MNI China Press Digest, July 24: Sino-U.S., Liquidity, Credit

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

on Friday:

     Beijing has taken no initiatives to escalate the already tense relations

with the U.S. and has vowed not to do so in the future, official newspaper the

China Daily said in an editorial on Friday. The editorial said Beijing's

decision not to escalate the conflict was a sign of restraint, not weakness, and

showed that China hoped the U.S. would come to its senses and back off from

confrontation. The U.S. would have difficulty in forming a united front against

China as its allies are unwilling to wager their future on the actions of the

current U.S. administration and recognize China's achievements under the rule of

the Communist Party, the Daily said, referring to Secretary of State Mike

Pompeo's recent speech on China, delivered in London. 

     The PBOC is likely to increase liquidity injections via conducting more

reverse repos or cutting banks' reserve requirement ratios (RRRs) to ease

month-end tight liquidity and bridge the shortage caused by the issuance of

special Treasury bonds, with CNY140 billion remaining through July, the

newspaper said citing analysts. 

     The PBOC is likely to pursue a balanced release of credit in H2 that

matches the pace of recovery while keeping liquidity at moderate levels, the

China Securities Journal reported citing analysts. The manufacturing sector and

private and small companies are the key sectors requiring funds during the

recovery period, the newspaper said. The PBOC will manage fund flows to avoid

arbitrage and the misallocation of resources, and the central bank will pursue

more innovative tools to direct funds to the real economy, Wang Jianhui, head of

the Research Institute of China Minsheng Bank, told the newspaper. 

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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