MNI China Press Digest May 16: CPPCC Meeting, Monetary Policy

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

Wednesday:

     The CPPCC held a meeting on Tuesday stressing its plan to gradually resolve

financial risks and ensure the stability of the economy and financial system,

according to the official Xinhua News Agency. The meeting, with the theme of

"improving the system of preventing systemic financial risks," concluded that

China needs to further strengthen coordination among different financial

regulators. Prudent and neutral monetary policy and tight financial regulation

should coordinate well in order to advance high-quality economic growth, said

Chinese Vice Premier Liu He, according to Xinhua. Risks should be borne by

investors, debt should be paid, and costs should be paid for wrongdoing, Liu He

said. China needs to improve the accounting standards of local government debt,

and improve the long-term functioning of the property market, CPPCC members

stressed. Illegal financial activities should be clamped down on and regulators

should "comprehensively" strengthen regulation on various financial activities,

CPPCC members said. 

     The focus of China's monetary policy may be switched to economic growth,

China Securities Journal reported, citing analysts. Monetary policy may lean

more towards economic growth, echoing earlier comments by the Communist Party

Politburo which stressed boosting domestic demand, the newspaper said. Monetary

policy will still be prudent and neutral and guidance of market expectation will

be stressed, the Journal said.  The PBOC's Q1 monetary policy report suggests

deleveraging at this stage will not focus on all sectors, but a few key sectors

such as local governments, SOEs and the property market, the newspaper said,

citing Pan Xiangdong, chief economist at New Times Securities.

     China should not suddenly slash local government debt, said Liu Shangxi,

director of Chinese Academy of Fiscal Sciences, according to his article

published in the newspaper of CPPCC. At a time when several government

departments are looking to curb invisible debt this may pose a risk to economic

stability, Liu said. Unclear fiscal responsibility at different levels of

government, the lack of a fiscal risk assessment system, and the

unpredictability of higher-level government policies caused the emergence of

invisible debt, Liu said. Regulation on invisible debt should be based on

changes in the domestic economy and international environment, Liu noted. 

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

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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