MNI China Press Digest, Sept 6: Yuan, Inflation, Property

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

Thursday:

     China should steadily push the market-based reform of its foreign exchange

forming mechanism and not rush to realize the free floating of the yuan, China

Securities Journal reported. China should reduce direct interventions in the FX

market and match the rate of reform with the speed of overall opening up, said

Xie Fuzhan, head of Chinese Academy of Social Sciences. A free-floating currency

isn't realistic or ideal, while floating based on certain management is

realistic, the journal said citing Ding Zhijie, deputy head of University of

International Business and Economics.

     Inflation in China will likely remain benign in the near term given a

softening demand in a slowing economy, the Economic Information Daily said in a

commentary. Policy makers will want to avoid flooding the market with liquidity

while pushing to contain local government debt, so consumer prices are not

likely to gain. M1 growth has been slower than M2 for six months, so inflation

isn't likely to spike: the daily said.

     China's local governments can ease polices for reducing property

inventories in their regions given the need to boost growth, the Securities

Daily reported. The Politburo Meeting in July and meetings held by the housing

ministry in August didn't mention property inventory reduction, the newspaper

said. Inventory reduction programs have had some success, it said.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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