MNI China Press Digest: Tuesday, January 9

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

Tuesday, January 9:  

     China's interbank market has ample liquidity even after the People's Bank

of China (PBOC) skipped open market operations for 11 days, PBOC-run daily

Financial News said Tuesday. The central bank has also made ample preparations

to prevent a cash crunch at the end of the current Chinese new year in February,

when cash demand surges, the newspaper said. That includes a temporary reduction

in the cash required to set aside by banks, Financial News said. (Financial

News)

     Chinese authorities are expected to use more indirect measures to manage

the value of the yuan, including adjusting interest rates, and accelerate

market-based reform of FX policies, the official China Securities Journal

reported Tuesday citing interviews of economists. Economists also expect the

authorities to broaden the participants of its interbank FX market and enrich

its FX products to attract investments from more overseas institutions, the

report said. (China Securities Journal)

     The risk that China's local government debt may trigger a financial crisis

is low given the outstanding total is within the standard set by the IMF, Chen

Long, a researcher affiliated with the Ministry of Finance, said in a People's

Daily commentary on Tuesday. Most local government debt went to financing

infrastructure projects, which boost growth and improve productivity, Chen said.

Still, China needs to speed up the reform of local governments' fiscal and

funding structures to improve balance sheet, Chen said. (People's Daily)

     China should not let local authorities relax controls over the property

market even if some slowing signs appear, the 21st Century Business Herald

reported Tuesday. Property prices in some cities are doomed to fall for lacking

actual demand and purchasing power, so the authorities should allow the market

correct itself, it said. China should not continue to rely on the property

sector for growth at the expense of excess borrowing, and having financial

institutions rely heavily on the property sector may endanger the economy, the

newspaper said. (21st Century Business Herald)

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

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

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