MNI China Press Digest July 12: RRR Cut, Slower Growth, US Ban

The following lists highlights from Chinese press reports on Monday:

• The PBOC's broad cut in lenders' reserve ratios last week was a normal liquidity operation and should not be interpreted as the central bank has changed its prudent monetary policy orientation, the Financial News reported citing Wang Yiming, a member of the Monetary Policy Committee. The funds unlocked will help meet maturing MLFs, including CNY400 billion due in July, Wang was cited as saying. China will also encounter large-scale tax remissions in July and government bond sales may also accelerate, Wang told the newspaper owned by the central bank. The RRR cuts will help banks improve financing capabilities as credit extended to the real economy has increased in recent years, increasing lenders' need for long-term capital, Wang was cited saying. The RRR cuts will also ease the difficulties of small businesses as the recovery remains unstable, while rising commodity prices raised production costs, Wang told the Financial News.
• China's H2 growth may slow to 5%-7% after recording about 8% in Q2, the Shanghai Securities News reported citing Sheng Songcheng, a former statistics and analysis official at the PBOC. Relatively low inflation pressure in the short term and stable asset prices are the conditions for loosening policies, Sheng was cited saying. The current liquidity looks to be tight given factors such as banks' deposit/loan ratios and maturing MLFs, Sheng said in a forum. While the property sector and local government debt are two major areas of risks, they should be dealt with through macro-prudential management, and not tightening monetary policies, Sheng said according to the newspaper.
• China protests after the U.S. added 23 Chinese entities to a list banning their exports over issues including alleged human rights abuses, and will take measures to protect its interests, according to a statement on the Ministry of Commerce website released on Sunday. The U.S. should correct its wrongdoing, which China sees as a breach of international economic and trade rules, the ministry said.