MNI China Press Digest, May 10: Sino-U.S., PBOC

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

Friday:

     Chinese Vice Premier Liu He has arrived in Washington for trade talks and

has expressed China's intention to resolve differences with the US. Liu, who is

China's senior trade negotiator, was reported by CCTV as saying that China was

hopeful the talks would achieve results and that he would negotiate in a frank,

confident and rational manner.

     U.S. threats to hike tariffs will only dampen China's GDP by less than 1%

because the contribution of exports has been declining, Global Times said in an

editorial today. The worst case scenario after US tariff hikes on all Chinese

goods was that 8% of Chinese exports may need to find new destinations, the

newspaper said citing unnamed economists. Half of this 8% was likely to find new

channels, meaning that only 4% of Chinese exports will be affected. Global Times

said it was difficult for additional US tariffs on Chinese goods to last for

more than a year, because one-fifth of U.S. imports are from China.

     The PBOC could adopt a loosening bias for monetary policy if further

external headwinds weigh on the economy, according to a report in the Economic

Daily today. The newspaper cited Chen Yi, a senior researcher in the Financial

Research Center at the Bank of Communications, who said it was necessary for the

PBOC to fill in the short term liquidity gap given the maturity of CNY156

billion in a medium-term lending facility and a drain of seasonal fiscal funds

in May. In the long term, the maturity of more than CNY3 trillion of MLFs could

also require supplementary liquidity, according to Chen.

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

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

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