MNI China Press Digest, May 27: Yuan, PBOC, Tax Cuts

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

on Monday:

     Speculators aiming to profit from shorting the yuan exchange rate will

suffer huge losses, said Securities Times in a front-page commentary today. The

newspaper said that the yuan can stabilize at a balanced level as it is well

supported by long-term economic fundamentals. The commentary also pointed to the

capacity for Chinese authorities to deal with the exchange rate overshooting,

and the tolerance for a more fluctuating yuan among the Chinese population.

     The key tasks of the PBOC in the near term are to promote the healthy

development of the bond market and support the financing of private enterprises,

according to Chen Yulu, deputy governor of the PBOC. Speaking in a forum on

Saturday which was reported by Sina Finance, Chen said the PBOC would focus on

the debt-to-equity swaps involving 185 companies, and cooperate with securities

regulators to guide more long-term funds into the capital market.

     Two symposiums on tax and fee reductions held by Chinese Premier Li Keqiang

over the last two weeks would provide a boost to market confidence, said

Securities Daily today. The reductions would encourage enterprises to increase

investment in R&D, accelerate the transformation of operations and upgrade their

products, said the daily citing Zhang Yiqun, a researcher at the Society of

Public Finance. Zhang said that China is fully capable of resisting any economic

shocks through a series of tax cuts and reforms, because the country has a huge

market, development space and economic resilience.

--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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