MNI China Press Digest, July 1: PBOC, HK, Local Govt Bonds

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

on Wednesday:

     The People's Bank of China lowered the rates for re-lending and

re-discounting programs and this does not mean the central bank embraces easier

monetary policy, according to the China Securities Journal. Citing Li Qilin, the

chief economist with Yuekai Securities, the Journal said the overall easing of

monetary policy can create arbitrage opportunities which prevent money flowing

into the real economy. The growths of M2 and total social financing have reached

central bank targets and economic activity is resuming, which also means the

central bank does not have the need for any further monetary easing.

     The National Security Law for Hong Kong, which came into effect on Tuesday,

safeguards the principles of "one country, two systems" and will prevent Hong

Kong from becoming the most turbulent city in Asia, Global Times said in an

editorial. Neither the central government nor Chinese society wants to cancel

"one country, two systems", the editorial said. However, "one country, two

systems" does not mean extreme movements in Hong Kong can collude with the US

and other external forces to create chaos in the city, the Times said.

     Chinese local government financing vehicles sold CNY2.13 trillion in bonds

in the first half of 2020, CNY300 billion higher than the last peak, according

to the Economic Daily citing data from Wind Information. Zhou Yue, the chief

fixed income analyst with Sinolink Securities, told the newspaper that about 79%

of the money raised by the bonds was used to substitute for old debts. Due to

their backing by local governments the market considered the financing vehicles

had better quality credit, so the bonds were sold at higher prices this year

than previously, Zhou said.

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

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

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