MNI: Rate Hike, Fin'l Open-Up - China Press Digest: Jan 26

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

Friday, Jan 26: 

     China should not hike its benchmark interest rates as its economy is at

risk of a downturn and inflation is benign, the China Securities Journal

reported, citing analysts. 

 - PBOC should adjust liquidity condition in the interbank market by raising

interbank rates in open market operations, it said. A rate hike may be feasible

under more mature domestic and overseas market conditions, the journal said. 

***COMMENT: The gap between China's real money market rates and policy rates is

widening given the authorities' deleveraging campaign, meanwhile the real loan

rates is also rising faster that the benchmark interest rates, causing two

distortion that needs to be addressed.

Opening up China's financial markets should be in line with economic growth and

development of its financial systems, and reforming the sector too quickly or

immaturely introduces risks, the Economic Information Daily reported, citing

industry analysts' reaction to senior leader Liu He's speech in Davos. 

 - Liu said this week that China will allow access to its markets at a pace

exceeding the world's expectations;

 - Tackling China's risks with shadow banking and local government debt will

remain a priority, newspaper cited industry analysts.

***COMMENT: Xinhua is advocating caution. There is probably much dissension on

giving too much financial-market access to overseas players or too soon. Policy

makers will have to balance these interests, so Liu's words shouldn't be taken

as a promise.

     Global leaders and investors bullish on China will be on the right side

history, the official English-language mouthpiece China Daily said on Friday in

an editorial. The newspaper blasted Western investors and commentators who

shorted or were pessimistic on China. They are still looking at China through an

ideologically tinted lens, carrying views out of "perennial bias, arrogance and

complacency," it said. 

***COMMENT: It's unusual for the government publication China Daily, which

normally tries to sound more business-like, to be openly combative. China may be

firing warning shots to those gathered in Davos, especially given the anti-China

rhetoric by the Trump administration.

--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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]