MNI China Press Digest July 20:Mon Pol,Fiscal Pol,Deleveraging

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

Friday:

     Under the background of deleveraging, financial institutions have shifted

to debts and bond purchases to provide liquidity for enterprises, Ruan Jianhong,

director of Financial Survey and Statistics Department under the PBOC, said in

commentary on Shanghai Securities News. This shift has shortened the financing

chain and financing costs to the real economy, Ruan said. The decrease in

entrusted loans and credit loans in real estate resulted in the decline in

social financing growth, Ruan noted. Commercial banks' interbank business and

equity investment services shrank, leading to a slight fall in M2 in June, Ruan

said.

     The stimulus of monetary policy alone cannot resolve the decline in the

risk preference of financial institutions as broad liquidity is tight and narrow

liquidity is loose, Financial News reported, citing Chen Jianheng, analyst of

CICC. Fiscal policy has more room to act as the growth of fiscal expenditure was

slower than that of fiscal revenue in the first half of the year, the newspaper

said, citing Ming Ming, chief analyst of Citic Securities. Increasing fiscal

expenditure can bring up business deposits to alleviate the impact of

deleveraging, Ming noted. It is necessary to be alerted to the pace of

tightening of off-balance sheet activities and its impact on the real economy,

Ming said, according to the newspaper.

     The "loose money and loose credit" combination aims to push credit

expansion by banks and protect private enterprises from the impact of bond

defaults and high financing costs, Securities Times said. China's deleveraging

campaign has entered a stable stage, the newspaper noted. By the second half of

the year, monetary policy is expected to be fine-tuned on the basis of

maintaining a neutral and prudent level, while administration policy will likely

to slightly loosened to boost credit expansion, the newspaper said.

--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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