MNI China Press Digest, June 25: GDP, RRR Cut, Risk Control

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

Monday:

     China is expected to report better-than-expected gross domestic product

(GDP) growth this year at 6.7% or 6.8%, according to economists affiliated with

various government think tanks, reported Shanghai Securities News. These

expectations are comparable to the 6.5% GDP goal set by China for this year. The

momentum for economic growth is strong, as indicated by accelerated growth of

private investment and manufacturing investment, said Wang Yiming, deputy

director of Development Research Ceneter of the State Council. Consumption for

the whole year should maintain stable gains at 9.5%, and exports should grow at

a two-digit growth rate, Renming University has predicted. The government needs

to make its fiscal policy more provocative, maintain its prudent and neutral

monetary policy, and further cut taxes; but RRR may be cut based on real

conditions, the economists said, according to the newspaper.

     The People's Bank of China may continue to cut banks' reserve requirement

ratio (RRR) one to two times this year, after its Sunday RRR cut unleashed

around CNY700 billion liquidity, reported Economic Information Daily on Monday,

citing analysts. China's RRR is still high compared with other countries, and

liquidity needs to be increased in the second half of this year, so another

50-100BP RRR cut could come in the rest of the year, said Ming Ming, chief

fixed-income analyst at Citic Securities. China-U.S. trade tensions could mean

China is feeling pressure to devaluate the yuan, which could drop to 6.6; thus

an RRR cut may be used to unleash more liquidity into the market to counter

potential risks, said Li Chao, chief analyst of Huatai Securities.

     The most important risk to control is preventing asset bubbles as China

further opens up to the rest of the world, said Fang Xinghai, deputy chairman of

China's securities regulator, in an interview with China Business News. The

China Securities Regulatory Commission (CSRC) needs to strengthen cross-border

financial regulation with other countries, Fang said. Property market growth is

still one of the main drivers of China's economic growth, but the needs of the

property market are diversifying, Fang said. China's outbound investment will

continue to increase as the country has a high savings rate, and investing

globally could reduce exchange rate and political risks, Fang noted. 

***Comments: As Fang indicated in the interview, China could support property

growth in some way this year to hit the target for GDP growth.

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

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

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