MNI China Press Digest July 27: SOEs, Liquidity, Consumption

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

Friday:

     Mixed ownership reform and restructuring of state-owned enterprises (SOEs)

is expected to accelerate, Shanghai Securities News reported, citing Li Jin,

chief researcher at China Institute of Enterprise Research, after the State

Council's state-owned enterprise reform meeting on Thursday night. The reform

will tailor policies to central SOEs and local SOEs to echo the meeting's call

for "categorical classification," Li said, according to the newspaper. The

reform will focus on "defining central SOE's main business" to avoid homogenous

competition, Li said. This move is consistent with China's adjustment of its

economic structure, Li added, according to the newspaper.

     The PBOC is expected to continue to halt open market operations (OMO) after

skipping OMOs for three days this week as liquidity in August will likely remain

at a high level, China Securities Journal reported. The PBOC's monetary policy

tools have always followed the pace of fiscal revenue and expenditure, thus the

PBOC may pause the OMOs until early August, the newspaper said. However, the

depreciation of the yuan against the U.S. dollar may result in reduced forex

purchases, which together with large issuance of government bonds, could lead to

a potential shock to liquidity, the newspaper added, citing anonymous traders.

     China should strengthen its consumption reform to increase residents' power

of consumption and further drive China's economy, China Securities Journal

reported, citing experts, including Guo Lei, chief analyst of GF Securities.

China's consumption has seen some upgrading but the government should further

cultivate consumption in service to improve residents' consumption structure,

said Huang Wentao, chief analyst of China Securities Corporation. Individual

income tax reform and innovation of high-tech products will also stimulate

long-term growth of per-capita consumption, the newspaper said. Local government

should firmly prevent speculative investment in real estate to encourage more

efficient consumption, Huang added, according to the newspaper.

--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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