MNI China Press Digest, May 20: Yuan, PBOC, CSRC

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

Monday:

     Any depreciation of the yuan below the psychologically important level of

seven yuan to the U.S. dollar would dampen market confidence, according to Sheng

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

PBOC. In an article published today in the China Business News, Sheng said that

a sharp fall in the yuan would increase capital outflow pressure and encourage

the U.S. to escalate trade frictions. He said that Chinese exporters cannot keep

relying on low prices to gain a competitive advantage, and a weakened yuan may

not actively improve product quality.

     The PBOC's Q1 monetary report released on Friday has re-emphasized the

importance of structural de-leverage amid the increasing macro leverage ratio

for the quarter, according to Ming Ming, chief analyst at CITIC Securities in a

commentary published today. Ming said the PBOC monetary report emphasized that

structural de-leveraging should be coordinated with monetary policy which

considered credit growth, economic growth and inflation. The PBOC also

reiterated its view that there is still downward pressure on the domestic

economy, and Ming said the report paid more attention to external headwinds

including the slowing global economy and trade friction.

     A former head of the China Securities Regulatory Commission (CSRC) who is

under investigation has come forward to the authorities, according to a report

from Xinhua News Agency. Liu Shiyu is under investigation on suspicion of

"violations of laws and discipline," Xinhua said, citing a statement from the

Communist Party's Central Commission for Discipline Inspection (CCDI). Liu was

replaced at the CSRC in January and transferred to the All China Federation of

Supply and Marketing Cooperatives as a director.

--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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