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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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