary Policy, PMI, Demand

The following lists highlights from Chinese press reports on Monday:

• China’s monetary policy still has sufficient experience and tools to deal with external uncertainties, supported by its economic resilience, moderate inflation and robust financial system, the Economia Daily reported citing analysts. China should cherish the current time window, when the monetary tightening by developed countries cause limited impact, to push forward pro-growth policies, with monetary policies focusing on ensuring employment and stabilising enterprises, especially supporting SMEs, the newspaper said citing analysts.
• China’s July manufacturing PMI unexpectedly fell back below the breakeven 50 and into contraction zero indicating greater downward pressure, as the sporadic outbreak of Covid-19, continued demand contraction and multiple difficulties have put more enterprises in trouble, Yicai.com reported citing Zhang Liqun, analyst of China Federation of Logistics & Purchasing. China should resolutely control all possible new impacts of the pandemic on the production and operation of enterprises, to avoid a wave of collapsed companies, Zhang was cited as saying. The manufacturing PMI may rebound to around 50 in the next few months after falling to 49.0 in July, with accelerated infrastructure investment driving demand, the newspaper said citing analysts.
• Weakening demand, especially from consumers, will become a long-term restriction on the Chinese economy, as China enters the era of negative population growth and an aging society, the 21st Century Business Herald reported citing Cai Fang, member of the People’s Bank of China’s Monetary Policy Committee. China’s population may peak this year or next year and India’s population will exceed China’s to make a very significant gap, Cai predicted. Fiscal policy will play a more important role than monetary policy in addressing demand constraints, with fiscal spending tilting more to safeguard people's livelihood and social welfare, Cai was cited as saying.