MNI China Press Digest, Sep 28: Liquidity, Bonds, SOE Reform

MNI (Beijing) - The following lists highlights from Chinese press reports on Monday:

China's monetary policy will remain stable and the PBOC is unlikely to cut banks' reserve requirement ratios or interest rates barring a major external shock, the Economic Information Daily reported citing Wang Qing, chief analyst at Golden Credit Rating. The PBOC may choose to inject medium and long-term liquidity by rolling over the matured MLFs in excess of the required amount, Wang said. However, he told the Daily that longer-term liquidity continues to be tight as banks are tasked to reduce structural deposits.

The inclusion of China in the World Government Bond Index is expected to attract USD120-150 billion of capital inflows into the Chinese bond market in the next 18-24 months, the Securities Daily reported citing market sources. China's high risk-free interest rate, combined with its restrained monetary policies, are attracting investment in the country's securities market from foreign institutional investors, reaching a historical high of USD101.1 billion in the first seven months, up 68% y/y, according to the Daily. China will continue to push for the two-way opening of capital accounts and the internationalization of the yuan, the Daily said.

China will promote strategic mergers and reorganizations of both SOEs and private enterprises to optimize the market structure and the supply and industrial chains, the Shanghai Securities News reported on Monday citing Vice premier Liu He. Speaking on a three-year campaign to reform SOEs, Liu said SOEs should increase their efficiency and innovation skills to become competitive and better serve the state-owned economy. State-owned capital should focus on sectors which concern national security, public services and other national economic lifelines and become the fundamental force in resisting macro risks, said Liu.