China Press Digest: Friday, August 18

     BEIJING (MNI) - The following are highlights from the China press Friday,

Aug. 18:

     The U.S. cannot win a trade war with China, the official People's Daily

reported Friday. The investigation the U.S. initiated this week into Chinese

intellectual property practices use Cold War rules that date back before the

establishment of the World Trade Organization, the report noted, stressing the

move by the Trump government is a matter of concern. Sino-U.S. trade, both

imports and exports, is determined by the markets and the choices of companies

and consumers in the two countries, the report argued. As the second biggest

trading partner with the U.S., the top exporter to the U.S. and the third

largest importer of U.S. products, China has "powerful weapons" to fight back if

a trade war starts, the report warned. (People's Daily)

     The balance sheets of some regional banks have showed obvious shrinkage,

with both assets and liabilities contracting, due to the government's strong

regulatory and deleveraging campaign, the Shanghai Securities News reported

Friday. According to half-year reports of local bank regulatory bureaus, the

non-performing loan ratios of some banks have started to rebound, some to as

high as 3%, the report said. Under the pressure of credit risk and the launch of

more financial regulatory rules, NPL ratios will continue to rise in the second

half of this year, the report predicted. (Shanghai Securities News)

     Some CNY600 billion in special treasury bonds will mature at the end of

this month and are likely to be rolled over, the 21st Century Business Herald

reported Friday. A total of CNY1.55 trillion in special treasury bonds were

issued in 2007 to withdraw abundant liquidity in the market when international

payments were showing good two-way flows, the report said. But in the current

situation, particularly with banks' excess reserve ratio as low as 1.3%, the

market is relying on the central bank for injections of liquidity, so the

extension of the special bonds will worsen major liquidity pressure as it will

further drain liquidity from the market, the report argued. The bond market was

sluggish in the first half of the year and the issuance of treasury bonds

slowed, so rolling over the special treasury bonds would increase the pressure

on the market from treasury bond supply for the rest of the year, the report

added. (21st Century Business Herald)

     Smaller Tier 3 and Tier 4 cities need to be alert to the increase in real

estate inventories, the Economic Information Daily reported Friday. Recently,

the real estate market in Tier 3 and Tier 4 cities has been quite hot while that

in larger Tier 1 and Tier 2 cities has been curbed by stricter regulations, the

report said. Expectations of higher housing and land price are growing in the

smaller cities. The hot market could easily trigger speculation, so authorities

should exert proper controls at a flexible pace to take account of changes in

the market, the report added. (Economic Information Daily)

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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