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China Press Digest: Friday, Nov. 3

     BEIJING (MNI) - The following are highlights from the China press for
Friday, Nov. 3
     It is too early to say the current improvement in bank asset quality has
become a trend, though banks have actively shrunk their balance sheets under
stricter regulation, the Financial News, a journal run by the People's Bank of
China, reported Friday. The debt risk has been reduced considering debt defaults
have decreased this year, the report said, adding that as of the end of
September, debt defaults totaled CNY23.68 billion, compared with CNY40.3 billion
for all of 2016. But economic downturn pressures are still large and credit
quality in some regions and sectors could plunge as cuts in overcapacity and new
environmental protection initiatives continue, the report warned. Insufficient
private investment and rising borrowing costs will put further pressure on
corporate debt burdens, the report warned. (Financial News)
     The short-term volatility of the yuan exchange rate will not change its
internationalization trend, the People's Daily reported Friday. The Chinese
government mouthpiece was responding to western media comments on the slowdown
of the currency's internationalization given data from the Society for Worldwide
Interbank Financial Telecommunication (SWIFT) showing the yuan's share of
international payments is now smaller than it was two years ago. From a trade
and investment perspective, the drive for yuan internationalization has never
changed, the newspaper said. The process faces challenges, including maintaining
a stable yuan exchange rate, the current limited ability and relative high cost
of hedging yuan exchange rate risks, and limits at the moment on the amount of
assets priced in yuan, the report admitted. The usage of the yuan in global
markets will increase in the long term as the Chinese economy continues to grow
and the One Belt, One Road initiative is pushed forward, the report stressed.
(People's Daily)
     New commercial bank loans are expected to decline significantly in October
due to further curbs on the property sector and for seasonal reasons, the
Securities Times reported Friday. Since September, authorities have banned the
use of consumer loans for property purchases, in addition to enhancing
punishments for property buyers who fund down payments in an illegal way. This
will contribute to a fall in short-term household loans in October, the report
predicted. Banks have largely used up their credit quotas due to the robust
expansion of new loans in the first nine months of this year, the report noted,
adding as of the end of September, total new loans had reached CNY11.16
trillion, or some 88% of total new loans granted last year. (Securities Times)
     China needs to enhance financial regulation to prevent financial risks from
causing major shocks to the economy, the Economic Information Daily said Friday
in a front page commentary. The regulatory duty shouldered by the central bank
should be emphasized and a "double pillar" management framework combining
monetary policy and macro-prudential policy should be optimized, the commentary
argued. The drafting of appropriate financial laws needs to be accelerated and
corporate governance in financial institutions needs to be strengthened, the
commentary stressed. (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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