MNI China Press Digest, May 15: Trade War, Yuan, PBOC

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

Wednesday:

     Tariff hikes by the U.S. will have limited impact on the Chinese economy

given that China has been diversifying its trade partners and tariffs would be

passed along in traded goods, China Business News reported citing Sheng

Songcheng, the former director of the Survey and Statistics Division of the

PBOC. China's exports to the U.S. fell by 13.9% y/y in Q1. If this decline

continues throughout the year, exports to the U.S could fall by $75.1 billion in

2019 which may cause the unemployment of 3.92 million people, said Sheng.

     The yuan will be more volatile in the future, as more foreign capital flows

through China and external headwinds weigh on domestic capital and the forex

market, said 21st Century Business Herald citing Guan Tao, former director of

the International Payments Department at SAFE. Though external changes will make

it more difficult to execute monetary policy, policymakers should still be more

domestically focused, Guan said.

     The PBOC has shown its intention to stabilize market expectations by

conducting a large scale MLF operation as another MLF matured yesterday, the

China Securities Journal said. In the near term, the tax season will be the

major factor draining liquidity, along with the loss of forex funds, the Journal

said, citing unnamed analysts.

--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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