MNI China Press Digest, Nov 19: Yuan, RRR Cut, Bailout Funds

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

Monday:

     China's current foreign exchange policy should aim at stabilizing the yuan

exchange rate, the Economic Information Daily said Monday in a front-page

commentary. An exchange rate overshoot may trigger a sharp change in the market

sentiment, which could have a serious negative impact on the financial system

and even the wider economy, the Daily said. However, focusing on reducing yuan

volatility does not mean the central bank will give up the reform of the

exchange rate regime, EID said. In fact, only pushing forward with reform and

letting the yuan fluctuate more freely can reduce investors' unilateral

depreciation expectation and ease the excessive focus on a specific exchange

rate level, the newspaper said. (Link to the story: https://bit.ly/2OQop8M)

     China will likely cut the reserve requirement ratio (RRR) by around 1% in

January, the China Securities Journal reported Monday, citing Pan Xiangdong,

chief economist at New Times Securities. Given that an RRR cut sends a strong

signal of monetary easing, the central bank will probably mainly use tools such

as refinancing, rediscounting, PSL, MLF and OMO to release liquidity by the end

of this year, the Journal said, citing Pan. However, it is possible the PBOC

announce of next year's RRR cut at an earlier stage, perhaps later this year,

which will steer banks towards parking money in private, small or innovative

companies, so as to meet the conditions of any targeted RRR cut.

     Fujian's provincial government has set up a CNY15 billion bailout fund, as

well CNY2 billion in special debts to rescue promising private-sector companies

with a "share pledge" risk said Xinhua news agency late Sunday. The government

also pledged to develop equity financing, accelerate the establishment of SME

development funds, and encourage various industrial investment or private equity

funds to invest in high-quality private-sector enterprises, the report said.

(Link to the story: https://bit.ly/2DMngh8)

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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