MNI China Press Digest, July 18: GDP, Interest Rate Cut, PBOC

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

on Thursday:

     China is still looking for new growth momentum to stabilize its

decelerating GDP growth rate, according to a report in Securities Times today,

Citing Liu Shijin, a member of the PBOC's monetary policy committee, the report

said China's GDP growth began to decelerate in Q1 2010 before bottoming in Q3

2016, and then entering a phase of medium speed growth. Liu said there was now

less demand for infrastructure and property investment which had supported

high-speed growth in the past. The economy needed to find new momentum to

underpin and stabilize medium speed growth, said Liu, who is also in charge of

the research group of medium and long-term growth launched by the Development

Research Center of the State Council.

     Markets should not be too optimistic about the dovish policy of the U.S.

Federal Reserve and be prepared for less action on interest rates rather than

expect deep cuts, according to a commentary in the China Securities Journal

today. The newspaper noted that the dollar is holding up well with the U.S.

dollar index fluctuating higher since July, with rises in safe-haven golds and

bonds lacking momentum. Any U.S. rate cut could be "preventive" and may not be

as deep as the market expects, the Journal said.

     The PBOC's shrinking balance sheet does not mean there is a tightening of

monetary policy, 21st Century Business Herald said in a commentary today. The

shrinking balance sheet in H1 was mainly due to the decline in the balance of

structural monetary policy instruments such as the medium-term lending facility

(MLF) and the pledged supplemental lending (PSL), which in turn had led to a

decline in asset size, the newspaper said. By end-June, the total assets of the

PBOC were at CNY36.4 trillion, a contraction of about CNY900 billion from the

end of 2018, the commentary said.

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

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

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