MNI China Press Digest, July 2: Yuan, PBOC Policy, GDP Growth

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

Monday:

     The yuan is not likely to depreciate continuously in the second half of the

year, China News Service reported, citing experts, after the yuan central parity

rate weakened 206 basis points to 6.6166 as of last Friday. China will likely

not reform its exchange rate formation mechanism, and the US dollar index will

remain strong in the second half of the year, said Xie Yaxuan, chief macro

analyst of Merchants Securities, according to the newspaper. The yuan will

fluctuate between 6.25 and 6.75 against the US dollar, Xie predicted. There are

still some uncertainties on the yuan as the trade escalation evolves, and the US

dollar's posture against the emerging currencies may change; however, the yuan

is very unlikely to drop below 7.0 within the year, said Zhang Ming, analyst of

Chinese Academy of Social Science, according to the newspaper.

     Yi Gang, governor of the People's Bank of China (PBOC), has proposed a

policy package to increase bank lending while reducing lending costs to small

and micro-sized firms, reported Xinhua News Agency. Small and micro-sized firms

are the new driving force of China's economy, which boost employment and

stimulate innovation, Yi said. The PBOC will raise the cap of relending and

rediscounting by CNY150 billion to support small firms and agriculture, Yi

noted. The key objective of the policy package is to increase the number of

enterprises that can acquire bank loans, and to enhance the financing structure,

Yi added.

     The resilience of China's economy will likely stabilize GDP growth at 6.6%

this year, reported Economic Information Daily, a Xinhua newspaper. It is

necessary to be cautious of potential negative effects, especially from trade

tensions between China and the U.S., the newspaper noted. Real estate investment

will most likely slow down as regulatory policies were tightened in the first

half of the year. However, the PBOC's looser monetary policy will ease credit

conditions and the policies to expand domestic demand will drive the growth in

sales of consumer products, said the newspaper.

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

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]