MNI China Press Digest, May 27: Monetary Policy, Banks, Profit

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

Wednesday:

     China's monetary policy will focus on boosting credits and delivering

currency more accurately to feed the real economy, the China Securities Journal

said in a commentary. The central bank restarted the injection of funds through

reverse repo operations yesterday after a two-month suspension, dispelling

market speculation that its monetary policy stance may have tightened, the

newspaper said. Judging from the tone of the language in the Government Work

Report around "guiding the broad money supply and the social financing growth to

be significantly higher than last year" it appeared that China would further

increase its monetary easing, the commentary said.

     China should promote greater cooperation between large and small banks in

addition to Internet banks with the aim of creating a more sustainable and

inclusive financial ecosystem, according to a commentary in the Economic

Information Daily. Such an approach could prevent small banks being crowded out

by larger banks seeking to increase their lending to SMEs with preferential

policies, the newspaper said. Large commercial banks are required to increase

their SME loans by more than 40% this year, according to the Government Work

Report. 

     Combined profits at China's largest industrial companies in April fell 4.3%

y/y, largely recovering from the 34.9% decline seen in March, according to a

statement released by the National Bureau of Statistics (NBS) on Wednesday. More

than half of 41 sectors reversed profit losses, and the profit improvements in

the automotive, special equipment, electrical machinery and electronics sectors

contributed 19.7 percentage points to the overall gain. Despite the significant

improvement the outlook for profits is dim given weak market demand, falling

industrial product prices and large cost pressures, the NBS said. 

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

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