MNI China Press Digest July 18: Liquidity, Fiscal Pol, SOEs

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

Wednesday:

     Short-term liquidity has been slightly tightened because of the peak of tax

payments, but overall capital supply and demand are balanced, China Securities

Journal reported. Early July saw high levels of liquidity, thus the PBOC

continued using open market operations to drain liquidity, leading it back to a

"proper and sufficient" range, the Daily said. Liquidity is likely to be more

ample than last year with lower average money market rates and less volatility

at the end of each quarter, the Daily said. Money market rates and ultra-short

bond rates have almost bottomed, the Daily added.

     China should innovate fiscal policy to encourage structural reform, direct

positive social expectations and balance the dynamics of supply and demand, Liu

Shangxi, head of Chinese Academy of Fiscal Science under the Ministry of

Commerce (MOFCOM), wrote in a commentary published on Economic Information

Daily. Fiscal policy should shift from comprehensive policy to structural

policy, adjusting China's economic and industrial structure, Liu said. Fiscal

policy should focus on more fields rather than targeted economic fields, Liu

added.

     State Owned Assets Supervision and Administration Commission (SASAC) has

proposed to regroup central state-owned enterprises in the second half of the

year, reported Shanghai Securities News. The regrouping of central SOEs will

direct state-owned assets to target industries, including electric, machinery

and autos, the newspaper said. SASAC will regroup on the enterprise level to

support industrial transformation and upgrading, the newspaper said.

Decentralized services will be transferred to dominant enterprises to achieve

integration of each specialization, the newspaper added.

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

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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