MNI INTERVIEW 1: China Should Boost Consumption If Trade Slips

     BEIJING(MNI) - China should respond to any further downward pressure on its

economy from the trade dispute with the U.S. by boosting consumption and

infrastructure spending and ensuring sufficient supplies of liquidity to the

economy, People's Bank of China monetary policy committee member Ma Jun told MNI

in an interview.

     "Benign liquidity conditions help reduce the funding cost of firms, in line

with Primer Li Keqiang's requirement for lowering the financing cost of micro

and small businesses by one percentage point this year," the PBOC's former chief

economist said on the sidelines of the Annual Meeting of the China Green Finance

Committee.

     Ma made his comments after the central bank noted the possible negative

effects on the economy of the trade conflict in its latest quarterly report late

Friday, and said that it would maintain the yuan stable at a "reasonable and

balanced level".

     When asked about a potential further deterioration in trade talks, Ma said

the pace of infrastructure investment could be accelerated, with faster approval

for projects and more timely disbursement of budgetary funding.

     "China should enhance trade cooperation with the EU and the UK,

particularly in the technology sector ... and R&D spending should be further

increased at both government and corporate levels," Ma said.

     Pressure on exports would also argue for further boosting domestic

consumption.

     "We should continue to increase consumption's share of the economy,

particularly by stimulating green consumption, such as of energy efficient

household appliances and new-energy automobiles," he noted.

     The economist warned that the U.S. should be aware of a possible hike in

inflation from tariff hikes on Chinese export goods.

     "There is little room for most Chinese exporters to cut prices as their

margins have been quite low. A lack of room to absorb higher costs on the China

side will push up prices on the U.S. side," Ma said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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