MNI China Press Digest, Nov 25: Economy, Liquidity, Risks

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

on Monday:

     China's economy does not need Quantitative Easing (QE) and issues faced by

Chinese companies cannot be solved by QE, according to an op-ed published in

Financial News. The article says that China should step up counter-cyclical

measures including expansionary fiscal policies and structural monetary measures

to stabilize the economy in the short-term. The monetary base is sufficient, the

newspaper said, but credit creation needs to improve because borrowing costs for

small and private companies are still high.

     The PBOC is expected to inject more liquidity into the financial system in

December in an attempt to avoid possible tight liquidity conditions which could

weaken the effect of earlier policy rate cuts, according to a report in the

China Securities Journal. Citing interviews with analysts, the Journal's report

says the PBOC could increase the medium-term lending facility (MLF), pledge

supplementary lending (PSL), or even restart injecting 14- and 28-day reverse

repos. These measures would be required because year-end financial supervision

could increase the demand for funds.

     The China Banking and Insurance Regulatory Commission (CBIRC) will

strengthen counter-cyclical adjustment and aim to improve financial

institutions' due diligence mechanisms, the Shanghai Securities Journal reports.

Citing Liang Tao, vice chairman of CBIRC, the Journal's report says the goal of

these policies is to increase lending to the real economy. China has favourable

conditions in which to maintain the stability of its financial system, and has

sufficient room for macro policy manoeuvres, Zhou said.

--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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