COMMENT-China Policy Watch-Yuan isn't a stimulus option

March 4 (Reuters) - China clearly has several stimulus options available as policymakers head into a much-anticipated parliamentary meeting this week. Weakening the yuan to support export competitiveness is unlikely to be one of them.

The top legislative body, the National People's Congress (NPC), convenes on Wednesday and will set key economic targets. The political advisory body, the Chinese People's Political Consultative Conference (CPPCC) meets from Tuesday.

With Beijing's pledge to spur domestic demand, income-boosting tax reductions and consumption vouchers look likely. To lift consumer confidence, more steps to shore up property values and the stock market - via extra support for private enterprises - might be announced.

An increase in the government's budget deficit is expected, and there could be hints at further monetary policy easing, despite February's uptick in manufacturing PMIs.

While benchmark interest rates could be lowered again, authorities will likely continue to defend the yuan, judging by the People's Bank of China anchoring of the daily USD/CNY benchmark rate near 7.1700. The central bank has also nudged bank USD deposit rates lower and there is increasing scrutiny of capital outflows.

The trouble with weakening the yuan to help exports isn't just that it would deter foreign investors, who have recently turned optimistic due to Chinese AI advances. It could also derail any hope of trade talks with the U.S.; President Donald Trump explicitly warned against yuan devaluation on Tuesday.