MNI China Press Digest, June 5: HK, mon pol, CPI, Economy

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

on Friday:

     The People's Bank of China will firmly support the development of Hong Kong

as an international financial centre and will guarantee the economic and

financial stability of the city, the central bank said in a statement on its

website. The PBOC would prioritize the implementation of two recent policies

delaying repayments on small business loans and purchasing some credit loans,

according to the statement posted late Thursday. This would prevent financial

sector risks.

     The People's Bank of China is expected to slow the pace of monetary easing

and focus on targeted measures as the economy recovers from the pandemic

disruptions, according to a report in the China Securities Journal. Citing

analysts, the Journal's report says the central bank changes do not mean a

policy U turn, but a flexible approach to prevent flooding the market. The PBOC

would increase its liquidity injections even through a possible reserve

requirement ratio cut in June. This would support the large issuance of

government bonds and deal with the maturity of the medium-term facility,

analysts predicted.

     China's consumer price index may continue to ease in May to below 3.0% y/y

due to declining pork prices and the lagging impact of oil, Economic Information

Daily reported Friday, citing institutions. "May CPI might slow to 2.6% on a

yearly basis as vegetables and pork prices are falling down along with the

improved supply," Lu Zhengwei, chief economist with Industrial Bank told the

Daily.

     Industrial output in China is likely to recover to the level of before the

Covid-19 outbreak, Shanghai Securities News reports. The newspaper says the

recovery is being helped by a narrowing in the decline in fixed-asset investment

and retail sales. "China's industry will show its resilience by responding to

the severe and complicated situation, as the system is complete and demands are

huge," Lian Ping, the chief economist with Zhixin Fund, told the News. Lian said

fiscal and monetary policies were also taking effect.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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