MNI China Press Digest, Sept 30: Consumption, Rates, Reform

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

on Monday:

     China should boost consumption to hedge against downward economic pressure

and balance any external uncertainty with greater capacity in the domestic

market, Economic Information Daily said in a front-page commentary. China's

policy should focus on promoting rural, 'green' and service consumption, as well

as encouraging the replacement of used automobiles, home appliances and

electronic consumer goods, the newspaper said.

     The PBOC will use market-based reforms to significantly lower the level of

actual interest rates, the PBOC-run newspaper Financial News reported on Monday.

Citing the Q3 meeting of the PBOC's monetary policy committee, Financial News

said the central bank was sending a signal on the use of the new loan prime rate

(LPR) pricing mechanism. The latest one-year LPR rate declined by 0.5 pp because

banks' borrowing costs were lower due to the reserve requirement ratio cut. In

the longer term, keeping the five-year LPR rate unchanged could avoid

stimulating the real estate sector by limiting downward pressure on mortgage

interest rates, the newspaper said.

     China should deepen supply-side reform while implementing prudential

monetary policy and maintaining sufficient liquidity in the financial system,

according to a report in Securities Daily. Citing the meeting of the Financial

Stability and Development Committee, Securities Daily identified

counter-cyclical adjustment and a growth in social financing as other key policy

objectives. The report said that China should also accelerate the creation of a

long-term mechanism for commercial banks to replenish capital and dredge the

transmission of liquidity from the financial system to the real economy.

--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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