MNI China Press Digest May 9: Yuan, FHC Rules, Xi & Trump Call

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

Wednesday:

     Downside risks for the yuan due to capital outflows are controllable,

Economic Information Daily said in a commentary. However, caution is warranted

regarding exports, which supported better-than-expected economic growth last

year. Exports are very likely to drag down GDP growth amid slowing global

economic growth and trade frictions between China and the U.S., the newspaper

said. The yuan could also face depreciation pressure as U.S. treasury yields are

increasing, it said. In the future the PBOC is likely to increase interest rates

following the U.S. Fed, and the central bank's recent decision to reduce

restrictions on banks' deposit rates could be regarded as preparation for a

future interest rate hike, the newspaper said.

     The PBOC and other financial regulators will issue rules regulating

financial holding companies, 21st Century Business Herald reported, citing

former PBOC officials and people with knowledge of the issue. The rules aim to

tackle previous problems of FHCs, such as financing of shareholders and

stakeholders, and the legality of capital source, a banker close to regulators

said. The rules are likely to be announced this year as strengthening regulation

on FHCs is urgent because illegal practices in the sector create significant

cross-market financial risks, a former PBOC official said. 

     Chinese President Xi Jinping said China and the U.S. should maintain

communication to find a solution for their trade spat and reach a win-win

situation in his call with U.S. President Donald Trump, Xinhua News Agency

reported. Trump said the U.S. highly values the current Sino-U.S. relationship,

and the U.S. hopes to strengthen cooperation with China in different fields and

adequately tackle problems related to the economic and trade relationship,

according to Xinhua. Xi stressed China supports the meeting of Trump and North

Korean leader Kim Jong Un, and China is willing to continue to exert a positive

influence on denuclearization of the Korean peninsula, Xinhua said. 

--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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