MNI China Press Digest, March 16: RRR Cut, Capital Inflow

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

on Monday:

     Last week's cut in the required reserve-deposit rate by the People's Bank

of China was a response to sluggish credit and lending provision by joint-stock

commercial banks, according to a report in the Economic Information Daily.

Citing Wang Yifeng, the chief banking analyst with Everbright Securities, the

Daily reported that some joint-stock commercial banks downsized their balance

sheets last month and are facing pressure from decreasing interest rate spreads

with higher costs of liabilities. This hinders them from lowering loan interest

rates, according to Wang.

     China is expecting more than USD150 billion in foreign capital to be

invested in the A-share and bond markets this year, the Securities Daily

reported. Citing Zhang Jun, the chief analyst with Morgan Stanley Huaxin

Securities, the newspaper said Chinese bonds have higher interest rates and more

stable credit performance which continues to attract foreign inflows.

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

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

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