MNI POLICY: No Yuan Depreciation To Boost Exports: China's Li

--No Direct Comment On Trade Disputes With U.S.

--Says Global Trade Rules Must Be Obeyed

     BEIJING (MNI) - China would never seek to boost exports through a

depreciation of the yuan as it would hurt the country, Premier Li Keqiang said

in his keynote speech at the World Economic Forum's summer gathering in Tianjin,

China, Wednesday.

     While alluding to a changing global trade environment, Li didn't directly

mention the escalating China-U.S. trade dispute, focussing instead on domestic

drivers of growth.

     These are the main points from his speech:

     -- China "won't ever" seek to boost exports through a yuan depreciation as

it would hurt the country, Li said, noting there had been accusations levelled

at China of doing so. "China will continue to create conditions for a stable

exchange rate and keep market-based exchange rate reform," he said. USDCNH fell

about 100 pips on his comments, breaking below the 6.85 level, while USDCNY also

weakened about 77 pips.

     --China will focus more on domestic growth, particularly by supporting

smaller businesses, Li said. He repeated that China would continue with prudent

monetary policy, maintaining "reasonable and adequate" liquidity. These comments

were in line with recent moves by the PBOC, which has reportedly ordered banks

to lower loan rates and boost credit to SMEs through window guidance.

     --China's risk prevention campaign will continue and levels of leverage

will be further stabilized, Li noted.

     -- "Foreign companies investing in China will be treated equally with their

Chinese counterparts," in a continuing attempt to attract FDI. According to data

from China's Ministry of Commerce, foreign direct investment growth in the first

7 months this year jumped 5.5%, compared with a contraction in the same period

last year.

     --Although Li did not directly mention the continuing trade dispute with

the U.S, he said basic rules of global free trade should be obeyed. He also

noted that China will continue to protect intellectual property.

--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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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