MNI China Press Digest - Wednesday, March 6:

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

Wednesday:

     China's government work report released on Tuesday indicated both money

supply and credit will continue to be loose this year, with cutting interest

rates likely, the China Securities Journal reported citing economists including

Ming Ming of Citic Securities. Targeted reduction of reserve ratios, cuts to

medium lending facility (MLF) and adjusting reverse repo policies may also be

used, the newspaper cited the economists as saying. 

     China will conduct bond swaps only for remaining legacy local government

debt and not for treating new hidden local government debt, as some in the

market speculated, China Securities Journal reported citing Liu Shangxi, head of

a research institute under the Ministry of Finance. As of the end of January,

legacy local government debt issued under LGFV totaled CNY315 billion, the

journal said.

     China's steep tax cuts, particularly lowering VAT to 13% from 16% for

manufacturing industry, will spur the economy, the Securities Times said in a

frontpage commentary on Wednesday. As VAT takes up 39% of China's total tax

revenue, targeting VAT gets to the core of the issue, the newspaper said.

China's manufacturing needs the boost given declining labor supply, higher cost

of operations and funding pressure, it said. The cuts can stabilize

manufacturing and private investments, Securities Times said.

     Some Chinese cities have begun to loosen restrictions on home mortgages,

the 21st Century Business Herald reported citing interviews with bank managers

in cities including Hefei, one of the 16 under tight property purchase

monitoring. Lenders began to feel having more liquidity in second half last year

and that feeling intensified in January, when money supply indicators largely

exceeded expectations, the newspaper said. Even as regulators keep a tight leash

on the housing markets, many cash-rich banks chase after property projects for

lack of good projects that they can lend to, the newspaper said.

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

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