MNI China Press Digest, March 28: SMEs, Yuan, Financial Reform

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

Thursday:

     Loose monetary policy will not help small and micro-sized companies to

obtain loans and excess liquidity will not ease their financing difficulties,

said Zhu Min, head of the Tsinghua PBCSF, a finance talent training school

affiliate with the PBOC, the National Business Daily reports. Zhu believes that

for the past ten years, a large amount of liquidity flowed into the financial

market to fuel the stock and bond market as monetary policy had a loose bias.

Funds will naturally flow to the stock market instead of SMEs, Zhu said.

     To boost the internationalization of the Chinese yuan, authorities should

focus on longer-term issues such as boosting the domestic economy, upgrading the

financial system, improving the effectiveness of financial supervision, along

with liberalizing interest rates and the exchange rate, said Guan Tao, a senior

researcher at China Finance 40 Forum in a commentary published on China Forex, a

magazine run by the State Administration of Foreign Exchange.

     The authorities should accelerate the development of small and medium-sized

banks to deepen financial supply-side structural reform, wrote Dong Ximiao, a

researcher at National Institution for Finance and Development, a prominent

national think tank, in an op-ed in the Economic Information Daily. Dong said

greater efforts were also needed to promote capital market reform to boost

direct financing. It is also necessary continue pushing the opening of the

financial sector and prevent financial risks, Dong added.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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