China Press Digest: Friday, December 8

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

Friday, December 8:

     Chinese regulators are trying to guide financial institutions into stable

and sustainable business areas and away from their previous models that

overvalued growth, the Financial News, a newspaper managed by the People's Bank

of China, said Friday. Cao Yu, vice chairman of China Banking Regulatory

Commission (CBRC), said city commercial banks need to decide what types of

businesses they want to be in, reflecting regulator's push to prevent potential

financial risks and promote sustainable development models, the newspaper said.

The market and society are increasingly paying attention to optimizing economic

structures and enhancing asset quality. (Financial News)

     Financial trusts reported decent growth in their assets in the third

quarter, with property market financing exceeding 10% of assets for the first

time in three years, the 21th Century Business Herald reported Friday. Financial

trusts' assets reached CNY24.41 trillion at the end of the third quarter,

CNY1.27 trillion more than at the end of second quarter, a 5.47% quarterly

growth rate, according to a report released by China Trustee Association on

Thursday. In the first nine months of the year, financial trusts' investments in

the property sector grew 1% to CNY2.07 trillion, or 10.01% of their total

investments at the end of September, the newspaper said. The government campaign

to tighten funding channels for property developers has motivated property

companies to turn to financial trusts. The newspaper said property companies

issued only 38 bonds in the first half of this year, accounting for less than

0.5% of their total financing. Development of the rental housing market is

providing new opportunities for financial trusts, with their investments focused

on real estate investment trusts (REITS) and rental property asset

securitization. (21th Century Business Herald)

     Chinese money supply is expected to remain tightly balanced, but the market

should not be pessimistic about the liquidity outlook as the period of greatest

interest rate fluctuation has passed, China Securities Journal reported Friday.

The liquidity injection by the People's Bank of China (PBOC) on Wednesday via

its Medium-term Lending Facility (MLF) shows the central bank will provide

sufficient liquidity to ensure money supply does not experience large

fluctuations at the end of the year. There will be a clear imbalance of

liquidity supply and demand in mid-December, the newspaper said, citing

unidentified experts predicting the central bank would continue injections via

its MLF to stabilize the market. The supply of money entering the new year will

not be a problem even if the PBOC drains funds because fiscal expenditures will

increase in the second half of December. (China Securities Journal)

     Banks in Xiamen city in Fujian Province cancelled CNY105 million of

consumer loans and "operational loans" -- loans for operational equipment

updates or office renovation -- which were used illegally to fund home

purchases, Caixin reported Friday. Xiamen banks are now checking how their

clients use consumption loans under orders from the local banking regulator, the

magazine said. Zhang Xintan, chairman of the Xiamen Banking Regulatory

Commission, said the agency is requiring banks to build systems to clamp down on

credit illegally transferred to the property sector and has already punished

four banks that allowed consumer loans to be used for property financing. Some

Chinese banks have already started to ask consumer loan customers to provide

receipts to prove they did not use their loans for home purchases, but other

banks are helping clients find receipts to justify the loans. (Caixin)

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

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

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