MNI China Press Digest, Nov 18: Monetary Policy, Housing

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

on Monday:

     The PBOC's shrinking balance sheet does not indicate tightening monetary

policy, according to a report in Securities Daily. Citing Yang Yewei, the chief

analyst at Southwest Securities analysts, the Daily's report said total

liquidity had not tightened without the release of base money this year, because

the reverse requirement ratio cuts had helped raise the currency multiplier. In

its Q3 monetary policy report on Saturday, the PBOC said the policy stance

should not be judged from monthly readings of the balance sheet, which is

significantly impacted by seasonal factors such as tax collection, fiscal

spending and the injection and withdrawal of liquidity.

     The PBOC will adjust its monetary policy based on the need to stabilize

economic growth and inflation and will do so with increased frequency but on a

reduced scale, the PBOC-run newspaper Financial News reported. Citing Dong

Ximiao, the chief analyst at XW Bank, the report said that any policy adjustment

was likely to be structural, including measures such as adding liquidity to

medium and small banks. Dong said another priority was to strengthen financial

support for private and small enterprises.

     China's lending policy to real estate developers is unlikely to change in

the short term after the PBOC's monetary policy report reiterated the principle

of not using real estate to stimulate growth. In reporting on the PBOC's Q3

monetary policy statement, Securities Daily said that developers will now be

more cautious about financing for the rest of this year. Citing Yan Yuejin, the

director of the E-House Real Estate Research Institute, the Daily's report said

developers were facing capital and inventory pressures amid weaker-than-expected

home sales.

--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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