MNI China Press Digest June 16: LPR, Pro-Growth, Capital Flows

The following lists highlights from Chinese press reports on Thursday:

• The People’s Bank of China is likely to keep the benchmark Loan Prime Rate unchanged next Monday, after it skipped moving the anchored rate of the medium-term lending facility this week, the Shanghai Securities Journal reported citing analysts. Also, policymakers are observing stimulus effects after making the largest ever 15 bps cut to the five-year LPR last month, the newspaper cited analysts as saying. The room for MLF rate cut will be limited in the future amid the rapid tightening of monetary policy by the Federal Reserve, and the PBOC may resort to lowering LPR to stimulate loan demand in the next stage, the newspaper said citing analysts.
• China will seize the current window to increase pro-growth policy intensity without resorting to excessive money supply, focusing on ensuring employment and stable prices, according to a statement on the gov website following the State Council executive meeting late on Wednesday. China will step up efforts to support private investment, which accounts for more than half of the total investment, and measures will include selecting a batch of major construction projects to attract private capital, the statement said.
• China’s balance of payments is resilient to any capital flow shocks as the outflows under securities investment was offset by the surplus in foreign trade in goods and direct investment, the 21st Century Business Herald reported citing Guan Tao, a former forex official. There was a net outflow of USD21.6 billion under securities investment in May, the slowest pace since February, the newspaper said citing data by State Administration of Foreign Exchange. Foreign goods trading registered a surplus of USD38.3 billion in May, an increase of 97% y/y, while the surplus in direct investment maintained basically the same level as last May at USD5.5 billion, the newspaper said.