MNI China Press Digest, June 4: GDP, RRR Cut, Trade Talks

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

Monday:

     China's gross domestic product (GDP) growth this year is expected to reach

around 6.6%, higher than the target of "around 6.5%" announced by the government

in March, said Economic Information Daily, a newspaper under the Xinhua News

Agency. The higher-than-expected growth will be driven by the government's

measures to increase domestic consumption and by the growth of new economic

drivers, the commentary said. GDP growth in the second quarter is likely to be

around 6.7% to 6.8%, the commentary said. However, China must still be cautious

of downward pressure on economic growth in the second half, it said, due to

financing difficulties for small companies amid deleveraging and risk control

campaigns, a drop in property investment and potential downward risks of export.

     The People's Bank of China (PBOC) is very likely to cut banks' reserve

requirement ratio in a targeted direction in exchange for banks returning

medium-term lending facilities (MLF) borrowed from the central bank, said

Securities Times in a commentary. An RRR cut is likely as liquidity this month

will be tight during banks' assessment tests at the end of second quarter and as

large amounts of MLF will mature, it said. However, an RRR cut will not mean the

current prudent and neutral monetary policy will be changed; rather, it is to

maintain stability of banks' liquidity and increase support for economic sectors

which are in line with the government's plans, it said. The PBOC's decision on

Friday to expand collaterals for MLF to AA+ and AA rating corporate bonds was

not to loosen monetary policy. The central bank was reacting to recent frequent

defaults of corporate bonds, the newspaper said, in a bid to boost investors'

confidence in corporate bonds and reduce fear in the market.

     China's statement regarding the China-U.S. trade talk this weekend,

released by the official Xinhua News Agency, shows that China still insists

neither side will start a trade war if trade talks are ongoing, a social media

account run by the official communist newspaper People's Daily said. If the U.S.

takes any tariff action against China, all agreed-upon terms would become

invalid, the article analyzing the statement said. China will not cause trouble,

but it is not afraid to tackle trouble caused by other countries, it said.

China's reforms, opening up and increasing domestic consumption are all its own

national strategies, and will be implemented even without the trade tensions,

the newspaper said, stressing it will advance the campaigns at its own pace. 

***Comment: The trade talks will end on Monday. According to the Xinhua

statement, the two sides are willing to discuss the details about the

implementation of the Washington agreement. However, no specific consensus or

deals have been announced at this point.

--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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